Microsoft partners say the company’s plan to introduce retail stores in key cities globally would help to counteract negative brand perceptions.
However, Lucy Powell, Microsoft’s local director of corporate communications, says, “No New Zealand city is currently being considered as one of the high-profile experience stores.”
The company has appointed a US-based retail veteran to focus on transforming the PC and device-buying experience for retail consumers, and develop and roll out new Microsoft-branded stores in a few major cities. The store strategy might help Microsoft to counter its falling share of the operating systems market, and also Apple’s recent gains in personal computer sales, by providing customers with an “immersion experience”.
If the strategy isn’t rolled out locally, that would disappoint Microsoft’s New Zealand partners. Implementation company Intergen was Microsoft’s 2008 partner of the year. Managing director Tony Stewart says concept stores do help to boost brands. “For a variety of reasons, Microsoft is fighting an uphill battle in terms of perception of the brand, so stores could be a good thing. They would have an impact on our customers in terms of how they view Microsoft and their decisions to purchase. Anything that enhances Microsoft’s brand value in New Zealand is a good thing.”
Another Microsoft Gold Partner, Kinetics Group, agrees stores would have a positive effect on the company’s image. “We’re out there trying to help our clients choose the products that are best for them and nine out of 10 times they happen to be Microsoft,” says CEO Andrew Hunt. “Anything that helps us reinforce that message is great. And if it gives customers a chance to get an immersion experience and demonstrations, that can only be a good thing.”
One of the challenges Microsoft faces will be the way its relationship with other vendors is marketed instore. Unlike Apple, which can offer an entire experience with its own branded computers, iPods and other devices, Microsoft would need to find at least one major hardware partner; especially if its stores are intended to allow consumers to demo and buy Microsoft-loaded PCs rather than just software and operating systems.
Paul Johnston, managing director of local Apple distributor Renaissance, says Microsoft’s store strategy is part of an international trend for organisations to look at better ways of representing their brand. “[Microsoft has] had some issues around the perception of Vista and are looking at ways to get their message across to the public better.”
He says New Zealand retail stores would be worthwhile for Microsoft, provided the customer buying experience helps to reinforce the brand. It will be more difficult for Microsoft than it has been for Apple, which has the hardware and software to offer a total experience, Johnston acknowledges. “It’s a difficult one — do they go with HP or Dell and cheese off the other guys, and what happens to the other partners?”
HP has both an eye on Sony and Apple’s successful retail models and also an existing relationship with Microsoft, and so is viewing its plans with interest. “Dell and HP are trying to have ‘zones’ in other retail stores and HP has talked about having its own stores at times,” says Warwick Grey, HP’s SMB marketing manager. “We’d want to be a part of it if they did something here. I think it’s great and we need more places like that, so people can see the full opportunity IT presents.”
Grey cautions that concept stores are expensive to set up, which is why major vendors more often take space in established retail stores. Microsoft would need to get it right first time if they pursued the strategy locally, he says.
Managing director of Microsoft distributor Ingram Micro, Gary Bigwood, says he’s intrigued by the vendor’s announcement, but says it’s too early to comment. It’s a case of waiting to see what Microsoft New Zealand’s plans are, he says.
The man responsible for the newly-created retail stores division, David Porter, started work at Microsoft in the US on 16 February. He joined the company from DreamWorks where he was head of worldwide product distribution, and prior to that spent 25 years at Wal-Mart Stores; which might prove to be telling. When Microsoft unveiled a mock-up of one of its retail store in the US last month, one journalist commented that it looked too much like a generic electronics store.
It may also be worth noting that Microsoft doesn’t have a great track record in retail. It opened a San Francisco store in 1999, demoing devices loaded with Windows CE, Microsoft clothing, souvenirs and shrink-wrapped software. That store has since closed down.