U-Village store fits Microsoft consumer strategy
Janet I. Tu / The Seattle Times
The performances this time will come from The Black Keys and OneRepublic, not Miley Cyrus and Dave Matthews.
The venue will be University Village, not Bellevue Square.
But the M.O. and goal are the same: Generate excitement for the opening of a Microsoft Store, and hope that carries over to the brand and the products in the store.
The latest Microsoft Store — the software giant’s 12th — is to open Thursday morning at University Village, right across the parking lot from an Apple Store.
High-profile events are scheduled, including the opportunity to play on Kinect for Xbox 360 game consoles with retiring Seattle Sounders FC goalkeeper Kasey Keller and former Seattle Mariner Edgar Martinez on Thursday, and performances by The Black Keys and OneRepublic on Friday and Saturday, respectively.
The new retail store, with 40 to 50 employees, is the second for Microsoft in the area. The Bellevue Square store, where Cyrus and Matthews performed, opened last year.
Nationwide, Microsoft plans to open two more this fall — in California and Virginia. And Chief Operating Officer Kevin Turner said earlier this year that the company plans to get to 75 stores in the next two or three years.
The idea is to put a fun and friendly face on a company sometimes perceived as stodgy, and to better position the brand in consumers’ minds — a weak spot for some Microsoft products.
While Microsoft dominates with its Windows operating system and its enterprise operations for businesses, its record with consumers has been spottier.
It leads in sales of its game console, the Xbox 360; and the Kinect for Xbox, with its motion-sensing and voice technology, has been popular.
But that buzz hasn’t translated into significant sales of Windows Phone, which lags far behind its competitors.
The company is even farther behind in the market for Web tablets.
That’s why having a way to reach customers directly and give them hands-on experiences with Microsoft products is especially important now, with the expected launch of the newest Windows Phone 7.5 Mango handsets sometime in the next few weeks.
And Windows 8 Web tablets are coming, perhaps as soon as 2012.
“Where else can they showcase their products?” asked Kate Newlin, a New York-based business-strategy consultant. “A number of the classic places have dried up, gone away, like Circuit City. Even at the places that are still around, they can’t really do what it is they’d like to do to tell the bells-and-whistles pieces.”
A tech-company retail store is nothing new, of course.
Apple opened its first store about 10 years ago and today has more than 300 around the world.
All, or nearly all, of Microsoft’s stores are near Apple stores — no accident since the shopping centers where they’re located are heavily trafficked and generate some of the highest revenue per square foot in the U.S.
When Microsoft decided to open a store a few doors down from the Apple Store in Bellevue Square, the Apple folks worried it would cut into their sales, said Bellevue Square owner Kemper Freeman Jr.
“Instead, the first 30 days of the Microsoft Store, the Apple Store’s sales were up 87 percent for the month,” Freeman said. “I wish my competitors could help me that much.”
What they found out was that having two stores in the same shopping center did more than if only one were there.
“People like to comparison-shop, even if they tend to be a Microsoft fan or an Apple fan,” said Freeman, who added that both stores are among the most successful retailers in Bellevue Square these days.
Jeff Green, a Phoenix-based retail analyst, says that, in total, both Apple and Microsoft’s stores rank well above the industry average in sales.
Apple’s average sales per square foot stands at about $5,250, he estimates, while Microsoft’s is at $1,500 — still about three times that of the industry average for specialty stores.
Microsoft won’t confirm that figure nor will it disclose whether the stores are profitable yet.
But Mika Yamamoto, Microsoft’s general manager of marketing and customer experiences, said the stores are seeing year-over-year increases in revenue.
She also said the stores’ customer-satisfaction scores, as well as indicators of how likely a customer will recommend the stores to family and friends, are high.
The stores provide a testing ground to see what approaches work best in reaching customers, something Microsoft can relay to its partners who sell its products.
“We hope the entire ecosystem can learn [from what we learn at the Microsoft stores how best] to sell Office or demonstrate Kinect,” Yamamoto said.
Made for testing
When customers walk into the 4,198-square-foot store at U-Village, they can expect to see — and try out — everything from Windows 7 PCs and Windows Phones to Kinect for Xbox 360.
It’s a smart move, according to Newlin, the business-strategy consultant.
As Microsoft develops its flagship operating system — with the upcoming Windows 8 featuring a radical redesign with a touch-friendly, tile interface — and launches its new version of Windows Phone, it has several options to try to reach customers.
It can fly at the “30,000-foot level of advertising, or [go down to] the beg-and-wheedle level, where you hope the sales guy at the big-box store is going to deliver the message,” Newlin said.
Or there’s a third option: “To own the story, own their own narrative,” she said. The stores then become part of Microsoft’s overall communications strategy. “They’d be crazy if they don’t.”