Tech Retail Store BATTLE: Microsoft’s Offensive Strategy Against Apple
They say imitation is the sincerest form of flattery. In that case, Microsoft (NASDAQ:MSFT) must have a great deal of praise for the world’s most valuable brand. The Windows-maker tried to duplicate Apple’s (NASDAQ:AAPL) success in the portable market with the Zune music player and Kin smartphone, but failed on both attempts. Recently, the company announced Surface, a tablet PC set to challenge the iPad this fall. While the jury is still out on the tablet match-up, consumers are receiving a better picture on how Microsoft’s often forgotten retail strategy is shaping up.
New product launches receive much of the hype in the tech industry, but the success of Apple (NASDAQ:AAPL) stores is something to be admired by every retailer. After closing its one and only retail outlet in 2001, Microsoft (NASDAQ:MSFT) announced plans last July to open at least 75 brick-and-mortar stores in the next two to three years, with the goal of placing the stores as close to Apple’s as possible. It is a direct attempt at imitating Apple’s retail strategy, but how does a Windows store compare to an iGadget store?
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On June 28, the world’s 20th Microsoft store opened in the Oak Park Mall in Overland Park, Kansas. The Grand Opening of the store was somewhat reminiscent of an Apple Grand Opening or product launch, with a large crowd camping out days in advance to be first in line. However, the numbers could have easily been skewed due to the fact that the first 200 people to visit the store received premier-viewing wristbands to a Blake Shelton concert the following Saturday. Nonetheless, I recently visited the new store in Kansas to see what all the excitement was about. Immediately afterwards, I went to the nearest Apple store to see how the two stacked up against each other.
I made my trip on a Saturday afternoon. The Microsoft store was easy to find, as it was on the ground level of the mall and contained a glowing Windows logo on the front, in the same place you would typically expect to find an Apple logo. The first thing I noticed was the effort that Microsoft put forth to drawing attention to itself. The company had large back-to-back flat screen televisions in the mall corridor featuring Xbox Kinect games that inquiring minds or gamers could play at freewill.
Upon entering the store, three employees dressed in Windows’ colors performed a cheer while jumping up and down. It is hard to say if it made people want to come into the store more, but nearby shoppers definitely stopped to watch the show. I was also greeted with a smile by a friendly employee and asked if I could be helped with anything.
The overall feel of the Microsoft (NASDAQ:MSFT) store was very similar to Apple (NASDAQ:AAPL). It was open and displayed many products on tables that customers could fiddle with. Furthermore, every product on display had a wooden stool nearby to invite users to sit and play for awhile. The store even had cushioned chairs that accompanied an Xbox 360 display. Although, as the picture below shows, the chairs went unused as the gamers preferred to stand.
Key products found in the store included: Windows 7 PCs, Windows Phones, Xbox 360 games and hardware, laptops, printers and all-in-one computers. One area of disappointment was the tablet selection. The only tablet on display was the Samsung Series 7 for $1,299. A rather steep price tag considering the latest iPad is available at $499. Perhaps Microsoft is just killing time until their own Surface tablet is released? The absolute coolest and most innovative feature of the new Microsoft outlet was the full digital wall that wrapped around the store and displayed images, videos and information. Certain parts of the wall were even playable via the Xbox 360.
After my visit to the Microsoft store, I set-off on my journey to the nearest Apple outlet. Despite Microsoft’s strategy of placing its stores extremely close to Apple’s, the nearest Apple store was a 25 minute drive away at the Country Club Plaza in Kansas City. Once again, the store was easy to find as the glass front and Apple logo were a dead giveaway. The giant promo of the new MacBook Pro was also a hint. Upon entering, I first noticed the larger crowd, but smaller square footage. Despite the Apple store being roughly one-third of the size of Microsoft’s, it easily had double the people in it. There were no cheers taking place, but I was greeted with a smile by a friendly employee and asked if I needed help with anything. When it came to in-store customer service, both outlets were top notch.
Compared to the Microsoft in-store color scheme, Apple’s store appeared a bit boring. White products, white walls, white ceilings and gray concrete floors. However, Apple (NASDAQ:AAPL) is known for this style and the number of people in the store clearly showed that it was not a great concern. The store also had wooden stools to sit and test the products, but not nearly as many as Microsoft. On the positive though, Apple did have a special children’s section that featured iPads with kid-friendly games. The store was truly one for kids and adults of all ages. Overall, I give the store design win to Microsoft. It had much more space for shoppers and gamers to roam and play. The colors were more intriguing and the digital wall wrap was simply beautiful.
While the smaller retail space for Apple (NASDAQ:AAPL) affected my judgement on the store design, it is a bright spot for Apple’s bottom line. RetailSails, a premier resource for fact-based insight and analysis on the U.S. retail industry, released a report earlier this year that showed Apple was the number one company in terms of highest sales per square foot. The iGadget maker topped the list with $5,647 of sales per square foot, almost double Tiffany and Co. (NYSE:TIF), the luxury retailer in the second place.
With in-store customer service being mostly equal and a close win for Microsoft (NASDAQ:MSFT) on store design, it really came down to the actual products to decide the winner. After all, without desirable gadgets everything else is mute. With the popularity of the iPhone and iPad, Apple is the hands down winner. In fact, on my visit to the Apple store, many people were huddled around the new Macbooks with Retina Displays. I even overheard shoppers asking employees how to switch to a Mac. On the contrary, I did not come across any Apple fans in the Microsoft store asking how to switch over to PC. It was also convenient to have every product in the Apple store made by the company itself. The Microsoft store was littered with several different products from companies such as Dell (NASDAQ:DELL), Hewlett-Packard (NYSE:HPQ), Vizio and ASUS. This could easily be overwhelming for less-tech savvy consumers.
Although Apple (NASDAQ:AAPL) is still the undisputed retail king, especially in the tech world, Microsoft’s store does feel like a step in the right direction. The true obstacle for Microsoft (NASDAQ:MSFT) will be placing innovative and addictive products in those stores.
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