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Microsoft has confirmed it is going to close its physical stores permanently to boost its virtual shopping store for its customers. MSFT stock is down today.
Microsoft Corporation (NASDAQ: MSFT) ranks as one of the top tech companies in the United States as well as all over the world. The company has contributed in no small measure to technological advancement as the world is enjoying today. Top on the list is Microsoft’s pioneering invention in the computer software solutions through its Windows application. Following readjustments instigated by the coronavirus disease that caused business lockdown for the most part of this year, Microsoft is set to close some of its retail stores permanently.
The development has sparked a bad ending to today’s trading with Microsoft (MSFT) stock plummeting by 1.18% to close at $197.97. Speculations are bound as to how the news will impact trading on Monday where investors will have more time to react to the news which was announced today Friday 26.
What Microsoft Physical Stores Closure Can Cause
Despite its efforts in proliferating its retail stores in the past decade, a move the company hopes would match up with Apple Inc (NASDAQ: AAPL) shopping experience center for its customers, it is unwinding with these stores closure decision. The company will transform previous retail store workers as part of the online customer support staff, a proposition that is questionable owing to the large number of workers involved.
The closing of Microsoft Store physical locations according to the official announcement will result in a pre-tax charge of approximately $450M, or $0.05 per share, to be recorded in the current quarter ending June 30, 2020. The charge includes primarily asset write-offs and impairments. This huge cost will be beneficial to the company in the long term as the cost of running the retail outlets will be eliminated.
Justifying the company’s decision to take the retail store online, Microsoft Corporate Vice President David Porter reiterated that the company’s sales:
“Have grown online as our product portfolio has evolved to largely digital offerings, and our talented team has proven success serving customers beyond any physical location, We are grateful to our Microsoft Store customers and we look forward to continuing to serve them online and with our retail sales team at Microsoft corporate locations.”
Porter noted that Microsoft has built a diverse team of staff who can handle the company’s digital/online store transition. The company is confident that the new normal in serving customers will not impact negatively on the company’s growth trajectory.
The lockdown caused by COVID-19 is over but its impacts remain. To thrive in this new world order, businesses must adjust to the new normal of which virtual work (work from home) is a prominent part. Microsoft Corporation, through its decision to take its retail stores virtual, may be creating a framework upon which innovative customer experiences will be built.