Microsoft might be beating Google at retail. No, really.

November 25, 2013

Google's Wonderlab, between Crate & Barrel and Fossil. (Lydia DePillis/The Washington Post)

The Internet was supposed to have killed physical retail. It's a persistent narrative: Malls are hollowing out, restaurants are taking over shopping strips, and Cyber Monday will soon make Black Friday obsolete. In the age of Amazon, when purchases are just one click away, why does anyone need a store?

All those trends are real. At the same time, however, the biggest tech companies are realizing that they've got a lot to gain from reaching customers in real life. For example, eBay has devised a "digital storefront," like a giant computer in a mall, for viewing products and getting them delivered later. Online-only fashion outlets are staging pop-ups in tony D.C. neighborhoods. And now Google has opened temporary shops in six locations around the country for the holidays, in an admission that even the most quintessential Internet company needs some square footage when it comes to selling actual stuff.

In fact, it's even more true of electronics. When you're locked in a battle for customers with items that are actually very similar — screens of various sizes, loaded with different operating systems — placing them in a physical environment is more important than ever. And putting your phone, tablet or laptop next to a bunch of others at Best Buy won't cut it, either. In a world where consumers define their identity through their gadgets, gadget peddlers need to explain their own.

So what are the strategies top tech companies are using to interact with customers at the retail level, and do they work? We visited Washington-area stores from Microsoft and Google over the weekend to find out.

——

Tech retail, it turns out, is pretty hard to get right.

Microsoft actually pioneered the concept back in 1999 — a time when its public image needed some burnishing — with a giant, glitzy showcase in downtown San Francisco. Closely modeled after the SonyStyle store in the same marquee shopping center, Salon called it a "Pottery Barn for the computer set," with experiential mini-neighborhoods where people could learn how Microsoft products might help them do everything from run a small business to plan a wedding.

It didn't work — the store closed in 2001 after lackluster sales. The decade brought another couple failures; Dell and Gateway both tried and subsequently abandoned retail strategies, going back to distributing through mega-stores such as Best Buy. For everyday equipment that doesn't define a consumer's identity, being sold next to a bunch of others was just more convenient.

Apple changed that. Unsatisfied with the treatment big-box retailers were giving his products, Steve Jobs started withdrawing them, and brought on Ron Johnson from Target to design a store specifically for Macs. The first one opened in Tysons Corner, Va., in 2001, and the network has since expanded to 417 locations worldwide, each with a trademarked sleek design and tightly controlled script for how employees interact with the people filtering through. The stores defined Apple's brand and became sales machines — inspiring no end of mimicry, including by Johnson himself when he moved on to J.C. Penney (with disastrous results).

Microsoft, though, learned quick. In 2009, to coincide with the launch of Windows 7, it restarted its retail strategy with stores almost indistinguishable from Apple's: The long, sleek tables with gadgets on stands, the shining logo above the entrance, the tech support bar in the back of the space (initially called a "Guru Bar" in response to Apple's Genius Bar). They poached Apple's retail employees, brought on its real estate strategist as a consultant, and chose locations near Apple stores — sometimes right across from them.

Microsoft declined to break out sales revenue generated by the stores, but it's at least been significant enough to justify the company's commitment; it opened 51 new stores in 2012 and is looking for more. Even if people don't walk out with computers, executives explain that the stores are more about revivifying a brand that's become more identified over the years with corporate enterprise software than objects of consumer adoration. And it also helps to learn what the consumer wants.

"The biggest single thing we've learned from the stores is it's helping us to transition from thinking about our customers to thinking like our customers," Microsoft Chief Operating Officer Kevin Turner said in 2011.

The branding element was on display this past weekend in Tysons Corner Center, the day after the new XBOX One went on sale. A crowd of people had lined up in the narrow walkway waiting for a chance to try out the gaming console in front of its larger-than-life, astonishingly realistic display, while flocks of green-T-shirted floor staff — sharply differentiated from Apple's red T-shirts — milled around keeping order.

"Yes! That was awesome!" a dreadlocked game-master cheered, as one girl triumphed in her game of Fantasy Football. Security guards waved away onlookers trying to take pictures.

People showed less interest in the tablets, laptops and phones on display in the rest of the store — even the Makerbot 3D printer that stood as a motionless objet d'art. Nevertheless, it's a good place to get used to the still-new Windows 8 and the lines of touch-screen laptops that support it. Microsoft's retail approach has a tougher challenge: Unlike the Apple store, with the exception of the hybrid Surface tablet, it has to sell its main product through other companies' platforms, and an operating system isn't as big a draw as a beautiful new piece of hardware.

Without a retail store, the popularity of a hit product like the XBOX would never have brought people in to see it. With the "One Microsoft" strategy, that's the point.


XBOX mania! (Lydia DePillis/The Washington Post)

——

Google's foray into the physical world has been rumored for almost a year now, despite management's protestations that it wasn't necessary. Its first actual step, though, is very tentative.

Walk by the "Wonderlab" on the first floor of the Annapolis Westfield Mall, at the intersection of Fossil and Crate & Barrel, and you just might miss it. Seven T-shirted staffers — light blue this time, accented by gray scarves studded with festive Android pins — leaned on iceberg-like benches, never straying from the cream-colored mat delimiting the space. Backlit tabletops set off the brand-new Nexus tablets and Chromebooks. There's no frenzy; people drift through to swipe at the gadgets, which don't have much to offer as far as diversion. A tablet is a tablet, and the Chromebook is special only for its low price — $270 — and lack of features.

In the place of a blockbuster new product — like, say, Google Glass, which wasn't on display — the Wonderlab had a giant white orb that people were supposed to enter, after donning cartoonish winter clothing from a box outside, and goof off for the cameras as fake snow blew around them. People could collect a small blue card that put them in the Snow globe queue if they swiped it on the back of a Nexus and entered their contact information. Swipe again, and the videos are uploaded to Youtube, rendered in slow motion, to share with all the world.

A sign at the entrance cautions participants that the footage may be used in Google advertising. "If you do not want to be recorded, please sit behind the cameras," it read. The warning may have been a courtesy, but just served as a reminder of how much data Google collects on its users through less up-front means.

The snow globe was broken when I showed up; a technician had arrived to fix the snow blower. I asked one of the employees what it had to do with Google, exactly.

"Nothing, it's just a fun Google-like thing," he answered. Unlike the Microsoft and Apple employees, these staffers were contracted from an outsourcing agency called Marketstar. They knew enough about the products to explain them, but probably wouldn't be able to fix something that went wrong, or convincingly communicate why they're better than the competition.

As a retail experience, the Wonderlab failed in two ways.

The first is a branding problem. Google cut a deal with Westfield, so with the exception of the Bryant Square location in New York, they're all sequestered away in dull suburban malls rather than centers of urban activity where they might've made more of an impression — like, for example, Washington's Union Station. The Annapolis version seemed more like a speedbump in the mallscape rather than a genuinely interesting new presence that could communicate the meaning of "Googliness" to the masses, and associate that powerful brand with the stuff it's got for sale.

The second is a product problem. Despite the snow globe gimmick, Google just didn't have much to show off — not even its new Moto X phones. The display might've directed a few people towards the mall's Best Buy, where they could take a Nexus or a Chromebook home with a $25 coupon. But if they were in a mall with a mind to buy a tablet or basic laptop, they might've done that anyway.

If Google really wants to use the real world to push product, it's going to need to think bigger. At this point, it's better at controlling other companies' marketing than its own.

Lydia DePillis is a reporter focusing on labor, business, and housing. She previously worked at The New Republic and the Washington City Paper. She's from Seattle.
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