Microsoft Sets Up Shop Next to Apple With First European Store

(Bloomberg) -- Apple Inc.’s flagship central London retail store gets a new neighbor on Thursday, as Microsoft Corp. opens its inaugural European high-street presence just meters away.

Microsoft has taken over three floors and 2,043 square meters (22,000 square feet) of a historic building on the corner of Regent Street and Oxford Street -- London’s central shopping thoroughfare -- originally designed in 1912, and which since 1996 had housed Benetton Group SpA’s main U.K. clothing outlet.

“As we build our own hardware with Surface and expand our enterprise offerings, we’re finding that a physical location has been really valuable,” Microsoft Chief Marketing Officer Chris Capossela said in an interview. “We’ve had a team working on this for multiple years now.”

Technology giants’ push to open flashy stores to showcase their devices and software has proven to be one of the few bright spots for the U.K.’s ailing retail industry, which has been beset by bankruptcies, store closures and rent cuts. Pressure from online retailers such as Amazon.com Inc. and a rise in costs stemming from the pound’s Brexit-induced weakness are crippling chain stores in particular.

Apple stores are now among the biggest drivers of foot traffic to shopping malls, replacing department stores as the most sought after anchor tenants in new developments. Samsung Electronics Co. leased the anchor store in the upscale mall designed by Thomas Heatherwick that opened in London’s Kings Cross district last year to provide a showroom for its devices.

Capossela said the years of planning to expand to Europe was not affected by observations of Britain’s ailing high streets, but rather from what it had learned by operating stores in the U.S. over the past 10 years.

“We’re not doing a physical retail store because somebody else isn’t,” he said. “It’s really just an opportunity for us to serve a set of customers that want to know what’s going on at our company.”

The new store blends white walls with wooden flooring and furniture, adding floor-to-ceiling video panels, laser-etching stations for product personalization, and a variety of conference rooms for training and education sessions.

Customers can try out Microsoft’s Hololens augmented-reality headset, or pick up a new laptop or charging cable. But video-gamers and fans of the company’s Xbox platform get a large dedicated area just to themselves. A room filled with Xbox One consoles are also fitted with webcams and headsets to host in-store e-sports tournaments, and 98-inch screens dot most walls to entice popular streamers to showcase their presence at the site.

“No other Microsoft store has the gaming lounge that this store has,” Capossela said. “There are gaming experiences here that are completely unique to London.”

The building sits in one of the English capital’s most upmarket areas, Oxford Circus -- the busiest pedestrian crossing in Europe, according to Westminster City Council. It was designed by John Nash, the architect behind Buckingham Palace, which itself is just a short walk away from Microsoft’s new store.

The CMO wouldn’t comment on whether the company planned on opening other stores in the U.K or Europe, or how long a lease it had committed to within the London building.

--With assistance from Dina Bass and Jack Sidders.

To contact the reporter on this story: Nate Lanxon in London at nlanxon@bloomberg.net

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Molly Schuetz

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