One of the world’s biggest tech brands is setting up shop in London’s Oxford Circus. So, what could the opening of Microsoft’s latest flagship store – one of just three in the world – mean for the UK capital?
Microsoft Oxford Circus is set to be a globally recognised retail destination when the tech giant opens its UK and European flagship store in London later this year.
The 15,000 sq ft store at 253‑259 Regent Street, W1, will be located at a prime spot in the heart of London’s West End shopping district, the intersection between Oxford Street and Regent Street. Microsoft has secured the best of both worlds here, with the two streets accounting for more than half of the West End’s annual £11bn retail sales and attracting footfall of more than 600,000 visitors a day. The opening has been long and eagerly awaited – an iconic brand launching on an iconic street.
“Microsoft is the largest and most recognisable brands to deploy in Oxford Circus,” says Paul Souber, head of retail agency London for Colliers International. “And London is without question a global city and its retail offer is unrivalled and unmatched in most cities in the world.”
The store, which is expected to span three floors, will be Microsoft’s third flagship. It launched its New York Fifth Avenue and Sydney stores in 2015. The tech company signed the lease on the Regent Street Grade II listed building, formerly occupied by clothing retailer Benetton, in October 2017, but is understood to have been searching for its ideal London location for several years.
Microsoft’s flagship stores form the rare crown jewels of its bricks and mortar retail strategy, launched in 2009 with the appointment of David Porter, head of Microsoft Stores. Porter has overseen an aggressive expansion of the company’s smaller speciality stores. The Microsoft Store brand opened its first property in 2009 and now has 104 physical stores in the US, Canada and Puerto Rico. The tech giant boasts that 80% of Americans live within 20 miles of a Microsoft Store.
Smart move
But when it comes to its flagship stores, Microsoft has taken an altogether different approach, spending years researching, securing and finessing locations and design. Its New York Fifth Avenue store took five years to bring to fruition.
An agent who was consulted by Microsoft on a number of potential locations in the West End said the company had done an enormous amount of research. Its final decision, the agent added, “was a smart move for them and will be a globally recognisable retail destination”.
Microsoft’s flagships are also part of the trend toward more experiential retail. It wants customers to interact with its products and become immersed in its brand, creating “Microsoft households” with long-term loyalty. To add to its retail experience, it will also offer an education and training programme. In other flagships this has included Minecraft coding classes, Xbox game design workshops and digital training.
“This will be so much more than just a great place to experience all that is possible with Microsoft,” said Cindy Rose, head of Microsoft in the UK, when the new store was announced. “It will be a real hub for the community, helping people explore their creativity through an ambitious programme of workshops and training.”
Of course, Microsoft has also cast an eye at the enormous success of Apple, which has been at the forefront of experiential retail. Indeed, all three of its flagships are located within walking distance of equivalent Apple stores.
Microsoft has remained characteristically tight-lipped about its Oxford Circus store. The planning documents, lodged with Westminster City Council, show it is working on a basement, ground, first and second floors.
There will also be a new entrance on to Regent Street as well as the existing Oxford Street entrance to maximise the location.
Partitions and lifts have been stripped out and there will be an open place design with a feature staircase designed by Gensler. Planning permission was granted in April 2018 but in October it went back to the council for permission on a staircase redesign and changes to store frontage glazing to withstand “crowd loading”.
The prominent Microsoft branding, seen emblazoned across its other flagships, may also be more toned down to fit in with planning rules. The tech company is now recruiting for staff, so a summer opening may still be on the cards.
London calling
While the Microsoft launch is significant for the London retail market, it is also part of an ongoing trend for the city. Marie Hickey, director of commercial research at Savills, says the number of international brands opening their first store in London rose by 27% in 2018 compared with 2017.
In the luxury retail market London was the top global city with a 38% increase in openings in 2018 and 9.6% share, compared with Paris which had a 4.7% share and a 11% dip in openings.
“Things are challenged,” says Hickey. “But the capital still attracts a large number of international tourists and international brands see an opportunity to get into the London market.”
While the rest of UK retail is cast under a cloud of CVA‑related gloom, London, although not immune, is still performing. Analysis from Knight Frank expects it to be the only retail sector in the UK to see positive rental growth in 2019, albeit at 0.9%. Internationally, Savills has placed London as the number one spot for retail “attractiveness” in 2019, with its volume of retail sales, forecast growth, access to international tourists and appeal placing it above New York, Paris and Tokyo as a place for retailers to set up shop.
Richard Griston, partner at Knight Frank’s retail agency, says that while the market may not be what it was in 2017, having a dominant landlord such as the Crown Estate on Regent Street means “it can take a view on income when choosing the right tenants”.
“It’s a cracking deal for the Crown and cements London’s position,” he says.
Colliers’ Souber agrees and says London remains a solid and stable market, despite economic and political uncertainty. He adds that the opening of Crossrail will soon have an enormous impact on the West End, helping to eradicate significant points of congestion.
“Microsoft opening here is a great advert for the city,” says Souber. “People are going to be saying: ‘Meet me outside Microsoft Oxford Circus’.”
Brand new brands in the capital
In 2018, 33 international brands set up shop in London, a 27% increase on 2017, according to Savills. These include:
Allbirds: The San Francisco-based eco-trainers brand opened its first international store in October last year. The brand, already valued at £1bn despite launching just three years ago, has a 16,000 sq ft store at 123 Long Acre, Covent Garden, WC2.
Jimmy Fairly: French eyewear brand Jimmy Fairly opened a modest 344 sq ft store at 63 Regent Street, W1, in June last year. It chose London to launch its first foray into international retail and has 14 stores planned in the UK and three other countries.
Eytys: The uber-cool Swedish trainer and apparel brand opened its first UK location in September, taking 1,000 sq ft at 75 Brewer Street, W1. Chief executive Jonathan Hirschfeld said: “This is a major step for our brand as we establish ourselves as an international player. As one of the world’s capitals of fashion, London was a natural choice.”
A. Lange & Söhne: The German luxury watch retailer opened a 1,377 sq ft boutique at 38 Old Bond Street, W1, in December. It is the brand’s first standalone store in London.
