Microsoft will open its first retail location in Canada at Yorkdale, the Star has learned.

On Tuesday, the technology giant announced it would begin selling its new Surface tablet later this year, to compete with Apple’s iPad.

Building permit notices reveal Microsoft has also been approved to build a store in the Yorkdale shopping centre.

Apple already has a retail location at Yorkdale, one of 23 across Canada. Microsoft has 25 stores in the U.S. – six in California.

More: Microsoft Surface opens two fronts in Apple tablet war

The move ups the ante in the battle between technology giants for a piece of the increasingly crowded tablet market, which includes Research In Motion’s BlackBerry Playbook, Amazon’s Kindle and tablets running Google’s Android operating system.

Microsoft officials said Tuesday the Surface would only be sold through Microsoft channels later this year. Canadians will be able to test drive one at Yorkdale when the retail store opens.

Microsoft and Yorkdale officials declined to comment.

The design of the Microsoft stores in the U.S. incorporates many of the elements that made Apple stores a hit – gleaming wood floors, lots of glass and products to sample. Microsoft has added big comfy chairs and benches to the décor in the U.S. locations.

At Apple stores, customers stand at counters featuring tethered Apple products.

Jason Dubroy, vice president, shopper marketing, DDB Canada, said the Microsoft move isn’t surprising, given that malls still draw crowds, including Baby Boomers, who still control about 60 per cent of all dollars spent in Canada.

While many are savvy online shoppers, others prefer the look, feel and service of a physical shopping environment.

But Dubroy said Microsoft is late to the game, both in the tablets and bricks-and-mortar stores.

“They will need to be able to differentiate their experience proposition quickly… or they won’t see the sales-per-square-foot traction they will need to justify expansion.”

“I think a retail presence is a logical next move,” said John Gerzema, executive chairman of BAV consulting. “Microsoft has gained a lot of consumer momentum over the past year with popular products like Kinect (for Xbox 360) and now, tablets.

“Among Canadians in our Brand Asset Valuator (BAV) surveys, Apple is seen as trendier and more progressive. But Microsoft outperforms Apple on being more trusted and caring for customers. The challenge of course, will be to define a retail experience that stands apart from Apple.”

The Apple store design was revolutionary when it was launched in 2001 as a spare and serene environment for customers to test-drive Apple products. It was conceived by Ron Johnson, the man behind the bubbly Target brand, which is set to enter Canada in 2013.

Johnson is currently struggling to revive the fortunes of discount fashion retailer J. C. Penney in the U.S.

Yorkdale is in the process of a $220-million expansion that will add more than 145,000 square feet and 40 new stores to the existing 225 stores by the end of this year.

The renovation will include an extra level of parking and renovations to Holt Renfrew and The Bay. Tory Burch and J. Crew are already open. Ann Taylor and LOFT are on the way.

Chipotle and Vancouver-based Joey Restaurant have also applied for permits to build in the mall.

Next week Yorkdale officials are planning to announce several first-to-market and international retailers opening at the shopping centre as part of the expansion.

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In 2005, Yorkdale Shopping Centre completed a $110-million expansion, which drove customer traffic and sales volumes higher than any previous year.

Best Buy spokesman Christopher Bennett said that increased competition through standalone retail stores such as Apple and Microsoft helps drive sales in general because it raises awareness among consumers.

“Microsoft and Apple are both valued partners. We probably retail more of their products than anyone else in Canada,” said Bennet.

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