Brick-and-Mortar
What Is a Brick-and-Mortar Business?
A typical street-side business that delivers products and services to consumers face-to-face in an office or store that the firm owns or rents is referred to as "brick-and-mortar." Brick-and-mortar businesses include the neighborhood grocery shop and the local bank. Because web-based firms like Amazon.com Inc. (AMZN) often have cheaper operational expenses and better flexibility, brick-and-mortar enterprises have found it difficult to compete.
TAKEAWAYS IMPORTANT
A conventional business with a physical shop or stores where consumers may explore and make purchases in person is referred to as brick-and-mortar.
Traditional storefronts have struggled in the digital economy, as web-based merchants like eBay and Amazon profit from cheaper operational costs and greater consumer flexibility.
To compete with online-only enterprises, many conventional brick-and-mortar businesses have built parallel, connected web-based businesses.
Similarly, the long-standing and essential brick-and-mortar model has had an influence on several formerly web-only businesses that have developed physical stores to capitalize on conventional retail's benefits.
Getting a Glimpse of Brick-and-Mortar
Many people still prefer to explore and purchase in a real store. Consumers may chat with personnel and ask inquiries about items or services in brick-and-mortar establishments. Consumers may try out a product like a video game or a laptop at Best Buy, or have lunch in Nordstrom's café while shopping. When customers make a purchase at a brick-and-mortar store, they get immediate pleasure.
Some customers are hesitant to use credit cards or other means of payment when shopping online. Customers frequently connect legitimacy with a physical location, since having a real presence may develop a sense of confidence. However, there are costs involved with leasing the building, workers to execute transactions, and utility fees such as electricity, heat, and water for firms that operate brick-and-mortar stores.
Some customers are hesitant to use credit cards or other means of payment when shopping online. Customers frequently connect legitimacy with a physical location, since having a real presence may develop a sense of confidence. However, there are costs involved with leasing the building, workers to execute transactions, and utility fees such as electricity, heat, and water for firms that operate brick-and-mortar stores.
Sales in Physical Stores
In their quarterly and yearly SEC-regulated financial reports, publicly-traded retailers often disclose same-store sales, or comparable-store sales, on a per-store basis. These financial measures compare the success of a retail chain's established stores over a specific time period. These numbers are used by brick-and-mortar companies such as restaurants, grocery shops, and general goods stores to analyse their financial performance and drive corporate decision-making about their establishments.
The U.S. Census Bureau publishes retail sales numbers monthly and e-commerce retail sales figures quarterly on a macroeconomic level.
Non-store retailing, which includes activities such as direct (door-to-door) selling and e-commerce, generated $667 billion in sales in 2019. 1
IMPORTANT : Many brick-and-mortar retailers have struggled to compete with web-based stores like Amazon.com; yet, organisations like Costco flourish by providing members with options like buy online, pick up in store.
An Example of a Successful Brick-and-Mortar Store
With all of the negative press surrounding brick-and-mortar stores, as well as Amazon's popularity, one might conclude that the brick-and-mortar business model is doomed. Costco, on the other hand, is defying the trend.
Costco Wholesale Corporation (COST) is a membership store that charges customers an annual fee ranging from $60 to $120. Being a member provides consumers with cost savings and service benefits. Costco has about 100 million members, with 90 percent of them renewing their membership every year.
In a customer poll conducted by Verint Systems, Inc.3, Costco beat out Amazon as the #1 Internet retailer.3 Costco sells 10,000 goods on its website and allows customers to order online and pick up in store, making it an appealing alternative to Amazon for its members.
Particular Points to Consider
With the advent of electronic commerce (e-commerce) and online enterprises, many people are questioning the future of brick-and-mortar businesses. In order to capture the benefits of each business model, it is becoming increasingly common for brick-and-mortar enterprises to simultaneously have an online presence.
Customers may purchase goods online and have them delivered to their house in as little as a few hours at certain brick-and-mortar grocery stores, such as Safeway. Offshoot terminology like "click and mortars" and "bricks and clicks" have sprung up as a result of the growing popularity of these hybrid business models.
Many conventional businesses are shutting storefronts throughout the country, including Gymboree, The Limited, Radio Shack, and Gamestop, despite relatively steady expansion in the larger brick-and-mortar scene. Other retailers, such as Sears and Payless ShoeSource, have filed for bankruptcy.
However, numerous significant online e-commerce firms have opened physical facilities to capitalize on the benefits of conventional retail, demonstrating the value of the brick-and-mortar model. Amazon.com Inc., for example, has created physical locations to help sell its items and improve customer relationships. Aside from operating a cashier-less grocery shop in Seattle and hundreds of other stores around the country,
In addition to bookstores around the country, Amazon paid $13.7 billion acquiring grocer Whole Foods in 2017, a move that many experts believed demonstrated Amazon's urgent desire to bolster its physical retail footprint.
However, other company types, such as those in the service industry, such as hair salons, veterinarians, petrol stations, car repair shops, restaurants, and accountancy firms, are more suited to brick-and-mortar formats. It's critical for brick-and-mortar businesses' marketing strategy to emphasise the benefits of shopping in a real store.
The retail market has clearly shifted, and to avoid becoming the next Sears or Payless, brick-and-mortar companies will need to adapt to the ever-changing electronic scene.
