What is Brick-and-Mortar Retail & Should I Have My Own Store?

Retailer opening his store

A brick-and-mortar store is a retail location that customers can visit to view products in the flesh.

Brick-and-mortar stores can be in shopping malls, town centers, on a street in a city, or the outskirts of a small community. The store sells something—like clothing or groceries—for customers to drop in, view, and purchase.

Despite the COVID-19 pandemic, the growth of physical retail stores continues to grow. Data shows global retailers generated $4 trillion in 2020 through their physical stores. That’s set to rise to $6.5 trillion by 2024.

This guide shares how the brick-and-mortar business model works, examples of successful retailers with their own shops, and how to open your first brick-and-mortar store. 

What is brick-and-mortar?

A brick-and-mortar store is a retail location where business owners showcase their products using a physical storefront. Customers can visit the store to browse items, talk with sales representatives, and try on items of clothing. 

Popular types of brick-and-mortar stores include grocery stores (like Whole Foods), specialty stores (like CVS), and department stores (like Macy’s).

How do brick-and-mortar stores work?

A brick-and-mortar store operates by selling products to customers who drop in. An attractive storefront (maybe with visual merchandising displays) draws in passersby. Here’s what that can look like:

Once customers enter the store, they’ll be able to view, touch, and interact with the products they’re thinking of buying. There may be an option to try on the item in the store’s fitting room.

Sales assistants are on hand to guide customers through that process. They’re able to greet customers, answer questions, and check the availability of stock. The end goal is to bring a customer to the checkout desk to complete their purchase. 

Brick-and-mortar vs. ecommerce

What are the differences between brick-and-mortar and ecommerce? What are the strengths of each? The weaknesses? Let's learn about both.

The pros of brick-and-mortar

Reach customers who don’t shop online

It’s easy to fall into the trap of believing that everyone uses the internet. Granted, the internet has a global penetration rate of 59.5%—but there are still potential customers you could alienate by going ecommerce-only.

A third of shoppers prefer shopping at brick-and-mortar stores because they’re able to touch and interact with the items they’re thinking of purchasing. Another 61% said they’re more likely to spend more when shopping at a physical location. 

Local businesses might seem outdated, given the popularity of the internet. But having a brick-and-mortar store to coincide with your ecommerce store targets both online and offline shoppers. 

Retail offers us a market that we wouldn’t access online. There are just certain demographics that prefer to shop in person—such as older customers, customers who are unsure of their size, customers who are looking for something super specific, etc.—and if we were only online we would be missing out on all of those opportunities to serve those customers.

Omnichannel commerce

There is no clear-cut answer to the question “Where do your customers shop?” Ecommerce could form a large percentage, as with brick-and-mortar. But there’s a high chance people combine the two.

Retailers experience a 190%+ increase in revenue when they sell on more than one channel. Some 56% of shoppers visit a store before making a purchase online.

Retail will never die, because it’s always going to change and evolve based on what consumers need. The key is to be resilient.

One way to combine offline and online shopping is “click-and-mortar” or phygital retail. In this case, people order the item through an online retailer and head to their physical store to collect the item. Some 59% of consumers are interested in this buy online, pickup in-store (BOPIS) shopping option.

Earl of East is one retailer that used click-and-mortar to keep its physical store open during the pandemic. Customers downloaded a mobile app to order their food and drinks. The store was open every weekday between 10 a.m. and 6 p.m for collection. 

Deliver better customer experiences

Did you know that 72% of millennials would rather spend money on experiences than on material items? It’s one reason why brick-and-mortar stores still thrive. 

Casper is one retailer that prioritizes customer experiences with its brick-and-mortar stores. It launched The Dreamery back in 2018. Busy New Yorkers could visit the store and pay $25 for a quick nap in a Casper bed. 

While you don’t have to go to this extent, in-store shoppers still get the personalized experiences that ecommerce stores can’t always deliver. 

“Predominantly an ecommerce business, we opened our first brick-and-mortar store last year, explains Candice Small, Founder of Candid OwlWhilst successfully selling our product online, we were increasingly receiving requests from our customers to open a showroom/retail unit to enable them to visit and experience our products in person.”

“Our customers can now touch, feel, and experience our fabrics in person, to select their bespoke lampshades with confidence that they will suit their home decor.”

The pros of ecommerce

COVID-safe

The number of brick-and-mortar retail stores in the US spiraled downward when the COVID-19 pandemic was declared—from almost 460,000 in 2017 to little over 328,000 in 2020. Legacy department stores also took a hit. Macy’s closed 125 retail locations; Nordstrom permanently shut 15 full-line stores; JCPenney almost went bankrupt.

Number of brick and mortar stores chart

The greatest advantage of having an ecommerce store is that it’s COVID-19 safe. The emergence of new technologies like virtual fitting rooms work to deliver the same in-store shopping experiences that people love, safely (and online).

Reach customers anywhere

Another downside to having a brick-and-mortar store is you only get to serve the people who live within close proximity to that location. That’s less than ideal if your target customers live outside major cities or are distributed globally. 

It was important for us to be able to reach people who live in the countryside and do not have access to many shops—and indeed, the majority of our customers live in remote locations.

Fewer expenses and less overhead

Ecommerce stores have the advantage over brick-and-mortar when it comes to overhead. Rent is being called the new customer acquisition cost, but there are still a whole host of expenses that come with opening a physical store. Rent, staff costs, public liability insurance, and hardware top the list. 

Ecommerce-only, however, has web hosting and CMS platform costs to contend with. Plus, if you’re storing physical products in a location before they’re shipped out to customers, location doesn’t really matter. You can often get cheaper storage units out of town that cost a fraction of each month’s rent for a storefront on a busy street.

Retailers should think of physical store investments as they have traditionally considered media investments—as a vehicle for customer acquisition, rather than purely as a distribution venue for product.

Types of brick-and-mortar stores

Department stores

Saks, Sephora, and Nordstrom are all examples of brick-and-mortar department stores. However, the value of in-store sales inside department stores has been declining steadily since its peak at the turn of the century—down from $230 billion in 2000 to $134.7 in 2018.

Specialty stores

Brick-and-mortar businesses like Home Depot, CVS, and Petco all specialize in one product—be that home improvement items, cosmetics, or pet food. In most cases, shoppers visit specialty stores with an item already in mind. 

Grocery stores

Grocery stores are another example of brick-and-mortar retail. Brands like Walmart, Trader Joe’s, and Costco have bases in most states.

Data shows that the average person makes 1.6 shopping trips to physical grocery stores every week. It’s the primary in-store shopping location for almost half of all customers—hence why brick-and-mortar grocery stores generate $6.22 trillion every year in the US alone.

Convenience stores

Convenience stores accounted for the bulk of all brick-and-mortar retailers in 2020, with more than 150,000 locations across the US. Those stores—including 7-Eleven and Casey’s—made $648.8 billion in revenue.

Examples of brick-and-mortar stores

Wildling

Wildling is a German shoe retailer that opened its first brick-and-mortar showroom last year. It uses Shopify POS, which fully integrates with its ecommerce platform, to show real-time stock availability, manage inventory, and track orders. 

Since using this setup for its first brick-and-mortar location, Wildling saw 50% more first-time shoppers in its physical showrooms.

Beauty Heroes

Beauty Heroes was a successful ecommerce retailer that wanted to open its first brick-and-mortar store. It combined the two channels—online and offline—using one single point-of-sale (POS) system. 

The launch of its first brick-and-mortar store was a success. It saved hours reconciling customer information across both channels. That’s valuable data it can use to retarget and analyze. 

Neighborhood Goods

An increasing number of direct-to-consumer (DTC) brands are partnering with brick-and-mortar retailers to get their consumer packaged goods in front of foot traffic.

Neighborhood Goods is one example of this in action. Its Austin brick-and-mortar store currently stocks a range of CPG brands, including BeHave, Just Water, and Chop Chop. It has plans for expansion into further locations later this year.

Burberry

Luxury retailer Burberry opened its first brick-and-mortar store in Shenzhen, China, last year. But unlike most retailers, it didn’t open the store with the vision of selling more merchandise. Instead, it prioritized delivering immersive retail experiences for its customers.

Its WeChat mini-program incentivizes customers to share their experiences on social media in return for social currency that can be redeemed for exclusive content. This gives the brick-and-mortar store an online presence, too. 

Burberry’s social retail store in Shenzhen is a place of discovery that connects and rewards customers as they explore online and in-store. It marks a shift in how we engage with our customers, and we can’t wait to share this innovative experience with the world.

Marco Gobbetti, CEO, Burberry
Burberry AR example
Source

How to open your first brick-and-mortar store

So now that you understand brick-and-mortar, let's walk through seven steps you can take to open your first physical location.

1. Find the right location

It’s tempting to put an offer in to rent a storefront in a busy shopping district. More passersby means more retail sales, right? Not necessarily. There are various factors you need to consider when choosing the right space for your store:

  • Where your customers are. In which state, city, or town do you have the most customers? Use analytics features on your ecommerce store to see where most of your customers live. You could also check shipping information for popular locations. 
  • Traffic. Do many people pass by the store? Rent will likely be cheaper if your brick-and-mortar store is on a back street, but you’ll need to spend more on advertising to direct foot traffic on the main street in your direction.
  • Competitors. How many retailers have their own brick-and-mortar stores selling similar products? Reference USA can show you that data to help you determine your first brick-and-mortar location.
  • Ease of access. Is there parking nearby? Some 77% of shoppers say being able to find an open parking spot is their biggest frustration.

Footwear retailer Rothy’s has five brick-and-mortar stores across the US. CEO Stephen Hawthornthwaite explains how those locations “are located in cities that have a healthy blend of both existing and potential new customers.

“From there, we look for a neighborhood that’s full of character, walkable, and offers a mix of retail, restaurants, and cultural activities. We launched Rothy’s in 2016 with comfortable shoes that didn’t fall short on style, and walking will always hold a special place in our hearts.”

Hawthornthwaite continues: “Lastly, Rothy’s community is at the heart of what we do, and we prefer to open stores in neighborhoods that have a strong, established community presence that draws people to the area and encourages them to stay a while.” 

2. Choose a point-of-sale (POS) system

The next step in opening a brick-and-mortar store is to choose a POS system. This is the machine that will allow you to take payments from in-store shoppers. 

Platforms like Shopify POS accept most payment methods—including those made by mobile apps and credit cards.

The best part? If you’re opening the store to coexist with your ecommerce store, Shopify POS works seamlessly across the two. The in-store technology keeps you updated with stock levels, helping to manage inventory across various sales channels. You’ll also be able to offer click-and-mortar services (like buy online, pickup in store).

3. Hire and train retail associates

Retail associates are the face of your store. They’re the first point of contact for any in-store shoppers who need assistance with a product they’re thinking of buying.

Put out a job advertisement to find your first retail associate. Their day-to-day jobs will include:

  • Greeting customers and assisting them with their purchase
  • Processing payments using your POS system 
  • Handling in-store returns and exchanges 
  • Creating visual merchandising displays to attract passersby 
  • Promoting brand loyalty programs 

Once you’ve found the right person to help you service local customers, invest time into training them. Remember: these retail assistants will be the face of your new brick-and-mortar store. Bring them up to speed on your company values, how to use your POS system, and the type of experiences you want shoppers to leave with. 

4. Manage inventory

Inventory management is the process of recording which items you have available for sale.

Research shows that retail inventory is accurate just 63% of the time. Retailers often get stumped, selling out-of-stock items if they’re not managing inventory that’s being sold through various channels.

Managing inventory is notoriously difficult. It’s a balancing act between having too little stock (and therefore having nothing to sell) and having too much stock (that either spoils, goes out of style, or takes up too much space in your store).

Keep track of in-store inventory by combining it with your ecommerce stock. Shopify, for example, shows stock levels of each item as soon as it’s sold either online or in-store. 

5. Experiment with pop-up shops

Pop-up shops are a superb way to experiment with brick-and-mortar. Instead of committing to a year-long lease, other retailers with their own storefront lend it to newer companies. 

DTC brand Gymshark experimented with its own pop-up store in London last year. In a bid to increase product sales and deliver excellent experiences, Gymshark offered free fitness classes to anyone who visited the location. They repeated the pop-up in locations around the world—including Toronto, where it sold 90% of its inventory on the first day. 

Birchbox also opened its first pop-up shop to experiment with brick-and-mortar. It hosted pop-ups in various locations across the US and set up a permanent shop in its most popular location: New York. 

6. Make the store COVID-safe

It’s no secret that COVID changed the way people shop. For those who feel confident heading in-store, the vast majority feel safer when retailers put precautions in place to reduce the risk of infection. 

Amongst those include:

  • Hand sanitizer on entry
  • One-way systems for entering and leaving the store 
  • Limited numbers and scheduling shopping times
  • Self-checkout machines and no-contact payment
  • Click-and-collect services (like curbside pickup)
  • Virtual fitting rooms to try on items without touching them

7. Merge in-store shopping with ecommerce

We’ve briefly touched on the fact that you can use your physical presence to power online sales. Omnichannel retail—which combines the two shopping channels—is becoming the norm, not the exception. Some 73% of customers use multiple channels to shop.

The simplest way to do this is by collecting your customers’ email addresses when they shop in-store. You can use this information for future retargeting, either pushing them back to their local store or to purchase online.

Think about encouraging in-store shoppers to share their purchases with friends, too. Recommendations from friends and family are the most credible forms of advertising. Get people talking about your store by rewarding them for doing so. Baku Foods does this with its omnichannel retail strategy:

Get a POS system for your brick-and-mortar store 

It’s clear that brick-and-mortar shopping experiences aren’t going away. Retailers need to think about the location of their stores, how they’ll manage inventory, and how they’ll make customers feel safe shopping post-pandemic.

Get started with Shopify POS

Take in-store payments from a shoppers’ mobile wallet, credit card, or debit card in one tap. Collect their information for future targeting, and manage inventory levels across both offline and online retail.

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