What is a brick-and-mortar store?
A brick-and-mortar store is a physical establishment where customers purchase products or services and interact face-to-face with employees. Examples of brick-and-mortar businesses include your local supermarket and department stores.
The brick-and-mortar model is different from online retail, where businesses sell items over the internet. Although online shopping is gaining traction, many consumers may prefer to shop for goods in brick-and-mortar stores.
What are the different types of brick-and-mortar stores?
While brick-and-mortar retailers all have physical locations, they often have different formats and inventories. The brick-and-mortar category includes grocery stores, clothing stores, department stores, specialty stores, drugstores, discount stores and convenience stores.
Each type of store caters to customers in a different way. Convenience stores offer a small selection of essential items. They appeal to shoppers who only need a few things and want to get in and out of the store quickly.
Department stores sell a wide variety of items to help shoppers satisfy a range of needs. Specialty stores focus on particular types of products, often carrying more variations of each item. For example, an art supply store might have a wider selection of paints and brushes than a generic supercenter.
Do brick-and-mortar stores also need an online presence?
Many brick-and-mortar stores are successful without e-commerce. For example, gas stations require customers to go to the physical location to pump gas. The items sold inside the store are chosen for convenience or impulsive purchases rather than online sales.
Some retail stores, such as clothing, home goods and hardware stores, can benefit from offering online shopping in addition to in-person sales.
Many stores offer a hybrid experience where customers can buy online and pick up in-store. This model enables consumers to access a wider range of products and design a more convenient shopping experience.
If you’re considering adding an online store to your brick-and-mortar store, consider your capacity to manage another type of sales. Ask yourself these questions:
- Do your employees have time and space to pack and ship orders?
- How will you handle shipping costs?
- Who will build and maintain the online store?
- What programs will you use to manage inventory?
Ways to promote brick-and-mortar stores
Marketing is essential for many brick-and-mortar stores. Depending on your physical location, foot or vehicle traffic may bring in some customers. It’s also helpful to invest in promoting the business with:
- Attractive, highly visible signage
- Traditional print advertising
- Radio and TV ads
- Online marketing
Digital marketing can be a powerful and cost-effective option. Use paid online ads to reach consumers in your target market or physical location. Build and optimize a website to show up in relevant search results, and create a Google Business Profile for enhanced search visibility. You can also promote the business for free on social media platforms such as TikTok, Facebook and Instagram.
Hiring for brick-and-mortar stores
Hiring is an important part of running a brick-and-mortar business. Your employees can have a significant impact on the customer experience.
A well-defined hiring process can help you recruit the right candidates. Consider these steps to find employees:
- Identify the roles you need. Determine what jobs you need to fill. If you run a small shop, you might only need one or two employees to help you stock shelves, process sales and keep the store clean. Larger stores might need cashiers, stockers, managers, customer service representatives, merchandisers and marketing employees.
- Write job descriptions. Define each role in the store, explaining exactly what each person is responsible for. Explain the required and desired skills or experiences you’d like candidates to have.
- Post job openings. Publish listings on local job boards and in newspaper classified sections. You can also put up signs in the store, or post flyers on bulletin boards around town.
- Interview and hire candidates. Look for people who can create a positive experience for customers.
A skills-based hiring process is often a good option for a brick-and-mortar store. For example, you might look for candidates with skills such as communication, attention to detail and active listening. Then, you can provide training to teach technical skills such as operating the point-of-sale system or maintaining inventory records.
Advantages of owning brick-and-mortar stores
Compared to e-commerce and hybrid stores, a physical storefront has several advantages:
- Allows consumers to browse and test products in person
- Creates an immersive, branded shopping experience
- Provides instant gratification to shoppers
- Satisfies consumers who prefer in-person shopping experiences
- Creates legitimacy for your business with a physical presence
- Gives customers the opportunity to ask questions about the goods or services
- Builds relationships with customers through in-person contact
- Expands opportunities for sales via in-store displays, ambiance and persuasive sales tactics
- Enables you to draw in customers through foot traffic
Disadvantages of owning brick-and-mortar stores
Before you start scouting physical locations for your retail business, note that brick-and-mortar stores also have drawbacks:
- Higher operational costs, including rent, utilities and insurance
- Space limitations determine the size of your inventory
- Hours or locations may not be accessible for some customers
- Customers must spend time traveling to the location
- Requires you to hire and retain staff
Expenses of starting and running brick-and-mortar stores
The upfront financial investment is one of the biggest barriers to starting a brick-and-mortar store. Before you decide to open a store, research the initial costs and ongoing business expenses that come with physical locations. Common expenses include:
- Monthly rent for the retail space
- Required licenses and permits
- Business entity formation fees
- Commercial Insurance
- Signage
- Renovations and repairs to help the space fit your needs
- Decor and lighting
- Shelves, displays, checkout counters and other fixtures
- POS systems, computers, software and other technology
- Marketing and advertising
- Inventory
- Packaging materials, such as bags and tissue paper
- Toilet paper, soap and cleaning supplies for bathrooms
- Employee wages
- Professional services, such as accounting, payroll, cleaning and legal services
- Utilities
The exact amount of money you need to open a store depends on factors including your geographical location, the store’s location within your city and the size of the property. The type of products you carry can also affect costs.
Alternatives to having brick-and-mortar stores
If a traditional retail store doesn’t fit your needs or budget, there are other ways to open a retail business. Some of the most popular alternatives to brick-and-mortar stores include:
E-commerce stores
E-commerce sites enable you to sell your products online, without the time and expense of setting up a physical storefront. Online stores have lower startup costs and minimal overhead expenses compared to brick-and-mortar establishments. However, it may take longer to grow trust and build a customer base.
An online business requires more technical knowledge than a brick-and-mortar store. You’ll need to build a website, install an e-commerce system and troubleshoot technical issues. To drive customers, you’ll also need to optimize the site and run advertisements. If you have the budget, these tasks can be outsourced.
The cost of opening an e-commerce store depends on the model. If you choose drop-shipping, you don’t need to purchase or store inventory. When a customer makes a purchase on your website, you’ll send the order to a third-party supplier that packs and ships the items. To make a profit, you must sell the items at a higher price than the supplier charges you.
Another option is to order, store, pack and ship inventory on your own. Depending on how much inventory you carry, you may need to rent a space for storing and packing orders. You can also choose to outsource warehousing and shipping to a third-party fulfillment center.
Food trucks
If you want to operate a restaurant but don’t have the capital, consider a food truck business. While the small space limits your menu options, a food truck can be an affordable and flexible way to enter the food industry and build a following. You can drive to high-traffic areas and events to reach new audiences. If the business is successful, you can expand to a permanent restaurant location.
Kiosks
Kiosks can help you establish a physical presence in a high-traffic location without the upkeep and expenses of brick-and-mortar stores. A kiosk is a cubicle or an open-fronted structure that allows you to display your products and attract passersby. You can rent a kiosk in a mall or a large retail space.
Kiosks can operate seasonally or year-round, depending on products and sales trends. For example, you might open a temporary kiosk business during the holidays to sell gifts, decorations, holiday food or calendars.
Farmers markets
Many cities hold regular farmers markets where local businesses can showcase their products and services. You can rent a small area, set up a table and sell items directly to attendees.
Farmers markets can be an attractive option if you want a cost-effective way to start a retail business, bring in sales and build relationships with customers. Most charge vendors a small entry fee; they may also limit the types of items you can sell. Markets may only run in the summer months in colder climates, which can limit profit potential.
Pop-up shops
A pop-up shop is a temporary brick-and-mortar store. You can rent commercial real estate for a short time and operate it like a traditional store. It’s a way to build awareness for your business without a long-term commitment.
Mobile retail units
A mobile retail unit enables you to sell goods at different events and locations. These units are typically built into trailers that transform into miniature stores. They often offer lower costs and more flexibility than pop-up shops and brick-and-mortar locations. You can use social media to keep customers up to date on your whereabouts.
Though online sales have taken a certain amount of market share from physical stores, brick-and-mortar retail outlets can still be viable and profitable businesses. By learning how to reach new customers, hire efficiently and create a positive shopping experience, you can create long-term success.
FAQs about brick-and-mortar shops
How can you get funding to open a brick-and-mortar store?
Ways to finance a brick-and-mortar store include business loans, self-funding and investors. Writing a well-researched business plan can help you explain the concept and convince banks or investors that it’s a potentially profitable endeavor. To reduce upfront costs, consider opening a smaller location or offering a limited product selection.
Where do you get inventory for a brick-and-mortar store?
You can buy products for your store from manufacturers, distributors, artists, online suppliers and wholesalers. Pay attention to the wholesale prices; you’ll need to mark them up to make a profit. Some suppliers offer discounts for bulk orders, which can help you increase the profit margin on bestselling items.
