What Are Brick-and-Mortar Stores?
The term brick-and-mortar describes a traditional business setup that operates from physical storefronts where customers can shop and engage face-to-face. Local grocery stores and neighborhood banks serve as everyday examples of these types of businesses.
Brick-and-mortar businesses have faced challenges in competing with online giants like Amazon, which benefit from lower operating costs and higher flexibility.
Key Takeaways
- Brick-and-mortar stores offer in-person shopping where customers can physically browse and purchase products.
- These stores struggle in the digital economy where online retailers enjoy lower overheads and greater customer flexibility.
- Many traditional storefronts have adapted by creating online counterparts to stay competitive.
- Conversely, some web-only companies have opened physical locations to leverage the advantages of traditional retail.
Understanding Brick-and-Mortar Stores
Many customers still prefer the tactile experience of shopping in a physical store. In brick-and-mortar settings, consumers can interact with store staff, ask questions, and physically examine products. For example, shoppers can test gadgets at Best Buy or enjoy a meal at Nordstrom’s cafe. These stores also offer instant gratification with immediate product ownership upon purchase.
Some people are wary of online transactions due to concerns about security and prefer the perceived legitimacy of physical storefronts. Nonetheless, brick-and-mortar operations incur significant costs, such as building leases, staff salaries, and utility expenses.
Brick-and-Mortar Store Sales
Retailers often report same-store sales in their financial disclosures to allow performance comparison of established outlets. This metric is crucial for assessing the financial health and guiding corporate decisions.
At a broader economic level, the U.S. Census Bureau provides monthly retail sales figures and quarterly e-commerce reports. Despite competition from online retailers like Amazon, some physical stores like Costco continue to flourish by offering niche services such as online order pickups.
A Shining Example: Costco
Contrary to the negative perception surrounding brick-and-mortar stores, Costco demonstrates a successful blend of physical and digital retail. Members enjoy cost savings and additional benefits in exchange for an annual membership fee. Costco, with over 118 million members and a 93% renewal rate, even outperformed Amazon in a consumer survey. Their strategy includes selling online and offering in-store pickup options.
Types of Brick-and-Mortar Stores
Certain store types remain resilient due to the advantages of a face-to-face shopping environment:
- Convenience Stores: Rely heavily on impulse purchases which online platforms can’t replicate.
- Groceries: Allow customers to inspect products and take them home immediately.
- Specialty Stores: Cater to specific needs, like hardware and books, though facing online competition.
- Department Stores: Offer varied product ranges but are vulnerable to online business.
Pros and Cons of Brick-and-Mortar Stores
Pros
- Offers a personal shopping experience.
- Better suited for products needing physical inspection.
- Effective for services like haircuts or vehicle repair.
Cons
- Higher operational costs including rent and staffing.
- Limited to local customer bases.
- Infrastructure maintenance costs.
Adapting in an Evolving Retail Landscape
Many brick-and-mortar shops now operate hybrid models, combining physical stores with online platforms. This trend extends to grocery chains like Safeway that deliver directly upon online orders. The surge in such hybrid models has created terms like
Related Terms: e-commerce, retail sales, traditional retail.
References
- The Business Research Company. “Ecommerce and Other Non-Store Retailers Global Market Report 2023”.
- Costco. “2022 Annual Report”. Page 5.
- Verint. “Costco, Amazon, and Apple Take Top Spots in Retail Customer Satisfaction Survey”.
- Whole Foods Markets. “Amazon to Acquire Whole Foods Markets”.
- Statista. “Number of Retail Establishments in the United States From 2015 to 2022”.
