Today we’ll dig deep into the world of brick-and-mortar retail. What is Brick-and-Mortar? You already know part of the answer. Every time you shop in a physical store, you experience what brick-and-mortar is all about, firsthand.
But, there’s more to it than the customer’s experience.
Brick-and-mortar retail is ever-evolving. Today’s physical retail stores are a far cry from the traditional B&M storefront — and retailers of tomorrow have even more “in store”. (Pun intended…)
In this article:
- What is brick-and-mortar?
- Brick-and-mortar retail vs eCommerce
- Point of Sale software at brick-and-mortar retail
- The 7 types of brick-and-mortar stores
- Best practices for brick-and-mortar business success
Let’s dive in.
What is Brick-and-Mortar?
A brick-and-mortar is a business that operates from at least one physical location that customers can visit. (as opposed to exclusively online). The storefront is called a brick-and-mortar store.
Traditionally, brick-and-mortar retail stores were THE way to do business. Customers visit the location, choose the products they want, and a store clerk is there to assist and complete the transaction.
The 5 Key elements that define a brick-and-mortar store:
- Visible and physically-accessible inventory
- Standalone, sometimes interactive, promotional displays
- Helpful staff to support the customer during their shopping experience
- Signage and a physical layout to keep customers engaged and moving forward
- An atmosphere that’s representative of the store’s brand
Today, brick-and-mortar stores often go beyond selling products. Retail stores are expected to deliver unique, branded, customer experiences. More on this later. We’ll tell you what you need to know about operating a successful brick-and-mortar store now and in the future.
Contrast makes it easier to understand. Let’s list the key differences between brick-and-mortar and online retail.
Brick-and-Mortar Retail vs. Ecommerce
Brick-and-mortar and online retail are two very different animals. The biggest difference is obvious: Brick-and-mortar stores exist in the physical world, while eCommerce stores have their webshop online.
Online shops are often based on eCommerce systems like Magento, Shopify, BigCommerce, and more.
The different location types leads to an entirely different experience for the customer — and a different way of doing business for the company.
It’s worth breaking down the key strengths of each, as well as the biggest challenges you’ll face going down either route.
Advantages of Brick-and-Mortar Retail
In arguing the case for brick-and-mortar stores, you have a ton of ammunition.
Modern consumer’s preferences:
- The modern consumer still wants to see and touch many products before they buy them. Allowing this makes customers less hesitant, and more intentional in their purchasing decisions.
- Brick-and-mortar shoppers want personal support they find from the in-store team. The direct way of helping leads to more revenue — and more chances to up or cross-sell to them, too.
- Buying is typically smoother in a well-run brick-and-mortar store than online. In comparison, poor checkout processes are responsible for 21% of online cart abandonment.
- Brick-and-mortar shoppers buy a product and take it home right away. This is very appreciated. Ecommerce shoppers have to wait for the product to be shipped, this is the reason why eCommerce is racing to offer next day delivery.
- Brick-and-mortar shops have much lower costs in shipping and fulfillment. Once a product’s sold, it’s literally out of your hands.
- A Brick-and-mortar store can give innovative, branded experiences to your audience. Live experiences often can’t be replicated online.
- In comparison, you can bring your brand’s digital experiences to life in your brick-and-mortar store. Or offer the online shop at a POS kiosk.
The rise of eCommerce sometimes makes brick-and-mortar retail seem like a thing of the past. But we are all competing for the same customer’s attention in all online channels, think of SEO, PPC on social and eCommerce email marketing.
Yes, the number of US-based eCommerce stores continues to grow. And yes, the number of brick-and-mortar locations continues to shrink. But don’t let these numbers fool you.
The fact is, brick-and-mortar stores still accounted for 84% of total retail sales in 2019, Not everyone is shopping online. There was a radical growth of eCommerce during COVID, but we can’t say it will stay this way.
Really, consumers are nearly split in their preference for on- or offline shopping. We’d actually argue that it’s evolving: As NPR recently pointed out, many online-only retailers are beginning to open physical stores to expand their reach.
Challenges of Brick-and-Mortar Retail
Running a brick-and-mortar store has its challenges. Mostly to do with high operational costs.
Ecommerce stores also cost money to run. But these pale in comparison to those of brick-and-mortar businesses.
What does it cost to run a brick-and-mortar business:
- Cost of renting and maintaining a physical location for your customers to shop in.
- The cost of equipment, displays, and more merchandising costs bring business expenses that online retailers don’t have to worry about.
- Utilities, insurance, licenses, taxes, and other regulatory costs can add up for new brick-and-mortar businesses.
- Staffing is a key cost for brick-and-mortar stores. It’s an investment you can’t afford to skimp on: Without talented staff, your store won’t be able to deliver the expected value to your customers.
Aside from these costs, there are also logistical challenges to operating a brick-and-mortar store, such as:
- The inability to serve customers 24/7 (unlike with eCommerce)
- Potential in-store stockouts, leading to delayed order delivery
- Small local talent pools, making it hard to hire team members
These challenges are unavoidable. They come with the territory of running a brick-and-mortar business. To succeed in the brick-and-mortar retail world, merchants need to keep increasing their skills to best face them.
Point-of-Sale (POS) Software for Brick-and-Mortar Stores
Point-of-Sale (POS) software is an essential part of a brick-and-mortar team’s tech stack.
A store’s POS system is its digital center, facilitating the following processes
- Customer transactions: Purchases, returns, and exchanges are directly completed by employees through the store’s POS system.
- Sales reporting and analytics: POS tools collect transactional data. It brings insight into the store’s business performance.
- Inventory management: As inventory moves from storage to display shelves to the customer, the information is logged in the POS.
- Employee scheduling and management: POS systems track employee hours, as well as on-the-job performance.
- Registration of customer profiles and tracking loyalty marketing (points etc) for customer retention and email marketing follow-ups.
Point-of-sale systems often support payment options. Modern POS systems mobile payments (such as Square and PayPal), credit cards, and other traditional payment methods.
POS software is aided by in-store hardware, including:
- Mobile tablets to allow convenient checkouts for customers and your employees.
- Barcode scanners to streamline transactions.
- Credit card scanners to securely facilitate credit transactions.
- Printers to record transactions and provide receipts.
Static POS systems can also act as the traditional cash drawer.
While there are a number of POS tools available, three of the most popular “new kids on the block” are:
- Shopify POS, which provides a streamlined, customer-centric checkout experience, along with omnichannel store management options.
- Vend POS, which allows for a highly-customizable checkout experience, and supports a number of add-ons and integrations.
- Square POS (one of Square’s eCommerce tools), which makes omnichannel sales possible for brick-and-mortar stores
7 Common Types of Brick-and-Mortar Stores
Not all brick-and-mortar stores are the same. The most successful stores follow their “retail formula” to the letter. It describes exactly how the store works. But the starting point is the type of brick and mortar store.
Some are smaller, with a specific selection of products. Other, larger stores sell items from multiple categories. Some sell luxury items, others sell more affordable goods.
Here, we’ll take a quick look at the most common types of brick-and-mortar retail stores, explaining the key aspects of each as we go.
1. Department Stores
Department stores are made up of multiple departments, each offering products revolving around a specific need or theme.
A department store offers a little something for everyone.Source WinG CC BY-SA 3.0
Typical departments within these retail stores include:
- Clothing and Accessories
- Home Decor jewelry, appliances, electronics, home decor
…and the list goes on.
This variety allows department stores to generate a ton of business from customers coming in with various needs.
2. Specialty Stores
Specialty stores sell products related to one specific theme or consumer need.
A few examples:
- Hat stores
- Sporting goods depots
- Jewelry stores
- Mattress outlets
Because specialty stores are so niched-down, they cater to a more focused audience — and are able to deliver more laser-focused value.
3. Convenience Stores
Convenience stores are small, local shops that sell “everyday” products, basic necessities, and impulse items, such as:
- Milk and eggs
- Alcohol and cigarettes
Convenience stores are the perfect pit stop for customers on the go — which all but guarantees foot traffic throughout the day and night for store owners.
4. Grocery Stores & Supermarkets
Grocery stores and supermarkets typically focus on selling food and food-related items, but often sell household necessities and consumables, as well.
Fresh produce is just one section of most grocery stores.
One of the major benefits of running a grocery store is the ability to generate regular, frequent business from loyal customers. Since you offer products they need on a routine basis, they’ll always have a need for your brand.
Drugstores offer more than convenience stores, but less than grocery stores and department stores.
And, though not technically a “specialty store”, drugstores typically focus on selling health and beauty products.
This added focus on necessary health-related equipment makes local drugstores a go-to spot for those in need of care.
Superstores are essentially a combination of all the types of brick-and-mortar stores we’ve discussed thus far.
Source MattWade (CC BY-SA 3.0) / Walmart’s Supercenters are the definition of “superstore”
Superstores can potentially generate business from consumers of all walks of life with varying needs. As you can imagine, opening a superstore probably isn’t in the cards for the fledgling entrepreneur.
7. Discount & Extreme Discount Stores
Discount stores are low- to no-frill retailers that offer quality products at affordable prices.
Discount stores exist in many different niches, most often in the vein of grocery, department, or specialty stores.
Though discount stores typically make a minimal profit from individual sales, the low overhead allows them to stretch revenues much further than the more pricey “big box” stores.
Each type of brick-and-mortar store comes with its own upsides and downsides.
The trick to success for retailers is to know how to make the most out of their store’s strengths in order to provide maximum value to their customers.
How to become a Successful Brick-and-Mortar Retail Business
The traditional brick-and-mortar store of the yesteryear is a dying breed.
The modern consumer wants more than just “a place to buy things”. (If that’s all they want, they’ll probably just make their purchase online, from the comfort of their own home.)
What they want from their local storefronts is a better all-around experience.
Here are five ways to ensure your retail store delivers more value to your customers.
1. Be Strategic with Merchandising
Merchandising is all about how you place products, signage, and other furnishings throughout your store to spur engagement and purchases.
Key elements of merchandising include:
- Interior and exterior displays
- Product images and promotional signage
- Color scheme
- Store layout
Strategic merchandising is vital to:
- Attract new leads
- Convert prospects
- Increase average order value and customer lifetime value
For starters, your store needs to be organized, with sections, products, and pricing clearly visible.
If the entire store looks like a rummage sale, it’ll be impossible for potential customers to find what they’re looking for. Chances are, they won’t even try.
Showcasing popular, high-value products can catch your audience’s attention.
Cross-merchandising attracts customers and can persuade them to buy related products. For example, clothing stores often display complete outfits (made of multiple clothing items and accessories)
2. Give more options to buy and Fulfillment
Many of the key reasons online consumers abandon their cart (and choose to shop in-store) have to do with a lack of options for payment and delivery.
Providing these options, then, will go a long way in getting customers inside your store and heading toward conversion.
There are two things to think about here:
1. Allow your customers to make purchases using their preferred methods. In addition to cash, check, and credit card, this also means looking into options like mobile and smartphone payments. (Note: This doesn’t mean you need to offer all payment options — just the ones that are worth adopting.)
2. Consider offering multiple payment policies and structures. Depending on your industry and audience. Installment plans, lines of credit, etc. Can attract customers who need additional time to pay their purchases.
You also want to offer options in fulfillment and delivery. Click-and-collect, for example, is becoming an increasingly popular option. Buy online and pick up your purchase in-store after.
Making returns smooth and as customer-friendly as possible is also key to retail success. A streamlined returns and exchange process means satisfied customers, but also fewer resources wasted on your end.
This is where even exchanges and store credit come into play. It’s all about figuring out what your customers appreciate most — and what’s best for your business.
3. Deliver Unique or Innovative In-Store Event
If your store is just “a place to buy things”, you’re not going to excite people to come there.
In order to get your target audience in the store, how can we make the experiences something they simply can’t get anywhere else?
Simple: Unique, in-store events.
For example, Home Depot offers kid-friendly workshops that walk parents and children through small craft projects.
Source / These workshops have been held online throughout the pandemic.
By today’s standards, though, it’s important to take things a step further, here. More than just offering standalone events, your aim should be to create an immersive overall in-store experience for your customers.
For example, Nike’s “Nike Live” stores deliver a variety of innovative experiences, such as:
- A “sneaker bar”, where customers can create customized designs before making a purchase
- Quick-service sections for customers on the go
- Digital vending machines for VIP customers
Such innovative experiences give customers a good reason to not only enter the store — but also to stick around to see what else the brand has to offer.
4. Use Digital Marketing to Generate Local Business
By now, it should be clear that choosing to go brick-and-mortar over e-commerce doesn’t mean avoiding the digital world at large.
On the contrary, you absolutely should be using digital marketing to generate foot traffic and in-store purchases.
Since the majority of your customer base will be localized, unless you are part of a franchise retail chain marketing, it makes sense to place a focus on local SEO, email marketing, and PPC ads.
Organic, local SEO allows small retail stores to gain major visibility.
Beacons and geofencing tactics can also attract passersby and others within the general vicinity of your store. These technologies allow sending push notifications, Google Ads, and other promotions to individual customers based on specific behavioral triggers.
Digital signage is also evolving to become more interactive. Digital signage can present real-time information to your in-store customers, such as product availability, queue position, and more.
Speaking of keeping up with digital transformation…
5. Use Technology to Enhance the In-Store Experience
The use of digital technology isn’t just to “wow” your in-store audience (although that certainly is part of it). It’s also to make the in-store experience more engaging — or, at the very least, to keep less-exciting moments to a minimum.
This goes for the browsing/shopping phase, as well as the purchasing phase of the customer journey. The “art of shopping” has multiple phases in each engagement. Here, the customer:
- Compares similar products
- Compares prices of products
- Compares store policies, terms, and conditions
Give free WiFi, interactive digital displays, and other means of gathering information removes friction from browsing. Your customers can easily move forward with their purchase.
Home Depot is progressive here, giving information specific to store locations via mobile app:
A digital POS system helps streamline purchasing products as well. With mobile POS systems, your team can literally meet customers where they are in-store — so they don’t need to wait or stand in line to buy your products.
Finally, you need to deliver an omnichannel experience for your customers — with your brick-and-mortar store being but one facet of the overall experience. Make each visit feel like a continuation of their journey with your brand — not a one-off engagement.
This should give you a good idea of what to focus on as you open your first retail store. But, we’re only scratching the surface, here. We’ll be adding resources to this guide and dig deeper into how to succeed as a retail shop owner.