Last Updated On November 30, 2020 / Written By Jin Hyun

Complete Guide to Launching & Managing a Brick-and-Mortar Business

Despite the advent of e-commerce or online shopping, brick-and-mortar businesses continue to play a vital role in the modern consumer experience.

In February 2019, online retail sales, led by digital marketplaces like Amazon, surpassed brick-and-mortar businesses for the first time in history, according to data from the US Department of Commerce. However, this doesn't mean that brick-and-mortar businesses are dying out - far from it.

In the UK, for example, traditional brick-and-mortar retailers generated 71 billion ($93 billion) in sales during the 2019 holiday season. In contrast, online retailers generated 27 billion ($36 billion).
In other words, brick-and-mortar establishments are here to stay for the foreseeable future. But the changing world of retail means that these businesses will have to adapt accordingly.

What Are Brick-and-Mortar Businesses?

The term brick and mortar comes from the traditional streetside business that provides products and services to customers in a face-to-face setting. Today, brick and mortar refers to stores with physical locations, usually found in malls and alongside busy streets with heavy foot traffic. When a business maintains a physical presence, it becomes a brick-and-mortar establishment.

While brick-and-mortar businesses are usually associated with the retail industry, they also include coffee shops, restaurants, corner banks, service providers, and offices - any business with physical premises.
While much has been said about the ever-growing popularity of e-commerce (i.e., online retail), many customers still want to do their shopping and browsing in places like malls and high streets.

In a physical store, consumers can interact with the establishment's staff and ask them questions about products and services. They can also have a more engaging customer experience - one that allows them to touch, test, taste, or smell the product before making a purchase decision. Shopping at a physical store also provides instant gratification after purchase.

Physical stores can also accommodate consumers that don't have credit cards or distrust digital payments. These people might also see brick-and-mortar businesses as being more legitimate than online stores.

Differences Between E-Commerce and Brick-and-Mortar Stores

Even though brick-and-mortar stores and e-commerce sites occupy very different spaces, the casual observer may view them as belonging to one industry - retail. After all, they're both places where people shop.

While there are similarities between online stores and brick-and-mortar businesses, there are also fundamental differences that aspiring business owners should know when planning their business model.

Locations

If a brick-and-mortar store occupies a physical space, then an e-commerce store is its antithesis, existing exclusively online. E-commerce businesses sell their products and services through a virtual portal or an online marketplace. However, these businesses may still need a physical location to keep inventory before shipping them to customers.

Transaction Types

Customers pay for their purchases at brick-and-mortar stores using cash and debit or credit cards. Over the past few years, brick-and-mortar businesses have had to keep up with new technologies, such as digital wallets like Apple Pay and Android Pay.

On the other hand, cash is usually not an option when shopping online. However, some merchants provide customers the option to pay for their purchases using COD (cash on delivery).

Marketing

Online stores tend to gravitate to digital marketing methods that drive users from social media sites and search engines to their app or website. This is far more cost-efficient than advertising on traditional channels like TV, print, or radio.

Meanwhile, some brick-and-mortar stores still depend on conventional marketing methods, such as posters, local business listings, newspaper ads, and leaflets. But many business owners are also diverting a significant portion of their marketing spend into online marketing, driving online customers to their physical stores.

Expenses

Brick-and-mortar businesses and e-commerce sites also have very different expenses.
While it can be easy to say that opening a brick-and-mortar store will naturally be more
expensive than setting up a website, the truth is not so simple.

When a business owner decides to sell goods online, they'll often turn to an e-commerce platform that provides web hosting, a domain name, and web page templates at relatively
affordable prices. However, they have other expenses, such as-

  • Logistics and shipping
  • Returns
  • Customer acquisition and support
  • Web development team
  • Employees
  • Taxes
  • Computer hardware and software


Aside from these expenses, a brick-and-mortar business will also have to account for rent, point of sale (POS) systems, and warehousing expenses.

Engagement

Brick-and-mortar stores have the critical advantage of human interaction. When customers have questions about a product or service, they can simply ask the salesperson in the store.

By comparison, online businesses have to find other ways to provide an engaging shopping experience and good customer service. Examples of methods include in-store chat features, videos of the products, and a flexible returns policy.

Setting Up a Brick-and-Mortar Business- 4 Steps

As with any other type of business, setting up a brick-and-mortar store requires following a series of basic steps.

1. Create a Business Plan

A business plan is the foundation of any enterprise, whether it's a brick-and-mortar business or an online store. The plan is a formula document that identifies the following-

  • Goals and objectives
  • The company's value proposition
  • Operating expenses and capital expenses
  • Strategy for making a profit
  • Competitors
  • Target audience

While anyone can open a business and begin selling merchandise, creating a business plan gives the company structure and a clear path to profitability. A business plan is also a crucial requirement when seeking funding from banks or investors.

2. Choose a Location

Because brick-and-mortar stores are limited by the physical space that they occupy, business owners must choose a strategic location - ideally, one with plenty of foot traffic. This is precisely why malls are a popular hub of brick-and-mortar establishments.

Aside from foot traffic, business owners should also consider factors like demographics and nearby businesses and establishments. For example, someone looking to open a cafe may want to pick a location close to offices or schools. This would guarantee a steady flow of foot traffic from students and office workers.

Aside from choosing a location, owners of brick-and-mortar businesses should also make it a point to maintain an attractive storefront and create an inviting interior space.

3. Plan for Expenses

Brick-and-mortar stores tend to have higher start-up costs than e-commerce shops. Opening a true storefront typically requires taking out a business loan or seeking seed capital from investors or partners. Major expenses include renting, leasing, or buying the property the store will occupy. Store owners also have to pay for-

  • Inventory
  • Payment processing equipment
  • Shelving and displays
  • Furniture
  • Utilities
  • Employee salaries
  • Licensing fees and insurance

4. Focus on Marketing and Advertising

For many years, brick-and-mortar businesses relied on the traditional media channels of TV, print, and radio for their marketing and advertising. But the prevalence of social media and digital platforms like Google and Yelp also require businesses to pay attention to online marketing to push online users to visit their physical stores.

5 Ways to Attract Customers to a Brick-and-Mortar Store

When opening a brick-and-mortar establishment, business owners should strategize ways to get the word out and generate interest among their potential customers. Below are a few tried and proven methods.

Hold In-Store Events

In-store events are perhaps the simplest yet most effective ways to generate chatter and interest in a brick-and-mortar business. According to one study, retailers that tap into shopper demand through in-store events increase their annual turnover by an average of 14%.

A popular example of an in-store event can include a product launch party. By inviting loyal customers to the introduction of a new product, businesses can make them feel valued and part of an exclusive group of people.

By doing so, stores can turn these customers into brand ambassadors that do their marketing for them. Launch parties also allow customers to see, test, and, ultimately, be one of the first to own new products.

Leverage Technology

Today's consumers have never been more tech-savvy, making it important to leverage retail technology.
For starters, shops can have digital screens that display their latest offers and allow customers to browse products and check stock availability. Retail establishments can also provide in-store discounts and coupons that can only be redeemed on their official mobile app.

A growing number of brick-and-mortar businesses have also introduced mobile point of sale (POS) systems, allowing staff to process orders and purchases on smartphones and tablet devices, effectively bringing the till directly to customers.

Offer Click and Collect Options

Brick-and-mortar stores can leverage the online accessibility of e-commerce by providing customers with the option to click and collect items. This would allow shoppers to purchase or reserve a product online and claim (as well as pay for, if necessary) their item from the physical store.

Research shows that 44% of customers are more likely to purchase a product if they can make an in-store collection. This is because many customers like being able to pick up their purchases when it's most convenient for them.

Design an Engaging In-store Experience

Customers' expectations of retail companies have increased over the years and a brand's physical store is no exception. Stores are no longer just a place to keep inventory, but they have also become part of the shopping experience.

For instance, Starbucks created a more personal experience for customers by calling them by their first names. Brick-and-mortar stores can also create an experience that extends to the greater community by hosting community events or creating seasonal products based on special occasions.

Support Sales Staff

Physical stores have the advantage of being able to put faces to their brand. Business owners must go out of their way to support their sales staff, whether this is done by providing them with proper training to effectively interact with customers or by incentivizing good performance with vouchers, commissions, and brand merchandise.

Benefits of Brick-and-Mortar Point of Sale (POS) Systems

The easiest way for brick-and-mortar stores to leverage new technology and improve the in-store experience is by investing in a point of sale (POS) system. POS systems offer key benefits, such as-

  • Instant Product Lookup - POS software can help staff members pull up the store's most popular products and check the inventory quantity and location, speeding up the process of serving customers.
  • Quick Payment Processing - Modern POS systems are designed to accommodate traditional payments such as cash, credit card, and debit card, as well as mobile payments through Apple Pay, and Android Pay.
  • Inventory Importing - A POS system that integrates with third-party inventory management software makes it possible to quickly and seamlessly upload multiple products into the software. This means sales staff no longer have to run to the stockroom to manually check stock.
  • Real-Time Reports - A cloud-based POS system can provide real-time visibility of sales for a given time period, stock levels, store layouts, customer history, and employee performance.

By focusing on providing great customer service and innovative in-store experiences, brick-and-mortar stores can position themselves to attract new customers and boost retention. The key is to take advantage of new technologies that have become part of the modern shopping experience.