Brick and mortar

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Brick and mortar retail shops on Marylebone High Street, London Marylebone High Street 12 Sept. 2015.JPG
Brick and mortar retail shops on Marylebone High Street, London

Brick and mortar (or B&M) is an organization or business with a physical presence in a building or other structure. The term brick-and-mortar business is often used to refer to a company that possesses or leases retail shops, factory production facilities, or warehouses for its operations. [1] More specifically, in the jargon of e-commerce businesses in the 2000s, brick-and-mortar businesses are companies that have a physical presence (e.g., a retail shop in a building) and offer face-to-face customer experiences.

Contents

This term is usually used to contrast with a transitory business or an Internet-only presence, such as fully online shops, which have no physical presence for shoppers to visit, talk with staff in person, touch and handle products, or buy from the firm in person. However, such online businesses normally have non-public physical facilities from which they either run business operations (e.g., the company headquarters and back office facilities), and/or warehouses for storing and distributing products. [2] Concerns such as foot traffic, storefront visibility, and appealing interior design apply to brick-and-mortar businesses rather than online ones. An online-only business needs to have an attractive, well-designed website, a reliable e-commerce system for payment, a good delivery or shipping service, and effective online marketing tactics to drive web traffic to the site. Governments are also adopting e-government approaches, which is the use of online services for citizens to enable them to fill out government forms, pay tax bills, and register for government programs online; these services aim to cut bricks-and-mortar costs (building leasing/purchase and staff costs) and improve services to citizens (by offering 24/7 access to information and services).

Etymology

The name is a metonym derived from the traditional building materials associated with physical buildings: bricks and mortar, however, it is applicable to all stores with a physical storefront, not just those built out of bricks and mortar. The term brick-and-mortar businesses is also a retronym, in that most shops had a physical presence before the advent of the Internet. The term is also applicable in a pre-Internet era, when contrasting businesses with physical retail presence with those that operated strictly in an order-by-mail capacity pre-Internet.

History

The Galanterie-, Kurz- und Spielwaren-Laden store in Uetersen, Germany in 1901 Uetersen Wientapper 1901.jpg
The Galanterie-, Kurz- und Spielwaren-Laden store in Uetersen, Germany in 1901

The history of brick-and-mortar businesses cannot be dated precisely, but it existed in the earliest vendor stalls in the first towns (as early as 7500 BC), where merchants brought their agricultural produce, clay pots and handmade clothing to sell in a village market. Bricks and mortar businesses remain important in the 2010s, though many shops and services, ranging from consumer electronics shops to clothing shops and even grocery shops have begun offering online shopping. This physical presence, either of a retail shop, a customer service location with staff, where clients can go in person to ask questions about a product or service, or a service center or repair facility where customers can bring their products, has played a crucial role in providing goods and services to consumers throughout history.

A fruit stand at a village market in Afghanistan. Afghan fruit stall 2-4-09.jpg
A fruit stand at a village market in Afghanistan.

All large retailers in the 19th and the early to mid-20th century started off with a smaller brick-and-mortar presence, which increased as the businesses grew. A prime example of this is McDonald's, a company that started with one small restaurant and now has nearly 36,000 restaurants in over 120 countries and plans to grow further; this shows the importance of having a physical presence. [3] For many small businesses, their business model is mostly limited to a bricks and mortar model, such as a diner restaurant or a dry cleaning service. Nevertheless, even service-based businesses can use websites and "apps" to reach new customers or improve their services. For example, a dry cleaning service could use a website to let customers know of the hours and location(s) of their bricks and mortar stores.

Decline

Netflix, an online movie streaming website founded in 1997, is an example of how an online business has affected a B&M businesses such as video rental stores. After Netflix and similar companies became popular, traditional DVD rental stores such as Blockbuster LLC went out of business. Customers preferred to be able to instantly watch movies and TV shows using "streaming", without having to go to a physical rental store to rent a DVD, and then return to the store to give the DVD back. "The rapid rise of online film streaming offered by the likes of Lovefilm and Netflix made Blockbuster's video and DVD [rental] business model practically obsolete.' [4]

There has been an increase in online retailers in the 2000s, as people are using e-commerce (online sales) to fulfill basic needs ranging from grocery shopping to book purchases. Sales through mobile devices such as tablet computers and smartphones have also risen in the 2000s: "While total online sales rose 18% year-on-year in December to £11.1 [B], according to the latest figures [January 2014] from e-tail industry body IMRG and advisory firm Capgemini, sales via mobile devices doubled to £3 [B].' [5]

The increase in households where both adults work outside the home, combined with the convenience of shopping for and buying products and services online, has decreased the number of customers going to retail outlets, as consumers can access the same information about products and services without paying for gas, parking and other costs, thus saving them time and money. "Today’s consumers lead busy lives and [Bricks and Mortar] shopping takes time. Often it is a [challenging] task. Consumers find researching and shopping on the Web far more convenient than brick-and-mortar visits." [6] Brick and mortar businesses are not limited to having a physical presence only, they may also have an online presence such as Tesco, who offer an online grocery service as well as a brick-and-mortar retail presence.

Benefits

Bricks and mortar retail shops along the Fredrikinkatu street in the center of Helsinki, Finland Freda Uudenmk rist 150708.jpg
Bricks and mortar retail shops along the Fredrikinkatu street in the center of Helsinki, Finland

The presence of brick-and-mortar establishments may bring many benefits to businesses;

Drawbacks

The brick-and-mortar approach also has various drawbacks.

New businesses and fixed costs

Fixed costs are a serious challenge for B&M businesses. Fixed costs are payments that a business has to make for elements such as rent of a store and monthly payments for services such as a security alarm. Fixed costs stay the same for a business even if it ramps up its operations or winds down its operations during a slow period. In contrast, variable costs change as a business ramps its operations up or down. Variable costs include wages (for employees paid by the hour) and electricity for operating machinery used by the business during its operating hours. If a business increases its hours of operation, its hourly wages and electricity bill will rise, but its rent and security alarm costs will stay the same (assuming that the business does not add additional locations). Start-up companies and other small businesses typically find it hard to pay all of the fixed costs that are part of their venture. Research shows that 70% of new start up businesses fail within the first 10 years. [11]

Inconvenient for customers with busy lifestyles

People have busier lifestyles in the 2010s, with more families having both adults working, and therefore they find it harder to find the time to physically go and shop at stores and services. As well, in many cities traffic jams and congestion on roads have made it more stressful and time-consuming to drive to physical locations to shop. Online shopping and online services, which consumers can access from an Internet-connected laptop or smartphone are more convenient for these people. [12]

Expensive and luxury products

B&M increases the fixed cost for any business, therefore the products sold in physical shops tend to be more expensive compared to online shops. For stores selling expensive products or services in a B&M format, customers expect beautiful window displays, fine decorating in the establishment and well-dressed salespeople who earn high commission on their sales. Some high-end hair salons and luxury car stores even offer conveniences such as free espresso and bottled water, all of which add to the overhead of selling these products and services. Online shops, even those for luxury goods, do not have to pay for high-end retail stores and salespeople. [13] Nevertheless, high-end online stores typically incur higher costs for their online presence, because they need to have leading edge Web 2.0 functions on their website, a professionally designed site, and in some cases, staff available to respond to phone calls, e-mails and online "chat" questions.

Wider stock availability online

Products may be out stock in relatively small brick-and-mortar retail stores and due to limited space in small business retail stores, these establishments may only be able to carry a few types of each product. Online shops are able to have a huge amount of stock in numerous large warehouses (e.g., Amazon.com has warehouses in numerous locations from which it ships its products) which it can quickly ship out. An online store may be able to order up products from a large number of geographically dispersed warehouses, even warehouses owned and operated by third parties (e.g., smaller companies), which are connected to the large company via the Internet.

Queues

Queues (lineups and waiting rooms) are part and parcel of B&M retail businesses, due to physical constraints and the limitations on how many staff the business can afford to hire. A physical store may only have a few salespeople to serve customers, so many customers may have to wait in line during the busiest hours. To lessen the stress of waiting, some B&M stores provide big-screen TVs with cable TV, free coffee and newspapers; while these niceties improve the customer experience, they add to the costs of operating a B&M establishment. On the other hand, an online virtual store in which customers select their own purchases in a virtual "shopping cart" and pay for them using e-commerce approaches may be able to serve thousands of customers at the same time.

E-government

Beginning in the 1990s and early 2000s, many governments in industrialised countries began to offer e-government services to citizens. Online government services are offered by a range of government departments and agencies, ranging from departments of motor vehicles (online car registration), police (paying speeding tickets online), city services (paying parking tickets online or requesting that a pothole be filled) and social services (registering for social assistance or unemployment insurance) and tax departments (paying a tax bill or submitting a tax return online). Many governments use e-services to provide online information to citizens (e.g., "help" guides, Frequently Asked Question lists, manuals for government program applicants, etc.), thus saving on the need for call centers where citizens can call to ask questions or physical service locations where citizens can come in person to ask about government forms or services.

These online government services aim at two goals: reducing costs to governments and improving client service. By offering these services and information online, governments save money, because they do not have to offer as many bricks and mortar client service centers where citizens can come and fill in these forms and pay government bills. Governments offering e-services can also operate with less civil servants and thus less salary and benefits costs, as the citizens using online services are generally doing all of the administrative tasks (e.g., downloading a form, filling in a form, looking up guidance in an online "help" manual, paying fees) themselves using their home computer. E-government services also improve service for citizens who have access to a computer, Internet and an online payment method (e.g., a credit card or PayPal), because these citizens are not limited by the 9 am-5 pm or 8 am-4 pm business hours of most physical government offices, and citizens do not have to incur the costs of transportation (e.g., bus tickets, gas, parking, etc.) associated with going to a bricks and mortar location. Nevertheless, government e-services do not help all citizens, due to the digital divide; citizens who are in poverty, who are homeless or who live in rural or remote regions may not have access to high speed Internet. These citizens, as well as those who are not comfortable with computers or those who do not understand how to use them, which in practice means elderly people, are not able to benefit from e-services.

See also

Related Research Articles

E-commerce is the activity of electronically buying or selling products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is the largest sector of the electronics industry and is in turn driven by the technological advances of the semiconductor industry.

<span class="mw-page-title-main">Retail</span> Sale of goods and services

Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and then sells in smaller quantities to consumers for a profit. Retailers are the final link in the supply chain from producers to consumers.

<span class="mw-page-title-main">Disintermediation</span> Eliminating middlemen from a supply chain

Disintermediation is the removal of intermediaries in economics from a supply chain, or "cutting out the middlemen" in connection with a transaction or a series of transactions. Instead of going through traditional distribution channels, which had some type of intermediary, companies may now deal with customers directly, for example via the Internet.

<span class="mw-page-title-main">Online shopping</span> Form of electronic commerce

Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet using a web browser or a mobile app. Consumers find a product of interest by visiting the website of the retailer directly or by searching among alternative vendors using a shopping search engine, which displays the same product's availability and pricing at different e-retailers. As of 2020, customers can shop online using a range of different computers and devices, including desktop computers, laptops, tablet computers and smartphones.

<span class="mw-page-title-main">Retail marketing</span> Economic concept

Once the strategic plan is in place, retail managers turn to the more managerial aspects of planning. A retail mix is devised for the purpose of coordinating day-to-day tactical decisions. The retail marketing mix typically consists of six broad decision layers including product decisions, place decisions, promotion, price, personnel and presentation. The retail mix is loosely based on the marketing mix, but has been expanded and modified in line with the unique needs of the retail context. A number of scholars have argued for an expanded marketing, mix with the inclusion of two new Ps, namely, Personnel and Presentation since these contribute to the customer's unique retail experience and are the principal basis for retail differentiation. Yet other scholars argue that the Retail Format should be included. The modified retail marketing mix that is most commonly cited in textbooks is often called the 6 Ps of retailing.

A virtual business employs electronic means to transact business as opposed to a traditional brick and mortar business that relies on face-to-face transactions with physical documents and physical currency or credit.

Direct-to-consumer or business-to-consumer (B2C) is the business model of selling products directly to customers and thereby bypassing any third-party retailers, wholesalers, or middlemen. Direct-to-consumer sales are usually transacted online, but direct-to-consumer brands may also operate physical retail spaces as a complement to their main e-commerce platform in a clicks-and-mortar business model. In the year 2021, direct-to-customer e-commerce sales in the United States were over $128 Billion.

Free shipping is a marketing tactic used primarily by online vendors and mail-order catalogs as a sales strategy to attract customers.

Non-store retailing is the selling of goods and services outside the confines of a retail facility. It is a generic term describing retailing taking place outside of shops and stores. The non-store distribution channel can be divided into direct selling and distance selling, the latter including all forms of electronic commerce. Distance selling includes mail order, catalogue sales, telephone solicitations and automated vending. Electronic commerce includes online shopping, internet trading platforms, travel portals, global distribution systems and teleshopping. Direct selling includes party sales and all forms of selling in consumers' homes and offices, including even garage sales.

Omnichannel is a neologism describing a business strategy. According to Frost & Sullivan, omnichannel is defined as "seamless and effortless, high-quality customer experiences that occur within and between contact channels".

<span class="mw-page-title-main">Showrooming</span> Shopping practice

Showrooming is the practice of examining merchandise in a traditional brick-and-mortar retail store or other offline setting, and then buying it online, sometimes at a lower price. Online stores often offer lower prices than their brick-and-mortar counterparts because they do not have the same overhead cost. Staff writers at the Wharton School have observed that showrooming and buying elsewhere is not new in itself, but its impact has become more significant with the greater availability of online purchasing.

<span class="mw-page-title-main">Omnichannel retail strategy</span> Business model by which a company integrates both offline and online presences

Omnichannel retail strategy, originally also known in the U.K. as bricks and clicks, is a business model by which a company integrates both offline (bricks) and online (clicks) presences, sometimes with the third extra flips.

<span class="mw-page-title-main">Marketplace Fairness Act</span>

The Marketplace Fairness Act was a proposed legislation pending in the United States Congress that would enable state governments to collect sales taxes and use taxes from remote retailers with no physical presence in their state.

<span class="mw-page-title-main">Dark store</span> Retail outlet that only focuses on online shopping

A dark store is a retail outlet or distribution centre that exists exclusively for online shopping. A dark store is generally a large warehouse that can either be used to facilitate a "click-and-collect" service, where a customer collects an item they have ordered online, or as an order fulfillment platform for online sales. The format was initiated in the United Kingdom, and its popularity has also spread to France followed by the rest of the European Union and Russia, as well as to the United States.

There are many types of e-commerce models, based on market segmentation, that can be used to conducted business online. The 6 types of business models that can be used in e-commerce include: Business-to-Consumer (B2C), Consumer-to-Business (C2B), Business-to-Business (B2B), Consumer-to-Consumer (C2C), Business-to-Administration (B2A), and Consumer-to-Administration

Mobile location analytics (MLA) is a type of customer intelligence and refers to technology for retailers, including developing aggregate reports used to reduce waiting times at checkouts, improving store layouts, and understanding consumer shopping patterns. The reports are generated by recognizing the Wi-Fi or Bluetooth addresses of cell phones as they interact with store networks.

<span class="mw-page-title-main">Retail apocalypse</span> Widespread decline in physical retail stores

Retail apocalypse refers to the closing of numerous brick-and-mortar retail stores, especially those of large chains, beginning around 2010 and accelerating due to the mandatory closures during the COVID-19 pandemic.

b8ta Retail in-service company

b8ta was a retail-as-a-service company which serve as presentation centers for consumer electronics and home goods. The company was founded in 2015 by Vibhu Norby, William Mintun, Phillip Raub, and Nicholas Mann. Its first location opened in Palo Alto in December 2015. Companies could pay to rent out space for their product to be displayed inside the locations, along with a tablet that each brand customizes with software. All of the products in stores were on display out-of-the-box and could be touched and demoed. The company also sold the products directly to consumers. Store employees, which the company calls "b8ta testers", assisted customers with demos and product information which is taught to them by companies with products on display. In November 2019, b8ta opened a fashion store named Forum in West Hollywood with the same business model.

The disruptive effect of e-commerce on the global retail industry has been referred to as the Amazon Effect: the term refers to Amazon.com's dominant role in the e-commerce market place and its leading role in driving the disruptive impact on the retail market and its supply chain.

The retail format influences the consumer's store choice and addresses the consumer's expectations. At its most basic level, a retail format is a simple marketplace, that is; a location where goods and services are exchanged. In some parts of the world, the retail sector is still dominated by small family-run stores, but large retail chains are increasingly dominating the sector, because they can exert considerable buying power and pass on the savings in the form of lower prices. Many of these large retail chains also produce their own private labels which compete alongside manufacturer brands. Considerable consolidation of retail stores has changed the retail landscape, transferring power away from wholesalers and into the hands of the large retail chains.

References

  1. ↑ "What is bricks and mortar? definition and meaning". Investorwords.com. Archived from the original on 2020-10-20. Retrieved 2012-11-03.
  2. ↑ "What is bricks and mortar? definition and meaning". Businessdictionary.com. Archived from the original on 2012-08-31. Retrieved 2012-11-03.
  3. ↑ Chalabi, Mona (17 July 2013). "McDonald's 34,492 restaurants: where are they?". The Guardian. Archived from the original on 30 October 2014. Retrieved 29 October 2014.
  4. ↑ Anon (12 December 2013). "Blockbuster to close remaining stores". BBC News. Archived from the original on 15 October 2014. Retrieved 29 October 2014.
  5. ↑ Butler, Sarah (15 January 2014). "Shopping by smartphone and tablet in UK increases by 18%". The Guardian. Archived from the original on 30 October 2014. Retrieved 28 October 2014.
  6. ↑ Walker, Brian. "Retail In Crisis: These Are The Changes Brick-And-Mortar Stores Must Make". Forbes. Archived from the original on 23 October 2014. Retrieved 29 October 2014.
  7. ↑ Anon. "Improve customer service, Increase sales". Sage.co.uk. Sage. Archived from the original on 30 October 2014. Retrieved 29 October 2014.
  8. ↑ Anon. "High Street V Online". Intersperience.com. Intersperience. Archived from the original on 5 March 2016. Retrieved 29 October 2014.
  9. ↑ "On Solid Ground: Brick-and-Mortar Is the Foundation of Omnichannel Retailing". A.T. Kearney. Archived from the original on 9 July 2017. Retrieved 12 June 2017.
  10. ↑ Agnihotri, Arpita (2015). "Can Brick-and-Mortar Retailers Successfully Become Multichannel Retailers?". Journal of Marketing Channels. 22: 62–73. doi:10.1080/1046669X.2015.978702. S2CID   154915558. Archived from the original on 28 April 2021. Retrieved 28 April 2021.
  11. ↑ Shane, Scott (28 April 2008). Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By. p. 99. Archived from the original on 30 October 2014. Retrieved 29 October 2014.
  12. ↑ Lawson, Alex (15 September 2014). "Shoppers 'hit the high streets with purpose' as footfall drops but spending rises". www.standard.co.uk. London Evening Standard. Archived from the original on 30 October 2014. Retrieved 29 October 2014.
  13. ↑ Brownell, Matt. "5 Products You Shouldn't Buy Online". TheStreet Inc. Archived from the original on 30 October 2014. Retrieved 30 October 2014.
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