Do Retailers Need Brick-and-Mortar Stores in 2022?

brick and mortar

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The meaning of brick and mortar is that of a physical, traditional retail business that customers can visit to view and purchase products in person. “Brick and mortar” is in contrast to ecommerce businesses that operate solely online.

Brick and mortar stores can be found in shopping malls, town centers, city streets, or the outskirts of small communities. It sells something—like clothing or groceries—for customers to visit, view, and purchase.

Despite the shift towards online shopping that was further emphasized with the COVID-19 pandemic, brick and mortar retail stores continue to grow. In 2022, US retailers opened twice as many stores as they closed

If you’re curious about brick and mortar retail, you’re in the right place. This guide walks through how the brick and mortar business model works, examples of successful retailers with their own shops, and how to open a brick and mortar store of your own.

What is a brick and mortar store?

A brick and mortar store is a retail location where business owners showcase their products using a physical storefront. Customers then visit the store to browse items, talk with sales representatives, try on or test products, and purchase goods.

Popular brick and mortar stores include grocery stores (like Whole Foods), specialty stores (like CVS), and department stores (like Macy’s).

While ecommerce has been on the rise over the last decade or so, brick and mortar remains an undeniably successful strategy for retailers. Data shows that physical retail continues to outsell ecommerce—in 2021, the ratio was nearly 4:1.

How do brick and mortar stores work?

Brick and mortar stores sell products to customers who stop by and shop. An attractive storefront (maybe with visual merchandising displays) draws in passersby. Here’s what that can look like:

Once customers enter the store, they  view, touch, and interact with products they’re considering buying. There may be an option to try on the item in the store’s fitting room.

Sales assistants are often on hand to guide customers through that process. They’re able to greet customers, answer questions, and check the availability of stock. The end goal is to bring a customer to the checkout desk to complete their purchase. 

Brick and mortar stores can also act as hubs for omnichannel retailers who offer experiences such as in-store events, local pickup, buy online, pick up in-store (BOPIS), or buy online, return in-store (BORIS).


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Brick and mortar vs. ecommerce

What are the differences between brick-and-mortar and ecommerce? What are the strengths of each? The weaknesses? Let’s learn about both.

Brick and mortar benefits

1. Reach customers who don’t shop online

Not everyone uses the internet. Sure, it has a global penetration rate of 59.5%, but there are still potential customers you could alienate by going ecommerce-only.

A 2021 State of Consumer Behavior report found that 33% of shoppers prefer brick and mortar stores because they’re able to touch and interact with products. Another 61% said they’re more likely to spend more when shopping at a physical location. 

The rise of ecommerce hasn’t outdated brick and mortar; it’s highlighted how important both experiences are for customers. Having a brick and mortar store to complement your ecommerce strategy targets both online and offline shoppers.

Retail offers us a market that we wouldn’t access online. There are just certain demographics that prefer to shop in person—such as older customers, customers who are unsure of their size, customers who are looking for something super specific, etc.—and if we were only online we would be missing out on all of those opportunities to serve those customers.

Retailers experience a 190%+ increase in revenue when they sell on more than one channel. Some 56% of shoppers visit a store before making a purchase online.

One way to combine offline and online shopping is “click-and-mortar” or phygital retail. In this case, people order the item through an online retailer and head to their physical store to collect the item. Some 59% of consumers are interested in this buy online, pickup in-store (BOPIS) shopping option.

Download The Future of Retail Report: Trends for 2022

BOPIS is a growing trend in retail, and one that is here to stay. According to a commissioned Forrester Consulting study conducted on behalf of Shopify, 45% of consumers said it was important or very important to be able to buy online, and pick up their item in the physical store. To learn more, download the full report.

Download report

Earl of East is one retailer that used click-and-mortar to keep its physical store open during the pandemic. Customers downloaded a mobile app to order their food and drinks, and the store was open during the day for collection.

2. Deliver better customer experiences

Did you know that 72% of millennials would rather spend money on experiences than on material items? It’s one reason why brick and mortar stores still thrive—they offer both

Casper is one retailer that combines customer experiences with its brick and mortar stores. It launched The Dreamery back in 2018. Busy New Yorkers could visit the store and pay $25 for a quick nap in a Casper bed. 

While you don’t have to go to this extent, you can provide in-store shoppers with the personalized experiences that ecommerce stores can’t deliver, such as immersive retail or content creation studios

“We opened our first brick and mortar store last year,” explains Candice Small, founder of Candid Owl. “Whilst successfully selling our product online, we were increasingly receiving requests from our customers to open a showroom/retail unit to enable them to visit and experience our products in person. Our customers can now touch, feel, and experience our fabrics in person, to select their bespoke lampshades with confidence that they will suit their home decor.”

Ecommerce benefits

1. Pandemic-safe

The number of brick-and-mortar retail stores in the US spiraled downward when the COVID-19 pandemic was declared—from almost 460,000 in 2017 to little over 328,000 in 2020.

Legacy department stores also took a hit. Macy’s closed 125 retail locations; Nordstrom permanently shut 15 full-line stores; JCPenney almost went bankrupt.

Number of brick and mortar stores chart

The greatest advantage of having an ecommerce store is that it’s COVID-19 safe. The emergence of new technologies like virtual fitting rooms work to deliver the same in-store shopping experiences that people love, safely (and online).

2. Reach customers anywhere

Another downside to having a brick and mortar store is can only serve the people who live within close proximity to or visit that location. That’s less than ideal if your target customers live outside major cities or are distributed globally.

It was important for us to be able to reach people who live in the countryside and do not have access to many shops—and indeed, the majority of our customers live in remote locations.

3. Fewer expenses and less overhead

Ecommerce stores have the advantage over brick and mortar when it comes to overhead. Rent is being called the new customer acquisition cost (CAC), but there are still a whole host of expenses that come with opening a physical store: utilities, staff costs, public liability insurance, and hardware are just a handful. 

Ecommerce-only, however, has web hosting and CMS platform costs to contend with. Plus, if you’re storing physical products in a location before they’re shipped out to customers, location doesn’t really matter. You can often get cheaper storage units out of town that cost a fraction of each month’s rent for a storefront on a busy street.

Retailers should think of physical store investments as they have traditionally considered media investments—as a vehicle for customer acquisition, rather than purely as a distribution venue for product.

Types of brick and mortar stores

Department stores

Saks, Sephora, and Nordstrom are all examples of brick-and-mortar department stores. However, the value of in-store sales inside department stores has been declining steadily since its peak at the turn of the century—down from $230 billion in 2000 to $134.7 in 2018.

Specialty stores

Brick-and-mortar businesses like Home Depot, CVS, and Petco all specialize in one product—be that home improvement items, cosmetics, or pet food. In most cases, shoppers visit specialty stores with an item already in mind. 

Grocery stores

Grocery stores are another example of brick-and-mortar retail. Brands like Walmart, Trader Joe’s, and Costco have bases in most states.

Data shows that the average person makes 1.6 shopping trips to physical grocery stores every week. It’s the primary in-store shopping location for almost half of all customers—hence why brick-and-mortar grocery stores generate $6.22 trillion every year in the US alone.

Convenience stores

Convenience stores accounted for the bulk of all brick-and-mortar retailers in 2020, with more than 150,000 locations across the US. Those stores—including 7-Eleven and Casey’s—made $648.8 billion in revenue.

Examples of brick and mortar stores

Wildling

Wildling is a German shoe retailer that opened its first brick-and-mortar showroom last year. It uses Shopify POS, which fully integrates with its ecommerce platform, to show real-time stock availability, manage inventory, and track orders. 

Since using this setup for its first brick-and-mortar location, Wildling saw 50% more first-time shoppers in its physical showrooms.

Beauty Heroes

Beauty Heroes was a successful ecommerce retailer that wanted to open its first brick and mortar store. It combined the two channels—online and offline—using one single point-of-sale (POS) system

The launch of its first brick and mortar store was a success. The Beauty Heroes team saved hours reconciling customer information across both channels—valuable data it can use to retarget and analyze.

Neighborhood Goods

An increasing number of direct-to-consumer (DTC) brands are partnering with brick-and-mortar retailers to get their consumer packaged goods in front of foot traffic.

Neighborhood Goods is one example of this in action. Its Austin brick-and-mortar store currently stocks a range of CPG brands, including BeHave, Just Water, and Chop Chop. It has plans for expansion into further locations later this year.

Burberry

Luxury retailer Burberry opened its first brick-and-mortar store in Shenzhen, China, last year. But unlike most retailers, it didn’t open the store with the vision of selling more merchandise. Instead, it prioritized delivering immersive retail experiences for its customers.

Its WeChat mini-program incentivizes customers to share their experiences on social media in return for social currency that can be redeemed for exclusive content. This gives the brick-and-mortar store an online presence, too. 

Burberry’s social retail store in Shenzhen is a place of discovery that connects and rewards customers as they explore online and in-store. It marks a shift in how we engage with our customers, and we can’t wait to share this innovative experience with the world.

Marco Gobbetti, CEO, Burberry
Burberry AR example
Source

How to open your first brick and mortar store

Let’s walk through seven steps you can take to open your first brick and mortar store.

1. Find the right location

It’s tempting to put an offer in to rent a storefront in a busy shopping district. More passersby means more retail sales, right? Not necessarily.

There are various factors you need to consider when choosing the right space for your store, including but not limited to:

  • Where your customers are
  • Traffic
  • Competitors
  • Ease of access

Footwear retailer Rothy’s has five brick-and-mortar stores across the US. CEO Stephen Hawthornthwaite explains how those locations “are located in cities that have a healthy blend of both existing and potential new customers.

“From there, we look for a neighborhood that’s full of character, walkable, and offers a mix of retail, restaurants, and cultural activities. We launched Rothy’s in 2016 with comfortable shoes that didn’t fall short on style, and walking will always hold a special place in our hearts.”

Hawthornthwaite continues: “Lastly, Rothy’s community is at the heart of what we do, and we prefer to open stores in neighborhoods that have a strong, established community presence that draws people to the area and encourages them to stay a while.” 

2. Choose a point-of-sale (POS) system

The next step in opening a brick-and-mortar store is to choose a POS system. This is the machine that will allow you to take payments from in-store shoppers. Platforms like Shopify POS accept most payment methods—including those made by mobile apps and credit cards.

The best part? If you’re opening the store to coexist with your ecommerce store, Shopify POS works seamlessly across the two. The in-store technology keeps you updated with stock levels, helping to manage inventory across various sales channels. You’ll also be able to offer click-and-mortar services (like buy online, pickup in store).

3. Hire and train retail associates

Retail associates are the face of your store and are likely the first retail position you’ll hire. Associates the first point of contact for any in-store shoppers who need assistance, and they help drive sales and manage foot traffic to your brick and mortar store.

When you find your first retail associate, their day-to-day tasks may include:

  • Greeting customers and assisting them with their purchase
  • Processing payments using your POS system 
  • Handling in-store returns and exchanges 
  • Creating visual merchandising displays to attract passersby 
  • Promoting brand loyalty programs 

4. Manage inventory

Inventory management is the process of recording which items you have available for sale.

Research shows that retail inventory is accurate just 63% of the time. Retailers often get stumped, selling out-of-stock items if they’re not managing inventory that’s being sold through various channels.

Managing inventory is notoriously difficult. It’s a balancing act between having too little stock (and therefore having nothing to sell) and having too much stock (that either spoils, goes out of style, or takes up too much space in your store).

Keep track of in-store inventory by combining it with your ecommerce stock. Shopify, for example, shows stock levels of each item as soon as it’s sold either online or in-store. 

5. Experiment with pop-up shops

Pop-up shops are a superb way to experiment with brick-and-mortar. Instead of committing to a year-long lease, other retailers with their own storefront lend it to newer companies. 

DTC brand Gymshark experimented with its own pop-up store in London last year. In a bid to increase product sales and deliver excellent experiences, Gymshark offered free fitness classes to anyone who visited the location. They repeated the pop-up in locations around the world—including Toronto, where it sold 90% of its inventory on the first day. 

Birchbox also opened its first pop-up shop to experiment with brick-and-mortar. It hosted pop-ups in various locations across the US and set up a permanent shop in its most popular location: New York. 

6. Make the store COVID-safe

It’s no secret that COVID changed the way people shop. For those who feel confident heading in-store, the vast majority feel safer when retailers put precautions in place to reduce the risk of infection. 

Amongst those include:

  • Hand sanitizer on entry
  • One-way systems for entering and leaving the store 
  • Limited numbers and scheduling shopping times
  • Self-checkout machines and no-contact payment
  • Click-and-collect services (like curbside pickup)
  • Virtual fitting rooms to try on items without touching them

7. Merge in-store shopping with ecommerce

We’ve briefly touched on the fact that you can use your physical presence to power online sales. Omnichannel retail—which combines the two shopping channels—is becoming the norm, not the exception. Some 73% of customers use multiple channels to shop.

The simplest way to do this is by collecting your customers’ email addresses when they shop in-store. You can use this information for future retargeting, either pushing them back to their local store or to purchase online.

Think about encouraging in-store shoppers to share their purchases with friends, too. Recommendations from friends and family are the most credible forms of advertising. Get people talking about your store by rewarding them for doing so. Baku Foods does this with its omnichannel retail strategy:

Get a POS system for your brick-and-mortar store 

It’s clear that brick and mortar shopping experiences aren’t going away. According to Shopify President Harley Finkelstein: “Retail will never die, because it’s always going to change and evolve based on what consumers need. The key is to be resilient.”

If you’re considering exploring brick and mortar for your own retail business, continue reading about finding the perfect location for your store, how to manage inventory, and how to make customers feel safe shopping post-pandemic.


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