Brick-and-mortar stores: pros and cons for small business owners

Despite the widespread prevalence of online shopping, brick-and-mortar stores still hold a significant space in the retail landscape—72% of U.S. retail sales will still take place in brick-and-mortar stores in 2024, according to Forrester via the National Retail Federation. 

The term "brick and mortar store" originates from the materials used in constructing physical retail establishments—bricks and mortar—signifying their tangible presence.

From fostering personalized customer experiences to growing roots in your local community, a physical retail location offers some unique advantages. Whether you’re looking to expand your e-commerce business or thinking of starting from scratch with a brick-and-mortar location, success starts with understanding how the brick-and-mortar/physical retail industry works. 

We’ll break that down, plus the advantages and disadvantages of opening a physical store and important considerations before doing so. 

How do brick-and-mortar stores work?

Brick-and-mortar stores are physical retail locations where customers can visit and shop in person. Unlike e-commerce platforms, brick-and-mortar stores provide a tangible space where customers can see and experience products firsthand. That could mean trying out different computers at an electronics store or trying on clothes at a department store. 

Store employees or sales assistants are another key aspect of brick-and-mortar stores. They typically provide product recommendations, answer questions, and offer personalized assistance to customers.

The customer journey at a brick-and-mortar store is often an interactive, hands-on process. It may involve browsing, trying out products, and making purchases at the store’s checkout counter. 

Types of brick-and-mortar stores

Successful brick-and-mortar stores tend to fall under a few main categories, each catering to different consumer needs and preferences. Below are the main types of brick-and-mortar stores: 

• Department stores: Department stores are large-scale retailers that offer a wide range of products across different categories, or departments. Department stores attract a diverse customer base because they feature a comprehensive range of products in each department. Common departments may include clothing, cosmetics, home goods, or electronics. 
• Grocery stores: Grocery stores are a staple brick-and-mortar store. They provide essential food and household items for consumers. 
• Convenience stores: Convenience stores are smaller retail outlets that cater to consumers’ immediate needs. They may carry snacks, beverages, toiletries, beer and tobacco products, and other basic household items. They’re often located in convenient locations and stay open later (if not 24/7) to maximize accessibility on the go.  
• Specialty stores: Specialty stores focus on a specific product niche that caters to customers with a specific need or interest. They offer a curated selection of products relevant to their niche, such as pet products or home improvement tools. 

Understanding the different types of brick-and-mortar stores can help you identify the category that aligns with your products and target market. From there, you can tailor your strategies to customers’ needs. 

Advantages of brick-and-mortar stores

While today’s digital-first environment has significantly impacted the retail landscape, there are several advantages of brick-and-mortar stores that set them apart: 

• Personalized customer service: brick-and-mortar stores enable face-to-face interactions between customers and knowledgeable store staff. Customers can receive real-time assistance, personalized recommendations, and the chance to address specific questions, leading to higher customer satisfaction. 
• Immediate product availability: Unlike online shopping, brick-and-mortar stores offer immediate gratification for customers. Customers can purchase and take home products on the spot without having to wait for shipping and delivery. 
• Local community building: A physical storefront creates opportunities for social interaction and community building. Providing a place for customers to gather can foster community, a sense of belonging, and a loyal customer base over time. 

Disadvantages of brick-and-mortar stores 

While brick-and-mortar stores offer many unique advantages, there are certain challenges to be aware of as well: 

• High overhead costs: Opening a brick-and-mortar store comes with higher overhead costs compared to online businesses. Account for expenses like rent, utilities, product storage, and general maintenance, as they can impact profitability. 
• Inventory management challenges: Inventory management for a physical store requires careful planning and efficient processes. Failing to ensure optimal stock levels while avoiding overstock or shortages can result in unused inventory or lost sales.
• Higher competition: Brick-and-mortar stores face high competition, both from online stores and other physical stores. Businesses must differentiate themselves through unique product offerings, effective marketing, and excellent customer service.

Considerations for opening a brick-and-mortar store

The prospect of opening a brick-and-mortar store is an exciting one. Whether you’re expanding your existing e-commerce business or kicking things off from scratch, be sure to take the following factors into account to set yourself up for success. 

Location

Choosing the right location for your store is crucial to its success. Think through the following factors to find the best location: 

• Foot traffic
• Proximity to your target customers 
• Accessibility 
• Visibility 
• Competition 

Conduct thorough market research to find areas with high demand for your products. Be sure to think carefully about your target audience and where they spend their time to ensure your location aligns with their needs, habits, and preferences. 

Financing and budgeting

Opening a brick-and-mortar store requires careful financial planning. You’ll need to assess the costs of opening your store and create a budget to support profitability. 

Renting or leasing the physical space will likely be the bulk of your expenses. There are several ways you could pay for your location, including: 

• Rent: Rental agreements are usually paid monthly, with short term limits (like 30 days at a time)..
• Lease: You’ll usually pay monthly, but lease agreements are longer term (usually at least one year).
• Purchase: You may pay monthly on a commercial real estate loan or mortgage to work toward owning the property.

In addition to your store location, other costs associated with moving into a physical space include:

• Utilities: This includes costs like internet access and heating/cooling. 
• Furnishing and supplies: If the space doesn’t come equipped or furnished, you’ll need to invest in furniture, fixtures and equipment, and any other decor needed to complete the space.
• Amenities: Some spaces charge extra for amenities like a shared mailroom or security measures.
• Insurance: You’ll want the peace of mind of your own business liability insurance coverage. Landlords might also require it.
• Staffing: If you plan on hiring staff, you’ll need to factor in costs for their wages. 

The total costs involved in opening a brick-and-mortar store will vary widely based on geographic location and the type of business. Do some research to assign estimates to each factor you’ll need to get up and running. The more realistic you are about your expected costs (and whether you can afford them), the more confident you’ll feel deciding for your business. 

Inventory management

Inventory management will be top of mind for any brick-and-mortar store. This includes establishing inventory tracking systems, establishing relationships with suppliers, and logging inventory changes after a sale. You'll also need enough merchandise to meet consumer demands without over- or understocking. Consider how you’ll track and manage inventory to maintain the right balance. 

If you don’t have enough room for inventory in your brick-and-mortar store, you may need to consider renting out a storage space.  

Staffing and training

Part of a store’s success depends on having adequate staff to serve customers. Assess staffing needs based on the size of your store, expected traffic, and operational needs. Be sure to factor employee paychecks into your overall budget, too. 

You’ll need to nail down employee job descriptions and have a plan for hiring and training processes. Create clear and comprehensive employment policies that outline job expectations, benefits, code of conduct, and grievance procedures. 

As well, familiarize yourself with local and federal employment laws and regulations related to hiring, wages, working hours, overtime, breaks, and employee rights. Overall, ensure your team has the skills to provide excellent customer service, product knowledge, and support for the store. 

If you’re unsure about anything, consider seeking assistance from HR consultants who specialize in labor laws and HR practices. Their expertise can help ensure your store maintains compliance with all laws and regulations while creating a positive work environment for employees. 

Marketing and advertising

To create awareness for your store, you’ll need to decide which marketing and advertising strategies you’ll implement. Consider both online and offline marketing channels based on the nature of your target audience, such as: 

• Social media: Platforms like Meta and TikTok can help you reach a wide audience, engage with potential customers, share store updates, run targeted ad campaigns, and more. 
• Community events: Hosting or participating in local events can help you connect with your target audience in a personal way. Consider sponsoring or attending local events like festivals, store pop-ups, charity drives, or networking gatherings to increase brand visibility and build relationships in the community. 
• Partnerships: Collaborating with local businesses and organizations that align with your target market or brand is a great way to cross-promote each other's offerings and expand your customer base.

Whatever marketing channels you choose, consider your target audience, budget, and resources to create a comprehensive plan for how you’ll promote your store. 

Technology integration

Before you open a brick-and-mortar store, consider what technology integrations you’ll need to streamline operations, process payments, and enhance customer experience. 

Consider the following technology integrations for your store: 

• Point-of-sale (POS) systems: You’ll need a POS system to manage sales and transactions in your store. Consider how you want to process payments and other factors you may want, like real-time inventory tracking or sales reports.
• Inventory management software: Inventory management software can help you track and manage inventory efficiently. Find one that allows you to monitor stock levels, track product movements, and set up automated reorders. 
• Customer relationship management (CRM) tools: A CRM tool can be valuable for capturing customer data and purchase history, which can help inform your marketing strategies. 
• Financial management and bookkeeping: Accounting software can streamline your store’s financial management and bookkeeping. This includes tasks like recording sales, expense tracking, cash flow management, generating financial reports, and handling tax processes. 

The specific technology integrations you need will vary depending on the size and needs of your brick-and-mortar store. Take a look at your operational needs, budget, and overall goals to decide which technology solutions will contribute to the success of your store. 

Tips to successfully run a brick-and-mortar store

No matter what type of store you’re opening, there are a few things to keep in mind to ensure the longevity and success of your store. While the tips below can apply to several types of brick and mortar stores, we’ve divvied them up based on different business models to help narrow you focus: 

If you’re running a grocery store, lean into these areas for success: 

• Emphasize value to customers: Offer bulk products at discounted prices to attract and foster repeat business.
• Foster customer loyalty: Create an exclusive membership program with benefits, savings, and perks like travel discounts.
• Optimize store layout: Organize outlets with optimized aisle placements and product displays for a seamless and convenient shopping experience.

If you’re running a specialty store, consider emphasizing the following areas: 

• Prioritize customer service: Train staff to provide knowledgeable and friendly assistance, offering personalized recommendations.
• Enhance customer experience with technology: Utilize digital tools like mobile POS systems, a personalized shopping app, and curated digital catalogs to offer a streamlined and customized buying process.
• Curate a unique product selection: Offer a variety of high-quality products in a range of price points, including unique brand selections not available in other stores.

If you’re running a convenience store, don’t overlook these areas:

• Choose the right store location: Capture a significant market share by strategically selecting locations with high foot traffic and close proximity to target customers.
• Diversify product offerings: Expand product offerings based on consumer preferences, integrating various departments to create a one-stop shopping experience.
• Bolster convenience through technology: Embrace the changing retail landscape by offering online shopping and a mobile app, providing customers with added convenience and enhancing engagement.

If you’re running department stores, consider emphasizing the following areas: 

• Embrace omnichannel integration: Embrace an omnichannel approach to connect with customers across various platforms. Integrate online and offline experiences, offering options like "buy online, pick up in-store" or seamless returns, providing a cohesive shopping journey for customers.
• Host in-store events and experiences: Host in-store events, workshops, or demonstrations to engage customers and create a sense of community around your department store. Offer exclusive experiences, such as fashion shows or product launches, to attract and retain customers.
• Lean into data-driven insights:  Utilize data analytics to gain insights into customer behavior, preferences, and buying patterns. Use this information to make informed decisions about product assortments, pricing strategies, and promotional campaigns, ultimately enhancing the overall shopping experience.

Start your business with confidence

Even in today’s digital age, brick-and-mortar stores continue to play a vital role in the retail landscape. They provide personalized experiences, prioritize customer service, and leverage technology—even just-right accounting software—to create memorable experiences for your customers and, in turn, loyalty.