Brick and mortar

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This article is about the e-commerce concept. For brick and mortar construction, see Brickwork.
Brick and mortar retail stores on Marylebone High Street, London.

Brick and mortar (also bricks and mortar or B&M) refers to a physical presence of an organization or business in a building(s) or other structure. The term brick-and-mortar business is often used to refer to a company that possesses buildings, often including retail stores, 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. This term is usually used to contrast with a transitory business or an Internet-only presence, such as an online shop, which have no physical presence for shoppers to visit and buy from directly. 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 mainly to brick-and-mortar businesses rather than online ones. Nevertheless, even an online-only business needs to have an attractive, well-designed website, a reliable e-commerce system for payment and effective online marketing.

The divergence between brick-and-mortar businesses and online businesses has expanded in the 2000s as more and more entrepreneurs and established organizations create profitable products known as web "apps" (software applications) and mobile apps. Many web and mobile apps are digitally distributed to customers online and offer value without delivering a physical product or direct service, thereby eliminating the need for manufacturing products, warehousing them, and distributing them using shipping and delivery services and/or physical retail outlets. As well, due to the shift to digital media in audio and video, stores are able to sell digital audio files of songs or digital movies or TV shows over the Internet, either by selling the file to the customer or allowing, for a subscription fee, the consumer to "stream" the songs, movies or TV shows. Furthermore, the advent of reliable, affordable remote business collaboration tools such as teleconference phone systems and videoconferencing systems (e.g., Skype) diminishes the need for physical business buildings and offices for many Web and mobile product businesses. Some stores have both a strong bricks and mortar presence and extensive online shopping services. Examples include Best Buy, Walmart, and Target. While these stores are primarily known as brick-and-mortar businesses, they also have major online shopping websites.

Etymology[edit]

The name is a metonym derived from the traditional building materials associated with physical buildings: bricks and mortar. The term was originally used by 19th century British novelist Charles Dickens in the book Little Dorrit.[3] The term brick-and-mortar businesses is also a retronym, in that most stores had a physical presence before the advent of the Internet. However, the term is also applicable when contrasting businesses with physical presence and those that operated strictly in an order-by-mail capacity pre-Internet.

History[edit]

The history of brick and mortar businesses extends from the earliest market stalls in the first towns, where merchants brought their wares to sell in a market to the high tech retail consumer electronics shops of the 2010s, where consumers can browse through laptops, smartphones and flatscreen televisions. This physical presence, either of a retail store, a customer service location with staff, or a service center where customers can bring their products, has played a crucial role in providing goods and services to consumers throughout history. 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 35,000 restaurants in over 110 countries and plans to grow further; this shows the importance of having a physical presence.[4]

Decline[edit]

Netflix, an online movie streaming website, is an example of how an online business has affected a B&M business such as Blockbuster LLC, a video rental store which went out of business. "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.'[5]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].'[6] 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."[7] Another example of this is the introduction of online banking, which has affected bank branches on the High Street: "Barclays will shut at least 50 [Bricks and Mortar] branches this year."[8] 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[edit]

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

  • Customer service: face-to-face customer service can be a big contributor into increasing sales of a business. Research has shown that 86% of customers will pay more for a product if they have received great customer service.[9]
  • Face-to-face interaction: the elderly are used to a more traditional approach when it comes to shopping and prefer to have a demonstration of products or services, especially when buying new technology. Research has shown that customers prefer to touch products, experience and try them before they buy.[10]

Drawbacks[edit]

Brick and mortar approach also has its 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 payment for services such as a security alarm. Fixed costs stay the same for a business even if it ramps up its operations or ramps downs its operations. 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. If a business increases its hours of operation, its 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 2000s, with more families having both adults working, and therefore find it harder to find the time to physically go and shop at stores and services. Online shopping and online services, which consumers can access from an Internet-connected laptop or smartphone are more convenient for these people.[12] With mobile devices, consumers can order take-out food, gifts and services even when they are "on the go", such as sitting on a bus or in an airport lounge.
  • Expensive products: B&M increases the fixed cost for a business, therefore the products sold in shops tend to be more expensive compared to online shops. Online shops do not have to pay for retail stores and salespeople. [13]
  • Wider stock availability online: Products may be out stock in relatively small brick and mortar retail stores, but 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 may be quicker to ship out. An online store may be able to order up products from a large number of geographically dispersed warehouses, which are connected via the Internet
  • Queues (lineups and waiting rooms) are part and parcel of B&M businesses, due to physical constraints. A physical store may only have a few salespeople to serve customers, so many customers may have to wait during the busiest hours. 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 may be able to serve thousands of customers at the same time.

See also[edit]

References[edit]

  1. ^ "What is bricks and mortar? definition and meaning". Investorwords.com. Retrieved 2012-11-03. 
  2. ^ "What is bricks and mortar? definition and meaning". Businessdictionary.com. Retrieved 2012-11-03. 
  3. ^ Chapter 3
  4. ^ Chalabi, Mona. "McDonald's 34,492 restaurants: where are they?". The Guardian. The Guardian. Retrieved 29 October 2014. 
  5. ^ Anon. "Blockbuster to close remaining stores". BBC News. BBC News. Retrieved 29 October 2014. 
  6. ^ Butler, Sarah. "Shopping by smartphone and tablet in UK increases by 18%". The Guardian. The Guardian. Retrieved 28 October 2014. 
  7. ^ Walker, Brian. "Retail In Crisis: These Are The Changes Brick-And-Mortar Stores Must Make". www.forbes.com. Forbes. Retrieved 29 October 2014. 
  8. ^ Walne, Toby. "'We obviously do not make Barclays enough money': Dozens of branches to shut, despite bid to woo customers". This is Money. Financial Mail on Sunday. Retrieved 29 October 2014. 
  9. ^ Anon. "Improve customer service, Increase sales". Sage.co.uk. Sage. Retrieved 29 October 2014. 
  10. ^ Anon. "High Street V Online". Intersperience.com. Intersperience. Retrieved 29 October 2014. 
  11. ^ Shane, Scott. Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By. p. 99. Retrieved 29 October 2014. 
  12. ^ Lawson, Alex. "Shoppers 'hit the high streets with purpose' as footfall drops but spending rises". www.standard.co.uk. London Evening Standard. Retrieved 29 October 2014. 
  13. ^ Brownell, Matt. "5 Products You Shouldn't Buy Online". TheStreet Inc. Retrieved 30 October 2014.