What is 'Brick And Mortar: Term'

Brick and mortar is a traditional street-side business that deals with its customers face-to-face in an office or store that the business owns or rents. The local grocery store and the corner bank are examples of brick-and-mortar companies. Brick-and-mortar businesses can find it difficult to compete with web-based businesses like Amazon.com, Inc. (AMZN) because the latter usually have lower operating costs and greater flexibility.

Brick-and-mortar businesses have several distinct advantages over their online counterparts. Many consumers still prefer to liaise with people directly as they believe questions about the product or service can be dealt with in a more comprehensive and immediate manner at a face-to-face level. Brick-and-mortar businesses allow consumers to hold, try and touch items before they contemplate making a purchase — indeed 73% of consumers prefer to try before they buy. Consumers associate legitimacy with a bricks-and-mortar business as a physical presence often gives a perception of trust.

Brick-and-mortar businesses provide consumers with instant gratification when a purchase is made. As a result, consumers typically spend more than they intend to at brick-and-mortar stores. However, there are several key disadvantages to operating a traditional brick-and-mortar business. A physical presence requires the need for employees to conduct transactions, renting or leasing expenses and utility charges such as electricity, gas, and water.

Future of Brick and Mortar Businesses

The rise of electronic commerce (e-commerce) and online businesses has led many commentators to contemplate the future of the humble brick-and-mortar business. It is increasingly common for brick-and-mortar businesses to also have an online presence in an attempt to reap the benefits of each particular business model. For example, some brick-and-mortar grocery stores, such as Safeway, allow customers to shop for groceries online and have them delivered to their doorstep in as little as a few hours.

However, the importance of the bricks-and-mortar model is given credence by several large online e-commerce companies opening physical locations to realize the advantages of traditional retail. For example, Amazon.com Inc., along with other online companies, has opened brick-and-mortar stores to help market its products and strengthen customer relations. That said, some business types, for example, those that operate in the service industry are more appropriately suited to brick-and-mortar form, such as hair salons, veterinarians, gas stations, auto repair shops, restaurants and accounting firms. It is crucial that marketing strategies for brick-and-mortar businesses highlight the advantages a consumer has when purchasing at a physical store.

BREAKING DOWN 'Brick And Mortar: Term'

RELATED TERMS
  1. Online-To-Offline Commerce

    A business strategy that draws potential customers from online ...
  2. Electronic Commerce - ecommerce

    A type of business model, or segment of a larger business model, ...
  3. Click And Mortar

    A type of business model that includes both online and offline ...
  4. Showrooming

    The practice of examining merchandise or products in a store ...
  5. Retail Industry ETF

    An exchange-traded fund that invests in companies whose main ...
  6. Renko Chart

    A type of chart, developed by the Japanese, that is only concerned ...
Related Articles
  1. Insights

    What Does Brick and Mortar Mean?

    Brick and mortar stores are traditional street-side businesses that deal with customers face-to-face.
  2. Investing

    Are Brick and Mortar Retailers Headed Into Bear Markets?

    The online sales revolution has altered the playing field for brick and mortar retailers, placing them at a disadvantage to purely web-based operations.
  3. Tech

    Understanding Electronic Commerce

    Electronic commerce is the buying and selling of goods and services over an electronic network.
  4. Personal Finance

    Is Online Shopping Killing Brick-And-Mortar?

    Online shopping has increased by 20%, much to the detriment of several large retailers; the question is, will there be more casualties?
  5. Taxes

    Internet Sales Tax Vs. Brick & Mortar Sales Tax

    Learn about the differences between sales taxes and Internet sales taxes, and the goods and services that typically incur each type of tax.
  6. Personal Finance

    eBank or Brick-and-Mortar Bank?

    The bank type that makes the most sense for you depends on the services you need. The best choice could be both.
  7. Personal Finance

    Should You Buy Groceries Online?

    A look at this new way to shop and whether it will help you save or end up costing you money.
  8. Personal Finance

    Comparing Online And In-Store Prices

    While every retailer is different, there are several factors that affect where you'll get a better deal.
  9. Small Business

    What is a Business Model?

    Business model is the term for a company’s plan as to how it will earn revenue.
  10. Investing

    Do Retail Store Closings Create a Domino Effect?

    If brick-and-mortar retailers continue to close at today’s pace, here’s how it could play out.
RELATED FAQS
  1. How does stock evaluation of an electronic retailing (e-tailing) business differ ...

    Learn how stock evaluation of an Internet retailer differs from a brick-and-mortar retailer. Since 2005, online commerce ... Read Answer >>
  2. What Are the Pros and Cons of Online Checking Accounts?

    Learn about the ways an online checking account can save you time and money, but understand the drawbacks before signing ... Read Answer >>
  3. What do you need to know to create a business model?

    Learn what a business model is, its importance and the primary elements that are needed in order to create a successful business ... Read Answer >>
  4. How has electronic retailing (e-tailing) changed the consumer discretionary goods ...

    Learn how electronic retailing has changed the consumer discretionary goods sector. Even physical stores are forced to invest ... Read Answer >>
  5. What are some examples of different types of business models in major industries?

    Learn what types of business models are currently being used in the marketplace as well as examples of models that work for ... Read Answer >>
  6. How can I invest in electronic retailing (e-tailing)? (AMZN, W)

    Learn about the different ways to invest in electronic retail. Amazon.com and Alibaba are the two dominant players in electronic ... Read Answer >>
Hot Definitions
  1. Dividend Yield

    A financial ratio that shows how much a company pays out in dividends each year relative to its share price.
  2. Fixed-Income Security

    An investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity. ...
  3. Free Cash Flow - FCF

    A measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents ...
  4. Leverage Ratio

    Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to ...
  5. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  6. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
Trading Center