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'

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