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. Showrooming

    The practice of examining merchandise or products in a store ...
  4. Renko Chart

    A type of chart, developed by the Japanese, that is only concerned ...
  5. Online Banking

    The performance of banking activities via the Internet. Online ...
  6. Business

    1. An organization or enterprising entity engaged in commercial, ...
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. Tech

    Understanding Electronic Commerce

    Electronic commerce is the buying and selling of goods and services over an electronic network.
  3. 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?
  4. Investing

    Why Brick-and-Mortar Retail Will Survive

    Not all retailers will be crushed by the mighty Amazon. Here's why.
  5. 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.
  6. Investing

    Choosing The Winners In The Click-And-Mortar Game

    E-tailing has changed the way consumers do nearly everything. Do you know how to pick the best retailer?
  7. Investing

    5 Retailers Set to Close More Stores in 2016 (FINL, GPS)

    Discover retail stores that have already announced plans to close stores in 2016. Some expect a new economic downturn, which may lead more stores to close.
  8. Investing

    Do Store Closures Hurt Retail Stocks? (WMT,SHLD,M)

    These eight retailers are closing stores. How many have seen stock depreciation over the past year?
  9. Investing

    Why Retail Layoffs Are on the Rise

    Many retailers are struggling, which is leading to increased layoffs. But it's not all bad news.
  10. Insights

    How Home Depot, Best Buy, Wal-Mart Can Beat Amazon

    Amazon.com Inc.'s growth has caused sales of many retailers to plunge, yet some are poised to thrive.
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. 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 >>
  3. 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 >>
  4. How does government regulation impact the retail sector?

    Learn about the types of federal agencies and regulations that retail businesses have to deal with, including inconsistent ... Read Answer >>
  5. What is the difference between cost and price?

    Consider how cost affects a product's price. Corporate expenses and the current cost of living both impact the final sticker ... Read Answer >>
Hot Definitions
  1. Notional Value

    The total value of a leveraged position's assets. This term is commonly used in the options, futures and currency markets ...
  2. Interest Expense

    The cost incurred by an entity for borrowed funds. Interest expense is a non-operating expense shown on the income statement. ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  4. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the ...
  5. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
  6. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
Trading Center