Brick and mortar (more commonlyBricks and mortar in British English,[1] sometimesB&M in American English) is anorganization orbusiness with a physical presence in a building or other structure. The termbrick-and-mortar business is often used to refer to a company that possesses or leasesretail shops,factory productionfacilities, orwarehouses for its operations.[2] More specifically, in the jargon ofe-commerce businesses in the 2000s, brick-and-mortar businesses have a physical presence (e.g., aretail shop in a building) and offer face-to-face customer experiences.
This term is usually used to contrast with a transitory business or anInternet-only presence, such as fullyonline shops, which have no physical presence for shoppers to visit, talk with staff in person, touch and handle products, or buy from the firm in person. However, such online businesses normally have non-public physical facilities from which they either run business operations (e.g., the companyheadquarters andback office facilities), and/or warehouses for storing and distributing products.[3]
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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 isMcDonald's, a company that started with one small restaurant and now has nearly 36,000 restaurants in over 120 countries and plans to grow further; this shows the importance of having a physical presence.[4]
Netflix, an onlinemovie streaming website founded in 1997, is an example of how an online business has affected a B&M businesses such asvideo rental stores. After Netflix and similar companies became popular, traditional DVD rental stores such asBlockbuster LLC went out of business. Customers preferred to be able to instantly watch movies and TV shows using "streaming", without having to go to a physical rental store to rent a DVD, and then return to the store to give the DVD back. "The rapid rise ofonline film streaming offered by the likes ofLovefilm 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 usinge-commerce (online sales) to fulfill basic needs ranging from grocery shopping to book purchases. Sales through mobile devices such astablet computers andsmartphones 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 increase in households where both adults work outside the home, combined with 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]
The presence of brick-and-mortar establishments may bring many benefits to businesses;
The brick-and-mortar approach also has various drawbacks.
Fixed costs are a serious challenge for B&M businesses. Fixed costs are payments that a business has to make for elements such asrent of a store and monthly payments for services such as asecurity alarm. Fixed costs stay the same for a business even if it ramps up its operations or winds down its operations during a slow period. In contrast,variable costs change as a business ramps its operations up or down. Variable costs includewages (for employees paid by the hour) andelectricity for operating machinery used by the business during its operating hours. If a business increases its hours of operation, its hourly 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 othersmall 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.[12]
People have busier lifestyles in the 2010s, with more families having both adults working, and therefore they find it harder to find the time to physically go and shop at stores and services. As well, in many citiestraffic jams andcongestion on roads have made it more stressful and time-consuming to drive to physical locations to shop. Online shopping and online services, which consumers can access from anInternet-connectedlaptop orsmartphone are more convenient for these people.[13]
B&M increases the fixed cost for any business, therefore the products sold in physical shops tend to be more expensive compared to online shops. For stores selling expensive products or services in a B&M format, customers expect beautiful window displays, fine decorating in the establishment and well-dressed salespeople who earn highcommission on their sales. Some high-end hair salons and luxury car stores even offer conveniences such as freeespresso and bottled water, all of which add to the overhead of selling these products and services. Online shops, even those for luxury goods, do not have to pay for high-end retail stores and salespeople.[14]