Brick and Mortar – Necessary For Small Business Consumer Experience?


The disruptive nature of technology has led to many new businesses being digital-first or, in some cases, online-only. However, increasing amounts of businesses are moving to brick and mortar shop fronts, with the notable example of Amazon’s 50 new retail outlets. What’s good news is that these are often focused on providing access to smaller businesses, lending logistical aid to increase product range.

This leads to the curious subject of whether brick and mortar is necessary for a small business looking to make a connection with customers. Having a customer experience strategy is important to creating and retaining a consumer base and research suggests have a real-world, physical interaction is important. Weighing up the pros and cons of investing in premises versus the alternatives will help to establish that strategy.


The financial basics of premises 

The bottom line on whether to prioritize a mortar and brick presence is an assessment of its costs and whether that’s feasible for a business of your size. According to statistics reported by MarketWatch, average commercial rent sizes vary wildly by state, from $14,800 per employee in NY to under $5000 in Atlanta. That’s before the costs associated with renting. Your revenue should be able to swallow the costs of renting. Alternatively, premises can be purchased using existing assets or through a mortgage, preferably business rated.

According to Business Online, purchasing is often preferential due to the asset investment made and preferential tax treatment with regards to SBA 504 transactions. This can also help to shelter your personal income. Regardless, ensure your finances are in order before considering material premises.


The strengths of brick and mortar 

The first thing to note about a move to brick and mortar is that, for a digital-first business, it will likely be for retail only. Advertising gurus Snap Agency note that 35% of all advertising spend by businesses is digital. For a primarily online business, that’ll likely be closer to 100%.

Where brick and mortar aids with a retail business is in sales. Despite the ever-increasing focus on online transactions, it has been noted in a Forbes analysis that 90% of commerce is in person. While there are caveats to this fact, it’s simply a matter of fact that there is a gigantic market for people who prefer to shop in person. However, this should be balanced for a digital business through analysis of your purchases to date. If your product is one appropriate to a digital market – technology is a great example – then it may be physical purchases aren’t likely to make much of a dent, and surplus would be better invested into shipping and support solutions.


The customer experience

The big advantage much touted by physical businesses is the customer experience. While the regular inclusion of trending online features, like voice recognition, tailored advertising and customization can help to engross the customer, most websites are ultimately non-interactive. In the case of identikit bot ‘helpers’, they can feel impersonal. With a shopfront, customers have the opportunity to be interacted with, and there are measurable benefits as a result – a long term study by consultants Temkin Group found that even ‘modest’ improvements, which can be gained from a retail storefront, brought 29% increased spending from consumers.

Ultimately, investing in a storefront will rely on how appropriate your product is for the type of consumer who prefers real-world interaction. If you have the revenue, the boost in customer experience is proven to boost sales. Balancing this versus your wider business plan is key, but the option is worth considering in detail.


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Founded in 1994 by the late Pamela Hulse Andrews, Cascade Business News (CBN) became Central Oregon’s premier business publication. •

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