Business Strategy

Why Some Businesses are Setting Up Shop in a Physical Space

April 24, 2023 — Some businesses that began as ecommerce-only are opening or considering a physical space to sell their products. Possible options range from long- and short-term leases to temporary areas such as pop-up shops.

The number of “brick-and-mortar” retail stores is growing, according to data from the U.S. Census Bureau and analysis from The Daily on Retail.

Big retailers announced the opening of 8,100 store locations – double the number of stores they have reportedly closed, report retail media and industry groups. The National Retail Federation called it a “bricks and mortar resilience in an omnichannel world.”

And the large retailers aren’t the only ones seeking a physical presence. Vuori, Fabletics and Parachute – traditionally considered as digitally native brands – are investing in brick-and-morter strategies, says Retail Bum in a Trends post.

“Smaller companies are now experimenting as well, opening free-standing shops, leasing from a retail service or securing short-term spaces in other stores,” writes Ellen Rosen in a New York Times article.

Shoppers at Physical Stores

While the popularity of online shopping isn’t going away anytime soon, there are still customers who want to visit a physical store to make a purchase or have that in-store experience.

The 2021 State of Consumer Behavior report says 33 percent of shoppers surveyed prefer brick-and-mortar stores because they can touch and interact with products, says a blog by Shopify.

Another 61 percent said they’re more likely to spend more when shopping at a physical location,” writes Elise Dopson in the Shopify blog.

“The rise of ecommerce hasn’t outdated brick and mortar; it’s highlighted how important both experiences are for customers. Having a brick and mortar store to complement your ecommerce strategy targets both online and offline shoppers,” says Dopson.

According to a report released by the U.S. Census Bureau in April, in-store purchases of clothing and accessories are up nearly 22 percent from a year ago.

“Brick and mortar remains an undeniably successful strategy for retailers,” writes Dopson.

According to Statistica, physical retail continues to outsell ecommerce, with the ratio nearly 4:1, the Shopify post says.

Different Motivators

Deciding to add a brick-and-mortar location varies depending on your business and several factors.

Some entrepreneurs start an ecommerce-only business with no thought to a “traditional” storefront. Others see adding a physical presence as part of a strategy to eventually provide customers across-channel shopping experiences – via desktop, mobile and physical spaces, writes Rosen in The New York Times story.

These “omnichannel” retailers see their brick-and-mortar locations as centers that can provide customers an experience, ranging from in-store events to buy online, pick-up in-store (BOPIS), explains Dopson in Shopify’s retail blog.

You may consider a physical location because of timing – opportunities align for you to reach new customers. Perhaps you’ve spotted a chance for a long, short term or even temporary space available in your community or have new funding to finance expansion.

Temporary Spaces

If you want to test the waters for a possible physical space, consider doing a pop-up shop or even an open-marketplace style shop.

“Pop-up shops are a superb way to experiment with brick-and-mortar,” writes Dopson for Shopify. “Instead of committing to a year-long lease, other retailers with their own storefront lend it to newer companies.”

Other options for a temporary space might be found in community shopping areas, including pop-ups in outdoor settings such as festivals and regularly scheduled events.

In the U.K., small businesses setting up shop in outdoor markets has become a growing trend. According to a post by Sam Bromley in Simply Business, the number of outdoor market stall traders has increased by 92 percent since 2020, making it the fastest-growing industry over the last year.

“Budding entrepreneurs can learn lots about business and what it takes to succeed while keeping start-up costs relatively low,” he writes.

The Same, Not The Same

Small business owners will want to examine the operations and marketing differences between running a physical store vs. an e-retail site, before opening that brick-and-mortar location, says Harvard Business School professor Leonard A. Schlesinger in The New York Times story.

“What makes you a good internet marketer doesn’t necessarily make for a retail store,” he says. “It’s different skills, different talents, and there can be bigger economic risks.

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