add-to-ecomm-header

Should You Open a Bricks & Mortar Store?

by
May 26, 2015

 

A growing number of eCommerce companies like Amazon and Bonobos are adding bricks & mortar (B&M) stores to complement their online sales. After all, the vast majority of retail sales still occur in a face-to-face setting, and the popularity of smartphones and mobile apps makes it easy to blend the online and “real world” shopping experience.

Opening a traditional store can provide your customers with an inviting and engaging shopping experience. It can encourage impulse buying and provide customers with immediate gratification since they take their purchases home without waiting for shipping.

Of course, not every online retailer has a product line—or the capital—to move into a storefront or mall setting. If you sell commodity products or sell thousands of different SKUs in small quantities, opening a physical location may not be the best idea.

To help think about if you should open a local shop, here are some key questions to consider:

  • Can you give your customers a sensory in-person experience, such as touching a cashmere sweater, trying out an antique sofa, or listening to music?
  • Do your customers like to try things on, such as clothing, shoes, or makeup?
  • Would a face-to-face conversation make the purchasing decision easier for your customers?
  • Can you use social media, a new app, or in-store promotions to build your brand on a local level, while enhancing customer loyalty and reaching new prospects?
    • If any of the above questions sound like an opportunity for your business, you should consider the practical aspects of opening a traditional store by analyzing your market and developing a solid business plan.

      Unless you have plenty of cash on hand or access to a large line of credit, you need to think carefully about how to cross the threshold into B&M retailing. In many cases, that means identifying one or two local markets with high sales potential to try out your new retail concept before investing in a nationwide rollout.

      You might also want to consider opening temporary “pop-up” stores in high-traffic locations, such as outdoor art or music festivals, farmers’ market, or a small kiosk in a mall in order to gauge customers’ reactions. Another option would be to sublease space within an existing store before investing in your own retail space.

      There are plenty of other considerations when preparing a bricks and mortar business plan:

      • How much inventory will you need to stock?
      • Do you need to set aside space for fitting rooms?
      • How many employees will you need to hire?
      • What hours will you be open?
      • How will you handle in-store delivery and shipping?
      • What about customer returns and exchanges?
      • Can you integrate the information systems for your online and retail stores?
      • Do you need to update your company policies to reflect issues like theft or breakage?

      In addition, you need to be able to cover the costs associated with opening a retail store, including the monthly rent (with down payment), store fixtures, point-of-sale system, initial inventory, and signage and tenant improvements to create your store’s unique shopping environment. You should also create a marketing, advertising, and public relations plan to tell the community about your new store.

      Your ongoing costs will probably include employee salaries and benefits, insurance (liability and property & casualty policies), janitorial services and utilities (including phone and Wi-Fi service), and any fees or assessments by the landlord.

      You should also talk to an attorney about whether “going real world” will change your legal liabilities, such as a “slip-and-fall” lawsuit. Opening a store may also have sales tax implications for your overall business.

      While it’s essential to analyze the costs and challenges associated with opening a bricks and mortar store, don’t let that be the end of the story. Take a close look at the sales potential—including a possible increase in your online sales—in order to make a well-informed decision about the future of your eCommerce company.