A click-and-mortar business runs a physical shop and an online storefront as one connected operation. This could be a bakery that takes online orders alongside counter sales or a clothing brand with a flagship shop and a marketplace listing that feeds off the same stock and customer records. The two channels share inventory, payment data, and customer history, which is what separates a click-and-mortar setup from a business that sells in more than one place.

As of May 2026, online sales accounted for 28.8% of all retail spending in the UK. This means more than 70% of retail spending still happens in person, and that's why many UK retailers are increasingly blending both channels into one operation.

Below, we'll discuss how these businesses operate day to day, the benefits and trade-offs of running both channels at once, and how to decide whether the click-and-mortar business model fits a given business.

Key takeaways

• A click-and-mortar business model connects its physical and online sales into one system for inventory, payments, and customer data.

• Running both channels well means managing UK-specific rules regarding value-added tax (VAT), distance selling, and payment acceptance across in-person and online sales.

• The right structure depends on the product being sold and whether the business can integrate its two channels rather than run them separately.

What is a click-and-mortar business model?

A click-and-mortar business model is when a business sells through a physical location and an online storefront at the same time. Both are run as one operation rather than separate ventures.

How do click-and-mortar businesses operate in the UK?

Running a click-and-mortar business in the UK means juggling two sets of operations that must work in sync at all times.

Here's what it involves:

• Unified inventory: Stock levels must stay accurate whether an item sells at the till or through checkout. The business needs a system that tracks both channels in real time.

• Fulfilment routing: An online order needs logic that can send it to the nearest physical location for same-day pickup rather than defaulting to a distribution centre that takes three days to deliver.

• VAT and digital records: Businesses registered for VAT must apply the correct rate across both channels and file records digitally under the Making Tax Digital rules of His Majesty's Revenue and Customs (HMRC) – whether the sale happened at a till or on a checkout page.

• Combined reconciliation: Finance teams need one set of books covering in-store and online sales. Manually matching separate terminal batches against separate online settlement reports doesn't scale past a handful of locations.

• In-store payment acceptance: Card readers and point-of-sale (POS) hardware need to handle chip and PIN, contactless, and digital wallets such as Apple Pay and Google Pay within the contactless limits set by the customer's bank or provider and the UK's Strong Customer Authentication rules.

• Online payment acceptance: A checkout page needs to support the same card networks and digital wallets as the physical shop as well as buy now pay later (BNPL) options such as Klarna or bank transfers.

What are the benefits of a click-and-mortar model?

A physical location lets a business build trust with customers in a way online-only retailers can't. Shoppers can see products before buying, ask questions face to face, and know there's a real place to go if a return goes wrong.

There's a data advantage as well. A connected click-and-mortar business sees the full customer relationship. Someone who buys in-store and later shops online counts as a single customer with one purchase history as opposed to two unrelated transactions. That makes loyalty programmes, targeted promotions, and channel-level performance tracking easier to run successfully.

The model also spreads risk across two revenue streams. When seasonal UK businesses, especially those that rely on Christmas or the summer tourist months, run both channels at once, it makes the business less dependent on any single sales pattern.

What click-and-mortar business models exist in the UK?

Not every click-and-mortar business is built the same way. A few models show up consistently across UK retail:

Store-first with online expansion

An independent shop, such as a bookshop or a butcher, adds a website and starts taking online orders alongside its existing trade. The physical shop remains the core of the business, and online sales supplement foot traffic rather than replace it.

Online-first with physical presence added later

A brand starts as a direct-to-consumer online seller. Later, it opens a showroom or flagship shop, usually to build confidence with UK shoppers and give them somewhere to try products before buying them.

Franchise or multilocation networks

A business with several physical outlets under one brand needs online orders to route to the correct location for fulfilment or pickup. Payouts also need to reach each franchise owner correctly. This means managing payments across multiple parties rather than one bank account. Stripe Connect is built for this kind of structure. It routes funds between a platform and the individual businesses or locations underneath it, which matters for franchise networks that need each location paid out correctly and on schedule.

Marketplace plus physical retail

A business that lists products on a marketplace platform while running a shop has to manage separate seller accounts and separate customer relationships, then reconcile them into one view of overall performance.

What risks and constraints come with running a click-and-mortar business?

A business needs staff or systems capable of handling both channels well. UK-specific rules add another layer to account for. Distance selling regulations give online shoppers 14 days to cancel most orders, a right that doesn't apply the same way to in-store purchases. Staff need to know which rules apply to which sale, particularly at the till when a customer tries to return something they bought online.

It can be easy to underestimate certain expenses. Running a physical shop means factoring in rent, business rates, and staffing costs that an online seller doesn't carry, and that's on top of maintaining an e-commerce platform, payment integrations, and fulfilment logistics. The overhead for a click-and-mortar business typically runs higher than either model alone. It needs to be justified by real benefit.

Brand consistency gets more difficult to maintain across channels as well. Confidence can erode if pricing, promotions, and stock availability don't match between the shop and the website. A discount running online that isn't honoured in-store or a product shown as available on the site but out of stock at the shop can create the kind of gap that pushes a customer to shop elsewhere.

Is a click-and-mortar model right for your business?

The right structure depends on what you're selling and who's buying it. Categories in which customers benefit from touching, trying, or seeing a product in person, such as clothing, furniture, or speciality food, tend to make the strongest case for a click-and-mortar business model. Categories that are purely functional or digital by nature might not need the cost of a physical shop.

The decision also hinges on whether a business can connect its two channels rather than running them as separate operations using the same name. A click-and-mortar model delivers its real advantages, such as unified customer data, flexible fulfilment, and spread-out risk, only when the systems behind it are integrated. Two disconnected sales channels tend to create more strain than they resolve. UK businesses should weigh whether they have, or can build, the payment and inventory infrastructure to run both channels as one connected operation.

How Stripe Connect can help

Stripe Connect orchestrates money movement across multiple parties for software platforms and marketplaces. It offers quick onboarding, embedded components, global payouts and more.

Connect can help you:

• Launch in weeks: Use Stripe-hosted or embedded functionality to go live faster and avoid the up-front costs and development time usually required for payment facilitation.

• Manage payments at scale: Use tooling and services from Stripe so you don't have to dedicate extra resources to margin reporting, tax forms, risk, global payment methods or onboarding compliance.

• Grow globally: Help your users reach more customers worldwide with local payment methods and the ability to easily calculate sales tax, VAT, and goods and services tax (GST).

• Build new lines of revenue: Optimise payment revenue by collecting fees on each transaction. Monetise Stripe's capabilities by enabling in-person payments, instant payouts, sales tax collection, financing, expense cards and more on your platform.

Learn more about Stripe Connect or get started today.