A back office is an office, or often the headquarters, that does not serve external customers.
The term back office is only used for businesses that have front line operations like retailers where they serve walk-in customers.
There is no need to call an office a back office if it does not serve external customer and just a primary area for administrative work.
That can just be called an office.
For example, a bank in City Hall with a store front where consumers can walk-in and make deposits is the front office of the bank. The office behind the scenes where cheques are cleared and admin work is done is the back office.
It is possible for a business to have front and back offices set up in the same location.
However, when businesses with a front line presence grow, in order to save costs, they seek out low rental areas to set up their back end operations.
Thus the need for a back office.
Back office for retailers
For retailers, a back office in the same location is not necessarily a decision based on budget or capital limitations.
It could be that such setups are made by choice.
Sometimes, it is essential for the smooth flow of operations to have back offices within the premises so that operational issues can be attended to and solved quickly.
When this is the case, the back office would essentially be on expensive rental as it would be sitting on retail space which is generally more pricey compared to regular commercial office space.
This is why when a back office is integrated into retail space, it is basically planned with a layout that takes up as little space as possible.
And often share the same space as inventory storage.
The bulk of the space would be used for retail floor space where most of the selling to generate revenue is done.
The bigger the retail space for merchandising, the more products go on display, and the more sales can be generated.
