Depends on where you live, I suppose. Large cities I've lived in have all allowed commercial spaces at ground level, but there are a ton of regulations as to what you can do in them.

Doing nothing but knocking down a wall and putting up a sign is a sure way to get shut down by the city, along with some likely hefty fines.

Edit: another barrier is building insurance; if a building is all residential, and someone wants to convert ground level space to commercial use, the insurance company has to re-assess the risk and premiums they charge due to the increase in people coming through, if nothing else.

In the UK it's quite rare for people to run a retail business out of their home, I can see why we don't do this but I also have a feeling we miss out on a lot as well.

In the town I grew up in (Blackburn), all the traditional family-run shops in terraced streets had the shop on the front room on the ground floor, and the living room and kitchen at the back, bedrooms on the top floor. Bakeries, butchers, delicatessens, shoe shops, chip shops, fashion shops, habadasheries, newsagencies, hardware shops, electrical shops, everything was like this. This was typical of most towns until the mid-late 1980s. You could do all your shopping on a single street local to your house.

These were not supermarket-style shops. You would walk in and be served directly over the counter in most. It's a shame that this was all destroyed by big supermarkets and globalism, because the quality of the products and service was superb, and they all sold locally produced food and goods, supporting a lot of local economic activity rather than having massive supply chains to source everything from China. The staff weren't minimum wage and disinterested, they were experts in their fields who cared about their businesses and customers, and had pride in their jobs and skills. Their destruction is one of the reasons why so many of our towns are struggling.

It isn't common now, but was until recently. Most high street shops have flats above them (except in the centres of big cities), and many are still owned by the same people who run the shop.