Well, it's fairly realistic in the context of medieval craftsmen and shopkeepers. Usually they had their shop and workshop or storehouse on the first floor, and inhabited on the upper floors.
To be perfectly accurate, though, they'd have to merely open a large window on the first floor and peddle their ware from there to passerbys; the customers stayed in the street. Shops were you walk in were a later developments, and shops were you grab yourself what you want before going to the cashier with your filled basket are even more recent.