https://dothemath.ucsd.edu/2011/11/pump-up-the-storage/

The main problem with gravitational storage is that it is incredibly weak compared to chemical, compressed air, or flywheel techniques (see the post on home energy storage options). For example, to get the amount of energy stored in a single AA battery, we would have to lift 100 kg (220 lb) 10 m (33 ft) to match it. To match the energy contained in a gallon of gasoline, we would have to lift 13 tons of water (3500 gallons) one kilometer high (3,280 feet). It is clear that the energy density of gravitational storage is severely disadvantaged.

It seems the problem is not necessarily one of conversion efficiency, but rather of scale. In order to store significant amounts of electrical energy using mechanical means, you need to move a lot of weight. Manufacturing the concrete blocks requires money and raw materials, and a pulley system robust enough to move them around wouldn't be cheap either. The pumped storage hydroelectric systems which currently provide the vast majority of our grid energy storage partially circumvent this expense by taking advantage of natural bodies of water and advantageous topography.

That being said, it's definitely a fascinating concept and one worth exploring. But there are well established difficulties that explain why this type of energy storage isn't already widespread.

What about friction within the pulley?