1.
Anchor
store: One of
the largest — if not the largest — retail stores in a shopping center or mall.
This department store or grocery store helps drive foot traffic, making it a
great neighbor for smaller retailers. Also known as a draw tenant, anchor
tenant, or key tenant
2.
Augmented
reality (AR): This
principle is about supplementing the user’s physical world with virtual things,
so they appear to be in the same environment. In retail it can be used in
shoppable catalogs, apps that let you see in-store deals by using your phone’s
camera, virtual fitting rooms, and more.
3.
ATS: This is the acronym for average
transaction size, or the average amount spent by a customer in a single
transaction or purchase. It is calculated by dividing the total dollar value of
sales during a given time by the number of transactions during that time. This
metric is a valuable way to determine whether the size of your sales is growing
— ideally, you want increasingly larger sales over time.
4.
ATV: This stands for average
transaction value. Like ATS, this is the average amount customers spend every
time they make a purchase.
5.
Bar
code: A
machine-readable code, which has alternating dark and light bars. The spacing
between the bars signals to the reader what the numerical code is. Bar codes
can be universal product code (UPC) or any other numerical format. Bar codes
help you track inventory going in and out of the store.
6.
Backorder: When a specific quantity of an
item could not be filled by the requested date, it’s on backorder.
7.
Big-box
store: Like the
name says, this is a large store that’s usually part of a major retail chain.
Target and Best Buy are big-box stores.
8.
Big
data: This
refers to a massive data set that is so large you would need a sophisticated
program — or a data scientist — to make sense of it. When you’re looking at big
data (like census information or tweets), you’re looking to analyze customer
behaviors, demographics, social information, and more.
9.
Brick
and click: This
term is used for retailers that integrate their e-commerce site and their
traditional brick-and-mortar stores. When the two are integrated, it allows you
to provide seamless web-to-store services, like buy online pick up in store and
buy online return in store.
10.
Bulk: The classic definition refers to
distributing raw materials (such as coal, iron, and grains) that are stored and
transported in large quantities. The term may have a variety of definitions
based on industry. It could mean buying a large quantity of a single item or it
could refer to the storage area for pallets.
11.
Bundled
pricing: Companies
that bundle together a package of goods or services to sell for a lower price
than they would charge if the customer bought all of those goods or services
separately.
12.
Card
file: According
to PCI-compliance standards, unsecured card files are generally a high-risk way
to store and manage sensitive customer information. Learn more about storing credit cards securely.
13.
Card
on File (CoF): Square
offers CoF as a safe and secure (PCI-compliant) way to store customer payment
information. This is the equivalent of a house account. It rewards your regular
customers by creating a fast and easy checkout experience (whether they are in
person or not). Square offers this feature as part of its POS.
14.
Carrying
cost: This can
also be referred to as a holding cost. It is primarily made up of the cost
associated with the inventory investment and storage cost.
15.
Cashwrap: This is the main checkout area of
a retail store, where retailers set up their POS and
customers pay for items. Sometimes cashwraps have shelves with items that
shoppers can pick up on their way out.
16.
Chargeback: A chargeback happens when a
customer disputes a charge from a business and asks the card issuer to reverse
it. Credit card chargebacks are meant to protect consumers from unauthorized
transactions, but they can mean lots of time and headaches for businesses.
Learn more about chargebacks and how to prevent them.
17.
Chargeback
rebuttal letter: If a
business wants to refute a chargeback, it might send a chargeback rebuttal
letter to persuade the customer to withdraw the dispute. The letter would show
evidence that the product was in fact delivered or that the service requested
was rendered. Learn more about the kind of evidence you need to defend
against non-fraud chargebacks.
18.
Click
and collect: This omnichannel feature allows customers who buy an item
online to pick it up in the brick-and-mortar store; it’s also called buy online
pick up in store, or BOPIS. Consumers love the ease and convenience of this
feature, which allows them to avoid shipping costs and wait times. Over 50
percent of customers have used a service like this according to a JDA software survey.
19.
Cross
merchandising: This
refers to the retail practice of displaying products from different categories
together to create add-on sales. You’ve seen this in a grocery store that puts
soda, chips, dip — and all the other foods you’d need for a barbecue — in one
area during the summer.
20.
Clienteling: This term characterizes activities
retailers use to build relationships with their customers. One of the most
popular ways to do this is to collect and track customer data with customer
relationship management (CRM) software that can then be used to create
customized communication and shopping experiences.
21.
Cloud
POS: A cloud
POS is a web-based point-of-sale system that lets you process payments through
the internet, rather than on your local computer or servers. Learn more about
the benefits of a web-based point-of-sale system.
22.
Contactless
payments: Contactless
payments are powered by near field communication, or NFC. NFC-enabled cards or
smartphones allow customers to pay for a purchase without touching the payment
terminal — they just need to wave or tap. Mobile payments, like Apple Pay, are one of the more common types of contactless payments.
23.
Consumer
packaged goods: This
describes products that are in a form that is ready for sale to the consumer.
CPGs include non-durable goods like packaged foods and beverages and other
consumables. They are often sold quickly and at a low cost.
24.
Consignment
merchandise: This is
inventory that a retailer does not own or pay for until it’s sold. In a
consignment arrangement, goods are left by an owner (consignor) in the
possession of an agent (consignee) to sell them. The consignor continues to own
the merchandise until it’s sold. Typically the agent, or consignee, receives a
percentage of the revenue from the sale.
25.
Convenience
products: These
are consumer products that are routinely purchased by customers, who usually
give little thought or planning to them. They often appeal to a large target
market.
26.
Cost
of goods sold: The
accounting term used to describe the total value (or cost) of products sold
during a given time period. Also referred to as COGS, this appears on the
profit-and-loss statement and is used for calculating inventory turnover.
27.
CRM: Customer relationship management is an online system
for managing relationships with your current and prospective customers, and
stores a directory of their information online. Learn more about what a CRM is.
28.
Dead
stock: Also
known as dead inventory, it’s how retailers classify products that have never
sold or have been in stock for a really long time. Sometimes dead stock is the
result of seasonality (people don’t buy Christmas ornaments in May), while
other times the stock just isn’t in demand — ever. Also called dead inventory,
this is one thing no retailer wants to have. You can get rid of dead stock with
sales and promotions, or you can avoid it all together with careful analysis.
29.
DC: This is an acronym for a
distribution center. A distribution center is a warehouse or specialized
building that stores a set of products to be distributed to retailers (or
directly to consumers).
30.
Dog: This is retail slang for products
that aren’t selling. See Dead stock.
31.
Drop
shipping: This
refers to an arrangement between a retailer and a manufacturer in which the
retailer transfers customer orders to the manufacturer, which then ships the products
directly to the consumer. When using a drop shipping method, the retailer doesn’t keep the
products in stock. The order and shipment information is just passed on to the
manufacturer. Sometimes referred to as direct shipping.
32.
Durable
goods: These
are products that can be used daily, but have a long, useful life expectancy.
Examples are furniture, jewelry, and major appliances, such as dishwashers.
33.
Dry
storage: Though
dry storage can have other meanings in different industries, in warehousing it
is typically used to describe non-refrigerated storage of food products, such
as canned and dry goods.
34.
E-tailing: Short for electronic retailing,
this is the practice of selling products on the internet. E-tailers range from
the very big, like Zappos, to the small, like your local clothing boutique that
also has an online store.
35.
EMV: EMV stands for Europay,
Mastercard, Visa. The technology is the global standard for credit cards that
use computer chips to authenticate (and secure) chip-card transactions. Because
this technology encrypts bank information, it’s much more secure than magstripe
cards (which hold static information about the card holders). Learn more
about EMV standards.
36.
Endless
aisle: This is
a feature of a brick-and-mortar store that enables customers to browse and shop
a retailer’s entire catalog. But, instead of stocking up on every item, the
store can provide the entire catalog through a touchscreen or tablet.
37.
Everyday
low pricing (EDLP): This is
a product pricing strategy that promises consumers a
consistently low price without comparison shopping or a sale.
38.
Fast
fashion: This is
clothing that moves from the catwalk or fashion shows to stores quickly. The
clothes represent the most recent trends. Stores like H&M and Zara have
built their businesses on fast fashion.
39.
Flash
sales: These
are sales that are available for a limited time. The huge discounts (we’re
talking 50 percent off and up) entice consumers to buy, and the limited time
frame — usually anywhere from several hours to a couple of days — forces them
to act quickly. Some e-tailers, like Gilt or Zulily, have built their entire
business on flash sales.
40.
Forecast: An estimation of future demand for
products or services. Historical demand is used to calculate future demand,
with adjustments for seasonality and trends.
41.
FIFO
(first in first out): This is
an inventory management cost strategy that assumes the
first units of stock purchased are the first ones that are sold, regardless of
whether or not they were. It’s a common way to calculate the value of
inventory: If you assume the first inventory in (the older inventory) is the
first out, then the cost of the older inventory is assigned to the cost of
goods sold and the cost of the newer inventory is assigned to ending inventory.
The cost of goods sold is essential to evaluating inventory turnover and determining the
efficiency of your inventory management.
42.
Franchise: This is a way that some businesses
expand by distributing their goods and services through a licensing
relationship. In this contractual relationship, a franchisor grants a license
to a franchisee to conduct business under the business’s name. Usually the
franchisor specifies the products and services to be offered by the franchisee
and provides an operating system, the brand, and operational support.
McDonald’s and Subway operate through franchise systems.
43.
Green
retailing: This
refers to the environmentally friendly business practices that retailers commit
to. This can range from giving customers reusable shopping bags to adding solar
panels to supply electricity to their stores.
44.
Gross
margin: The
difference between how much an item costs and what it sells for. On a larger
scale, it’s how much sales revenue a company keeps after all the direct costs
of making a product or performing a service are accounted for. It’s also called
gross profit margin.
45.
High-speed
retail: This
practice speeds up the customer’s shopping experience. Drive-thrus, pop-up
stores, and mobile businesses like food trucks all fit in this category.
46.
Impulse
purchase: Also
called an impulse buy, this happens when a customer makes an unplanned purchase
of a product or service right before checking out at the store. Some retailers
set up small items around their cashwrap to encourage this behavior (like a
grocery store that puts magazines and candy in the checkout lane).
47.
Inventory
management: This is
a system a retailer uses to make sure the right inventory is in the right
place, at the right time, and in the right quantity. As a part of this, the
retailer is making sure that ordering, shipping, handling, and related costs
are kept in check.
48.
Inventory
turnover: The
average number of times that inventory on hand is sold or used during a
specific time period. Most of the time, high stock turn is good — it means
you’re selling a lot without stocking too much. To calculate it, divide the
cost of goods sold by the average inventory.
49.
Keystone
pricing: This is
a method of selling merchandise for double its wholesale price. It’s an easy
way for retailers to cover costs and make a reasonable profit.
50.
Layaway/lay-by: This is a service that allows the
customer to put an item on hold with a retailer until the item is paid for in
full. The customer pays installments on the product until it’s entirely paid
off. While some retailers offer this kind of program all year, it is commonly
advertised during the holidays. Layaway programs make it easier for the
consumer to afford products and reduce financial risk for the retailer.
51.
Leveraged
buyout (LBO): An LBO
is the purchase of a company using borrowed funds (such as loans from banks and
investors). The purchaser uses the company’s assets as collateral for the
funding and its cash flow to pay back whatever is owed.
52.
LIFO
(last in first out): This is
a principle that assumes new merchandise sells before older stock. It matches
current sales with the current cost structure.
53.
Loss
leader: A
marketing tool for retailers, a loss leader is an item that’s sold below cost,
or at a loss, in an effort to attract new customers. Retailers that use loss
leaders rely on the fact that once customers are in the door, they buy other
items that do turn a profit.
54.
Lot
size: Also
called order quantity, this is the quantity of an item you order for delivery
on a specific date.
55.
Markdown/markup: A markdown is the difference
between the original retail price and the reduced price — it’s the devaluation
of a product, usually because it’s not selling at the original price. A markup
is the amount of money added to the wholesale price to obtain the retail price.
56.
Customer-facing
display: A
customer-facing display (CFD) — also known as a customer display or monitor —
is usually a separate screen that allows customers to view their order, tax,
discounts, and loyalty information during the checkout process. Because they
can view what you are ringing up, CFDs help reduce inaccuracies and incorrect
purchases, creating a better experience for your customers.
57.
Mass
customization: This is
a product that can be produced at a low cost in high volume, but still provide
each customer with a customized offering. Nike’s NIKEID is a prime example of a
shoe that can be mass produced but in the specific colors a customer wants.
58.
Merchandising: This is the way a product is
displayed in your store that encourages customers to purchase it. Merchandising
includes embellishments like price, packaging, offers, coupons, and more.
59.
Minimum
advertised price: This is
a supplier’s pricing policy that doesn’t permit resellers to advertise prices
below a specific amount.
60.
Mobile
payments: Mobile
payments are regulated transactions that take place digitally through your
mobile device. They are enabled by near field communication (NFC). Popular
mobile payment apps include Apple Pay and Android Pay. Read our handy guide to
learn more about mobile payments.
61.
Monthly
sales index: A
measure of seasonal sales that is calculated by dividing each month’s actual
sales by the average monthly sales, and then multiplying results by 100. If the
result is more than 100, that means there’s been growth; if less than 100,
there’s been a loss.
62.
Multichannel
retailing: Selling
merchandise through more than one independently managed channel, such as
brick-and-mortar stores, catalogs, and online. This is the precursor to
omnichannel retail, which aims to tie those channels together.
63.
Mystery
shopping: This is
an activity where a market research company, watchdog group, or even a retail
owner sends in a decoy shopper to evaluate the products or the customer service
in a store. The mystery shopper behaves like a regular customer (or performs
specific tasks) and then provides feedback to help the store improve its practices.
64.
Niche
retailing: The
practice of selling only to a specific market segment. A niche retailer
specializes in a specific type of product or a set of related products. Warby
Parker is a niche retailer specializing in eyewear. But your local pet store is
also a niche retailer, despite offering a wide range of products.
65.
Net
profit: The
actual profit after working expenses have been paid. It’s calculated by
subtracting retail operating expenses from gross profit.
66.
Net
profit margin: This is
the percentage of revenue left after expenses have been deducted from sales.
It’s a performance metric that shows how much profit a business gets from its
total sales. It’s calculated by dividing net profit by net sales.
67.
Net
sales: This is
the revenue a retailer makes during a specific time period, after deducting
customer returns, markdowns, and employee discounts.
68.
Obsolete
inventory: This
refers to products that have no sales or aren’t used during a set period of
time (it could be weeks or years, depending on the retailer). See Dead stock.
69.
Off
price: This is
merchandise purchased for less than the regular price. Selling off-price
merchandise can be a great way to get customers to your store. There are some
retailers that only sell off-price merchandise, like Nordstrom Rack, which
sells designer merchandise at drastically discounted prices. (Its parent
company, Nordstrom, attributes some of the company’s overall
growth to its off-price retailer.)
70.
Omnichannel
marketing: Omnichannel
marketing aims to create a seamless experience across all of a brand’s
marketing channels. This is different from multichannel marketing. Most
retailers already have multichannel marketing; they use a website, social
media, email, and other channels to push out brand messages, promotions, etc.
Where omnichannel differs is that it takes into account how consumers interact
with all of those channels and how they move from one to another; omnichannel
marketing is all about connecting the dots between the channels. The goal is to
keep customers moving around within the brand ecosystem, with each channel
working in harmony to nurture more sales and engagement. An omnichannel
marketing strategy may include things like cross-channel loyalty programs, in-store pickup, smartphone apps to
compare prices or download coupons, and interactive in-store digital lookbooks,
in addition to more traditional channels. Learn more about how to run an
effective omnichannel marketing strategy for retail.
71.
Order
lead time: The
number of days from when a company buys the production inputs it needs to when
those items arrive at the manufacturing plant.
72.
PCI
compliance: PCI DSS
stands for Payment Card Industry Data Security Standard. It sets the
requirements for organizations and sellers to safely and securely accept,
store, process, and transmit cardholder data during credit card transactions to
prevent fraud and data breaches. Any organization that processes credit card
payments needs to prove it is PCI compliant. Read more about PCI compliance in our guide.
73.
Planogram: This is a detailed floor plan of a
store. It visually represents the placement of products and product categories
throughout a store (on shelves, racks, etc.) that best drives sales. A planogram
is a helpful tool for thinking about how placement impacts purchase behavior
and how retailers can be most efficient with their space.
74.
PLU: This stands for price look up.
It’s a system that displays the description and price of an item when the item number
is entered or scanned at the point of sale. PLUs are often printed on the
customer receipt to remind the customer what was bought.
75.
Pop-up
store: A
short-term shop that keeps a physical space for a limited amount of time.
Pop-ups can be set up anywhere — empty retail spaces, mall booths, parks, etc.
76.
Prestige
pricing: This is
a pricing strategy used by high-end retailers in which an item is priced at a
high level to denote its exclusivity, quality, or luxury. Prestige pricing is
intended to attract status-conscious consumers or those who want to buy premium
products.
77.
Procurement: This is the process of sourcing,
negotiating, and strategically selecting goods for your retail shop.
78.
Product
life cycle: This
describes the stages a product goes through once it’s in market. There are
four: introduction, growth (in sales), maturity, and decline, and they show
whether the expected sales are strong or poor. By paying close attention to the
life cycle of each product, you can gather information to improve future
product, promotions, and offerings.
79.
Proforma
invoice: A
document that outlines the commitment on the part of the seller to deliver
products or services to the buyer for a specific price. It’s sent in advance of
a shipment, so it’s not a true invoice.
80.
Point-of-sale
(POS) system: At the
most basic level, a point-of-sale system includes the hardware and software
that allows a retailer to check out customers, record sales, accept payments,
and route those funds to the bank. But the right retail point of sale can do more than record sales.
With the right software integrations, it can help you run your entire business
and affect your long-term growth. Read more in our handy guide to choosing
the best POS system for your small business.
81.
Private
label: A brand
that is not owned by a manufacturer but by the retailer or supplier. Retailers
and suppliers buy the goods and market them under their name. Target’s
Up&Up and Simply Balanced are both examples of private label lines.
82.
Purchase
order: This is
a document used to communicate a purchase to an employer. It can be used to
approve, track, and process purchases as well. A purchase order usually indicates types, quantities,
and agreed prices for products or services, as well as delivery dates.
83.
Quantity
on hand: This
describes the physical inventory that a retailer has in possession.
84.
Quantity
on order: This is
all the stock that you have in open purchase orders or manufacturing orders.
85.
Quantity
discount: This is
an incentive offered to a buyer to purchase a certain quantity for a decreased
cost per unit.
86.
Relationship
retailing: A
strategy that businesses use to build loyalty and create lasting relationships
with customers. There are numerous tactics retailers can use to reach those
goals, including loyalty programs, first-class customer service, great return
policies, or personalized experiences.
87.
Retargeting: This is an advertising practice in
which online ads are targeted to consumers based on their previous actions. A
retailer like Nordstrom, for instance, retargets consumers based on what
they’ve browsed on its site. A consumer may have looked at a pair of shoes on
Nordstrom’s website, and is then retargeted with an ad for those shoes on
Facebook.
88.
RFID: Radio frequency identification is
the technology that provides radio waves to track, read, and capture the
information that lives in a chip on a product’s label or packaging. RFID is
used to take accurate measures of inventory, but retailers are also looking at
how to use it to learn more about customers.
89.
Shrinkage: This is the difference between the
amount of stock that a retailer has on the books and the actual stock that’s
available. To put it simply, it’s inventory loss that can be attributed to
factors such as employee theft, shoplifting, administrative error, vendor
fraud, or damage.
90.
Stock-keeping
unit (SKU): The meaning of SKU can be confusing. This is a number
(usually eight alphanumeric digits) that retailers assign to products to keep
track of stock internally. It’s used in inventory management to track and
distinguish one item from another. A SKU represents all the attributes of a
product, including brand, size, and color. For example, one type of shoe could
have 40 SKUs, in various combinations of sizes and colors. A SKU is often
confused with a UPC (universal product code), as they both are used to identify
products. The difference is that SKUs are unique to a retailer, whereas a UPC
applies to a product no matter what retailer is selling it.
91.
Social
commerce: New
retail and e-commerce practices that incorporate social media,
user-generated content, or social interaction. This doesn’t mean that social
platforms, like Instagram, are the platforms where purchases happen; instead,
the social networks help drive sales. There are a variety of types of social
commerce: peer-to-peer marketplaces, group buying, peer recommendation sites,
social network–driven sales, and user-curated shopping, to name a few.
92.
Showrooming: The consumer practice of examining
products in a store and then purchasing them online at a lower price.
Showrooming becomes more and more common as mobile usage increases and new
price-check and shopping apps emerge.
93.
Store
loyalty: When a
buyer likes and trusts a store, and therefore systematically goes there again
and again to make purchases. A retailer can encourage this with loyalty
programs and special promotions for regular customers.
94.
Supply
chain management: The
management of the flow of goods and services, involving the movement and
storage of raw, work-in-process, and finished goods from the point of origin to
point of consumption.
95.
Tribetailing: The retail practice of tailoring
what you do — everything from your products and store design to marketing and
communication — for a specific group of people, or tribe. The goal of this is
not to appeal to the public or a mass market, but to capture a niche.
96.
Triple
net lease: This is
a rental agreement on a commercial property in which the tenant agrees to pay
all ongoing expenses of the property (like real estate taxes, building
insurance, and maintenance) as well as things like rent and utilities. Because
the landlord doesn’t have to worry about variable costs of ownership, this type
of lease generally has a lower rental rate than a standard lease.
97.
T-Stand: This is a typical merchandising
fixture used to display clothing. It can have straight or waterfall arms.
98.
Units
per transaction (UPT): This
measurement is an average of the amount of items sold during each sales
transaction. It’s one metric to track over time to see growth.
99.
Visual
merchandising: This is
the practice of creating visually appealing displays, in-store experiences, and
designs that drive traffic and maximize sales. Studies have shown that visual
merchandising can influence a customer’s perception of item quality and likeliness
to purchase.
100.
Warehouse
management system: Computer
software designed for managing the movement and storage of materials throughout
a warehouse. The system is usually divided into three operations: putaway,
replenishment, and picking.
101.
Wholesale: This is the sale of goods in large
quantities to retailers, who then resell them.
