What is the Retail Industry? The retail industry is a sector of the economy that is comprised of individuals and companies engaged in the selling of finished products to end user consumers Types of retail location Core retail area – that part of a town centre where pedestrian flows are greatest, competition for representation is greatest and rents are noticeably higher than elsewhere. Edge-of-centre – A location within easy walking distance (usually not more than 300-400 metres) of the core retail area, and providing parking facilities that serve the centre as well as the new development thus enabling one trip to serve several purposes. Out-of-centre – that area beyond the edge-of-centre limit but within the settlement boundary. Types of retailing Commentators now prefer to consider retailing in terms of a typology, which categorizes retail developments according to their form and function. With this in mind and having regard to the glossary of terms, the following typology of retail uses can be discerned: - • Superstore - self-service stores, usually over 2,500 gross retail sq. m in size devoted to selling mainly food items. • Hypermarket – these are superstores in excess of 5,000 net sq. m. Since the publication of the last retail strategy there has been a tendency for the large retailers to seek to build hypermarkets, exemplified by the likes of Tesco Extra. • Retail warehouse – large single level individual store selling mainly bulky durable goods. • Retail park – agglomeration of at least three warehouses, which may also include a superstore & other leisure/entertainment uses.
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What is the Retail Industry?
The retail industry is a sector of the economy that is comprised of individuals and companies engaged in the selling of finished products to end user consumers
Types of retail locationCore retail area – that part of a town centre where pedestrian flows are greatest, competition for representation is greatest and rents are noticeably higher than elsewhere.
Edge-of-centre – A location within easy walking distance (usually not more than 300-400 metres) of the core retail area, and providing parking facilities that serve the centre as well as the new development thus enabling one trip to serve several purposes.
Out-of-centre – that area beyond the edge-of-centre limit but within the settlement boundary.
Types of retailingCommentators now prefer to consider retailing in terms of a typology, which categorizes retail developments according to their form and function. With this in mind and having regard to the glossary of terms, the following typology of retail uses can be discerned: -
• Superstore - self-service stores, usually over 2,500 gross retail sq. m in size devoted toselling mainly food items.
• Hypermarket – these are superstores in excess of 5,000 net sq. m. Since thepublication of the last retail strategy there has been a tendency for the large retailers toseek to build hypermarkets, exemplified by the likes of Tesco Extra.
• Retail warehouse – large single level individual store selling mainly bulky durablegoods.
• Retail park – agglomeration of at least three warehouses, which may also include asuperstore & other leisure/entertainment uses.
• Shopping centre/mall – predominantly purpose built centres comprising a mix of large and small units, typically anchored by a food store
• Regional shopping centre – this is a term used to describe a massive purpose built retail development. The guidelines state that such centres are normally in excess of 50,000 gross retail sq. m. and do not usually include retail warehousing. However, the term has also been used to describe large retail developments above 25,000 gross sq. m., which comprise a combination of shopping malls, superstores and retail warehousing. In addition, the term ‘regional centre’ is often applied to the role performed by major town centres
• Supermarket and mini supermarkets. A supermarket is a self-service store of less than2,500 net retail sq. m. in floor area selling mainly food. A Mini supermarket is a termthat can be employed to describe small convenience outlets (usually no bigger that 500sq. m. gross) that are generally operated by the Symbol groups, such as
• Forecourt retailing – a term which has evolved to reflect the popularity of linkingmini-supermarkets to Petrol Filling Stations
• Discount foodstores – standardised no-frills convenience stores (circa 1,500 sq. m.gross) that concentrate on selling limited product lines in bulk.
• Factory outlet centres – retail outlets specialising in the sale of manufacturer’sproducts directly to the public.
• Retail warehouse clubs – large retail centres, usually greater than 2,500 sq. m. gross,selling mainly durable goods to members only.
• Home delivery shopping – all-inclusive term used to describe domestic reception ofgoods either digitally via the Internet/ Interactive Television, orally by phone, or bywritten request via the post.
Types of retail floor-spaceGross retail area – this is the total floorspace, as measured from inside the shop walls, which includes sales space, plus storage space, offices, toilets, canteen and circulation space.
Net retail area – this is also referred to as sales space and includes the internal area of the shop which is devoted to the display and sale of retail goods (including the area devoted to checkouts).
Add-On SalesAdd-on sales is the promotion of additional products or services to a customer at the time of purchase.
Anchor StoreA major retail store used to drive business to smaller retailers. These larger department stores or grocery stores are generally part of a retail chain and are the prominent business in a shopping mall.
AtmosphereAtmosphere is the physical characteristics and surrounding influence of a retail store that is used to create an image in order to attract customers.
Average Inventory CostAverage inventory cost is found by adding the beginning cost inventory for each month plus the ending cost inventory for the last month in the period. If calculating for a season, divide by 7. If calculating for a year, divide by 13.
Acid-Test RatioA measurement of how well a business can meet its short-term financial obligations without selling any inventory.
Ad SlickAd slicks refer to the final, camera-ready advertisement. It gets its name from the glossy paper on which it is printed
Big Box StoresLarge stand-alone store with varying market niches
Bill of LadingA bill of lading is a document used as evidence that a transport company or carrier received goods from a shipper
Black FridayBlack Friday is used to describe a number of historical Fridays in which an event led to public chaos or disaster.
Blue LawRules created to prohibit particular activities to certain days or hours. Many blue laws have been removed from the law books or are no longer enforced.
Booking ProgramA vendor booking program is the opportunity to view new products or samples now and to place an order for that merchandise to be delivered at a later date.
Brand AwarenessA gauge of marketing effectiveness measured by the ability of a customer to recognize and/or recall a name, image or other mark associated with a particular brand.
BrandA brand is a name, symbol or other identifying mark for a seller's goods or services. It is distinct from other sellers.
Break-Even PointWhat is the break-even point? The point in business where the sales equal the expenses. There is no profit and no loss.
Brick and MortarBrick and mortar store refers to retail shops that are located in a building as opposed to an online shopping destination, door-to-door sales, kiosk or other similar site not housed within a structure.
Business BlogA business blog is a written set of entries by a business and published online with blogging software. These entries are generally displayed in reverse chronological order and feature industry-related information, photos and/or links. Business blogs may also allow comments for added interaction with the reader.
Business ModelA retail business model is essentially how a retail business is planned, organized and operates in order to cover expenses and generate a profit. Our business model is how we make money.
Business PlanA detailed document describing the past, present and future financial and operational objectives of a company
CapitalCapital is money available to build and grow a retail business. These liquid assets represent the amount of ownership and risk in a business.
Cash DiscountA percentage reduction in price for payment within a specified period of time
Cash FlowThe movement of money in and out of a business and the resulting availability of cash
Category KillerA large retail chain store that is dominant in its product category. This type of store generally offers an extensive selection of merchandise at prices so low smaller stores cannot compete.
Chain StoreOne of a number of retail stores under the same ownership and dealing in the same merchandise.
Co-operativeWhat does co-op stand for? What is a co-operative as relating to retail business? Learn more about this and other retailing terms.
Comp SalesWhat are comp sales? Comparable-store sales is a measurement of productivity in revenue used to compare sales of retail stores that have been open for a year or more. Historical sales data allows retailers to compare this year's sales in their store to the same period last year.
Contribution MarginContribution Margin is the difference between total sales revenue and total variable costs. The term is applied to a product line and is generally expressed as a percentage.
Cost of Goods SoldThe price paid for the product, plus any additional costs necessary to get the merchandise into inventory and ready for sale, including shipping and handling
CouponA promotional tool in the form of a document that can be redeemed for a discount when purchasing goods or services. Coupons feature specific savings amount or other special offer to persuade consumers to purchase specific goods or services or to purchase from specific retailers.
CRM - Customer Relationship ManagementCustomer Relationship Management (CRM) is a business strategy designed to reduce costs and increase profitability by strengthening customer loyalty.
Cross-SellCross-selling refers to a sales technique in which the salesperson recognizes what a customer is purchasing and will make suggestions or recommendations of other related merchandise the shopper may also be interested in purchasing.
Cyber MondayCyber Monday is one of the busiest shopping days of the year for online retailers. Retailers notice a spike in sales on this day as many consumers who were too busy to shop over the Thanksgiving weekend or did not find what they were looking for, headed to the web on Monday from work or home to find bargains.
CompetitionCompetition in retail is the rivalry between sellers striving to obtain the same customer
Dead Stock
Does your retail store have dead stock? Learn more about this retailing term for used or unsold merchandise.
Digital SignageDigital signage refers to a variety of technologies used to replace traditional retail signs. Instead of static print signs and billboards, digital signage is composed of electronic signs dispersing content and messages in the most targeted, interactive way
Drop ShippingDrop shipping is the process in which a retailer markets a product, collects payment from the customer and then orders the item from a supplier, to be shipped directly that customer. The retailer's profit is the difference between the amount collected and the amount spent. No inventory is held and the retailer is not involved in the shipping
FOBShipping term used to indicate who is responsible for paying transportation charges.
FacingThe number of identical products (or same SKU) facing out toward the customer. Facings are used in planograms and when zoning a retail store
Fair TradeFair trade is an organized movement developed to promote standards of environmentalism and fair wages, alleviate global poverty and ensure that companies negotiate with the growers, manufacturers and producers of products for a fair price. This social-responsibility movement focuses on exports from developing countries.
First In, First OutA method of stock rotation in which goods that are received first are sold first. Newly received product is stocked behind the older merchandise
Gross Margin Return On InvestmentA measure of inventory productivity that expresses the relationship between your total sales, the gross profit margin you earn on those sales, and the number of dollars you invest in inventory.
Gross MarginGross margin is the difference between what an item cost and for what it sells
InventoryInventory is the merchandise a retail store has on-hand. The term also refers to the act of counting, itemizing and recording in-stock merchandise or supplies.
Inventory TurnoverThe number of times during a given period that the average inventory on hand is sold and replaced
KioskThe term kiosk, as related to retailing, refers to a small stand-alone structure used as a point of purchase. This can be either a computer or display screen used to disseminate information to customers or may be a free-standing, full-service retail location. Kiosk are often found in malls and other high-traffic locations.
Keystone
Keystone pricing is a method of marking merchandise for resell to an amount that is double the wholesale price
LayawayLayaway is the act of taking a deposit to store merchandise for a customer to purchase at a later date.
Loss LeaderMerchandise sold below cost by a retailer in an effort to attract new customers or stimulate other profitable sales
Minimum Advertised PriceA suppliers pricing policy that does not permit its resellers to advertise prices below some specified amount. It can include the resellers retail price as well.
MarkupA percentange added to the cost to get the retail selling price
MarkdownPlanned reduction in the selling price of an item, usually to take effect either within a certain number of days after seasonal merchandise is received or at a specific date.
MarginThe amount of gross profit made when an item is sold.
Marketing CalendarA marketing calendar is a tool used by retailers to show what marketing events, media campaigns and merchandising efforts are happening when and where, as well as the results.
Merchandise MixA merchandise mix is the breadth and depth of the products carried by retailers. Also known as product assortment
Mystery ShoppingWhat is a mystery shopping program? Learn about this retailing term to effectively improve business
Operating ExpensesThe sum of all expenses associated with the normal course of running a business.
Odd-Even PricingA form of psychological pricing that suggests buyers are more sensitive to certain ending digits
Open-to-Buy (OTB)Merchandise budgeted for purchase during a certain time period that has not yet been ordered
Planogram
Visual description, diagram or drawing of a store's layout to include placement of particular products and product categories.
Profit MarginA ratio of profitability calculated as earnings divided by revenues. It measures how much out of every dollar of sales a retail business actually keeps in earnings
Private LabelProducts which are generally manufactured or provided by one company under another company's brand.
POSPoint of Sale (POS) refers to the area of a store where customers can pay for their purchases. The term is normally used to describe systems that record financial transactions. This could be an electric cash register or an integrated computer system which records the data that comprises a business transaction for the sale of goods or services.
Product DepthProduct depth is the number of each item or particular style of a product on the shelves. Product depth is also known as product assortment or merchandise depth.
Product BreadthThe product breadth is the variety of product lines offered by a retailer.
Purchase OrderA purchase order (PO)is a written sales contract between buyer and seller detailing the exact merchandise or services to be rendered from a single vendor.
Point-of-Purchase DisplayPoint-of-purchase displays, or POP displays, are marketing materials or advertising placed next to the merchandise it is promoting. These items are generally located at the checkout area or other location where the purchase decision is made. For example, The checkout counters of many convenience stores are cluttered with cigarette and candy POP displays
Quantity DiscountA reduction in price based on the amount purchased. May be offered in addition to any trade discount
RFIDRadio Frequency Identification (RFID) refers to the technology that uses radio waves to transmit a product's unique number from a tag to a reader.
RetailerWhat is the definition of a retailer? One who sells goods or commodities directly to consumers. These items are generally sold in small quantities, at a marked up price from the manufacturer or wholesaler
RetailingThe sale of goods or commodities in small quantities directly to consumers.
Run of PaperRun of paper is an advertising term by newspapers referring to an advertisement that may be placed anywhere within the paper
Sales FloorThe sales floor is the location of a retail store where goods are displayed and sales transactions take place. For example, the receiving of merchandise takes place in the stock room, but all direct sales and customer interactions are done on the sales floor.
Sell-Through RateSell-through Rate is a calculation, commonly represented as a percentage, comparing the amount of inventory a retailer receives from a manufacturer or supplier against what is actually sold to the consumer
ShopliftingWhat is shoplifting? Shoplifting is the theft of property which is worth less than $500 and which occurs with the intent to deprive the owner of that piece of property. The crime of shoplifting is the taking of merchandise offered for sale without paying.
ShrinkageRetail shrinkage is a reduction or loss in inventory due to shoplifting, employee theft, paperwork errors and supplier fraud.
SKUThe Stock Keeping Unit (SKU) is a number assigned to a product by a retail store to identify the price, product options and manufacturer.
SlidingA loss prevention term referring to the act of a cashier passing merchandise around the cash register barcode scanner without actually scanning the item
SoftlinesA store department or product line primarily consisting of merchandise such as clothing, footwear, jewelry, linens and towels.
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Staple GoodsStaple goods are products purchased regularly and out of necessity. Traditionally, these items have fewer markdowns and lower profit margins. While price shifts may raise or lower demand for certain kinds of products, the demand for staple goods rarely changes when prices change.
SustainabilitySustainability refers to the characteristic of certain products that provide environmental, social and economic benefit. Sustainable products are produced with minimal energy and packaging. They are considered eco-friendly as they cause no harm to the environment throughout their entire life cycle
Trade DiscountA discount on the list price given by a manufacturer or wholesaler to a retailer
Trade CreditAn open account with suppliers of goods and services
Triple Net Lease - NNN or Net-Net-NetA triple net lease is a rental agreement on a commercial property where the tenant agrees to pay all real estate taxes, building insurance, and maintenance on the property
WholesaleWholesale is the sale of goods, generally in large quantity, to a retailer for resale purposes.
Word-of-MouthPossibly the most effective form of marketing. It is the verbal recommendation and positive approval by a satisfied customer
Working CapitalLiquid assets available to build and grow a retail business. It is measured by current assets minus current liabilities. A positive working capital is needed until the shop can produce a profit
Anchor store: A major retailer chosen for its ability to drive traffic to the mall or shopping center in which it’s located.
Automatic reordering system: Program that reorders merchandise when in-store supplies fall below a predetermined level.
Big-box store: Large stand-alone store specializing in one category of merchandise (e.g., Home Depot).
Category killer: National retail chain that is dominant in its product category—usually by offering an extensive selection at low prices--to the point of putting smaller players out of business.
Centralized buying organization: Company in which all buying decisions for all the stores in the company are made by one central office
Destination retailer: Retailer to which customers will make a special trip, even if it entails going out of their way.
FIFO: First in, first out; method of stock rotation in which the goods that were received first are sold first.
Free-standing store: Store that’s not part of a shopping center or a mall.
Forward stock: Merchandise that is kept on the selling floor.
Gross leasable area (GLA): Total floor space available for retail sales.
Hard goods: Non-textile products.
Impulse items: Products that are not planned purchases.
Loss leader: Item that is priced below cost to attract customers who will then presumably purchase other, profitable products.
Market area: Geographic area from which a store draws its customers.
Planogram: Diagram, drawing, or other visual description of a store’s layout, including placement of particular products and product categories.
Point-of-purchase (POP) display: Advertising display placed alongside the merchandise it is promoting or at the checkout area.
Point-of-sale (POS) system: Combination of hardware and software that records customers’ purchases, accepts payments, and adjusts inventory levels.
Reserve stock: Merchandise that is not kept on the selling floor.
Soft goods: Textile products.
Traffic driver: Marketing material that isn’t a direct response vehicle but rather serves to draw customers to a store.
Under-the-counter stock: Merchandise that is kept under the counter or in drawers rather than on open display, usually because the items are easily shoplifted
Client journey the experience the client has with your brand. This begins with telephone calls, all printed literature, your physical environment and finally you !
Merchandising strategy the plan you have for positioning which product where. This needs to reflect seasonal opportunities ie- the umbrellas at the front if it's pouring down with rain.
brand the total sensory experience the client has with your company and its product or service. It resides in only one place: in the mind of your customer.
POSPoint Of Sale - the printed materials in your store - visuals, directional signage, promotional signage, product descriptors etc
Romancing the Customer a rather clever metaphor for describing how to create lasting business relationships!
Deliverables what your business provides, the measure for services you provide. Your customers ‘take-aways’
swing areathe positioning of tables, gondalas or floor fixtures to influence the flow or direction your customer takes through your environment. Sometimes can be created by pillars, stairs or other fixed objects
flow the ease and direction your customers take in the retail environment
sensory experience appealing to the clients sense of sight, smell, hearing, touch and taste - What experience do you provide?
seducing the senses using your environment to appeal to each of our senses - what great retailers do best
visual pollution so many messages! So much signage! Clutter everywhere - unable to focus on anything, makes your eyes hurt.
Compelling communication using words to describe what is in it for me, create humour, create a need, curiosity
mind sharegetting into the customers head - literally they think of what you sell and your brand is the first thing they think of
iconic creating an aspirational, singular display - to make something exclusive, gorgeous, totally irresisible - ever so slightly untouchable - to gaze at longingly
service excellence proud to serve, exceed expectations, deliver inspired expertise, educate, listen, ask questions, adopt an attiutude of yes I can, avoid excuses, create wow!
surprise & delight dare to be different! Use colour, animation, humour, anything to wake customers from their usual coma. Do the opposite thing sometimes - don’t argue, agree
romancing becoming obsessive (in a healthy way) with your customer, their needs, wants, desires
relationshipshow strong are yours with your clients? How well do you know them, understand them, anticipate what will they be blissed out by?
proportional merchandising
giving more space to your best sellers and less space to your poor sellers - simple huh?
dual sited/dual positioning having products merchandised in more than one place. Especially relevant when a product can be sold with more than one thing
promotional campaign the time and place you choose to introduce lines, products etc - generally linked to seasonal opportunites - Christmas, Mothers Day, the world cup, winter, summer
link sales placing a product next to another to create a spark or encourage the customer to buy more than one product - cleanser with an exfoliator, TV & DVD player
logical adjacencies rather like link sales but the layout follows a logical sequence -normally follows the way a customer would use the product - washing powder followed by fabric softener, birthday cards followed by gift wrap
up-selling customer enters the store for a shirt and leaves with a shirt & matching tie through your brilliance and seductive knowledge of your products and services!
open merchandising liberated retail area! Customer is able to pick up, touch, play, experience the product
closed merchandising everything locked behind glass cabinets - customer has to ask permission to buy while you loiter over their shoulder. Self defeating security policy - talk and enagage, still the most effective security system there is
price blocking merchandising products together with the same price point
colour blocking merchandising products together of similar colours and shades - layout following the colour spectrum
impulse buys products generally under £10 which are unplanned purchases. Generally positioned by the till point or near to high price merchandise - anything from sweeties to jewellery to scarp leads
seasonal merchandising reflective of the time of year - generally Christmas, Easter, Valentines Day etc
olfactory marketing using the sense of smell to create a signature fragrance and create powerful associations think of new car smell, leather, freshly baked bread, ground coffee beans
auditory marketing playing music to strengthen your brand quality. Also the quality of your dialogue with customers and your colleagues
core range the products you always have in stock, never changes, what you're known for
promotional lines limited editions, summer ranges, only available during the promotion - buy now or lose out - need to be merchandised differently, should stand out from your core range - needs also to be consistent with your core range - just because you can sell something doesn’t mean you should!
limited editions designed to create urgency - great for increasing the average sale value
AVT average value transaction - the average spend of your customer - calculated by dividing the number of transactions by how much you've taken
primary space a hot spot - the most accessible for your customer, highly visible from the entrance and in-store should always have best selling lines, promotional lines or seasonal merchandise in this space
hot spot the area in store which every customer sees and can get at
secondary space almost as good as primary space or a hot spot but may be less visible - generally next to primary space
tersery space behind the till point, at the front doors, hidden behind pillars - excellent for merchandising non-seasonal or low demand lines
Agency/partnership system
Refers to the methods of practicing and using another person's business model. The network partner manages the outlet but does not usually own the goods he is selling. The goods (or materials necessary to perform services) belong to the licensor. The agent signs buy-sell contracts on behalf of the licensor. In return for the sales of goods or services, the agent receives a commission specified in the licensing contract. There are many versions of this system. The conditions are agreed on a case-by-case basis by the system's initiator.
Convenience stores
Small-format chain stores open at least 11 hours a day, with a basic range of groceries, alcohol, cigarettes and newspapers/magazines.
Delicatessen supermarkets
Supermarkets with an extended premium range, targeting medium- and high-income customers.
Direct distribution
Offering goods and services directly to consumers, through person-to-person contact, usually at the client's home, workplace or elsewhere outside of all-year retail sales points; a form of retail distribution outside of a chain of shops. Direct distribution requires the personal presentation of the product and the provision of explanations and advice.
Discount stores, discounters
Grocery or mixed grocery and non-food stores around 1,000 m2 in size, offering on average around 800-1,200 products, chiefly foodstuffs, often under the retailer's own private label or produced exclusively for the retailer. Prices are on average 15-30% lower than the market averages. Types include soft and hard discounters.
DIY retail market
Do It Yourself retail market ? the value of the sum of merchandise sold in DIY stores (construction materials, finishing, decoration and garden products).
DIY stores
Modern, usually large-format stores specialising in the sale of construction materials, finishing, decoration and garden products.
Drugstore and cosmetics shops
Outlets whose key offering is made up of cosmetics, toiletries, hygiene products, accessories, and possibly also household chemicals. It includes: cosmetics shops primarily selling cosmetics; perfumeries primarily selling luxury (selected) cosmetics brands and targeting high earners; chemical shops primarily selling household chemicals.
E-shopping mall
A website which presents the offers of a number of internet stores.
E-store, internet store, on-line store
A sales point involved in e-trading over the internet under a unique www address, with an interactive form that allows the consumer to place an order for a product or service using the information provided (including price and method of payment).
FMCG
Fast Moving Consumer Goods: a group of products sold quickly at a relatively low cost, usually referring to food (excluding fresh food) and cosmetics/toiletry items.
Franchising system
Refers to the methods of practicing and using another person's business model. The parties signing a franchising agreement remain totally independent of each other. Both the outlet and the goods (which are frequently supplied by the franchisor) belong to the franchisee. The franchisee purchases goods and services on its own behalf and account; the complete sales revenue belongs to the franchisee, who pays periodic franchise fees to the franchisor.
Grocery retail market
The value of the sum of merchandise sold in grocery stores. It includes fresh foods, FMCG and other products (including non-foods) sold in grocery shops.
Grocery shop/store
A retail outlet offering typical foodstuffs, non-food merchandise (mixed grocery and non-food stores), or groceries only.
Hard discounters
A type of discounter characterized by a limited product range and a predominance of low price private labels.
HoReCa market
Hotel food service (Ho), restaurant-services (Re) and catering (Ca) market.
Hypermarkets
Mixed grocery and non-food stores over 2,500 m2 in size, offering on average 40,000 items, around 50% of which are foodstuffs.
Integrator
A firm running a franchise- or partnership-based retail chain. It may operate on a commission basis or act as supplier if the integrator is a wholesaler.
Internet auction, internet auction platform
An internet service through which products can be sold and auctions can be participated in via the internet.
Large-format stores
Grocery and mixed grocery and non-food stores typically above 400 m2 in size (retail space). This definition covers hypermarkets, supermarkets and discount stores.
Mono-brand clothing stores
Stores offering clothing, footwear and accessories under a single brand.
Multi-brand clothing stores
Stores offering clothing, footwear and accessories under various brands.
Price comparison website
A specialised website comparing the prices of products across various internet stores.
Private labels (also known as own brands)
Products manufactured on commission from a retail chain, which are only available in the chain's stores and are owned by the chain.
Small-format shops
Grocery or mixed grocery and non-food shops under 400 m2 in size.
Soft discounters
A type of discounter characterised by a broader product range, including fresh food and mostly manufacturers' brands.
Specialist food stores
Outlets selling a selected category of groceries. These include butchers' shops, bakeries, cake shops, off-licences and greengrocers'.
Supermarkets
Mixed grocery and non-food or grocery-only stores 300-2,500 m2 in size, offering on average 5,000-10,000 products, at least some 70% of which are foodstuffs.
Additional markup percentage: The addition of a further markup to the original markup as a percentage of net sales.
Add-on selling: Is selling additional new products and services to existing customers, such as a sales executive encouraging a customer with a purchase of shirt to also purchase pair of trousers or tie.
Advertising: Paid communication delivered to customers through non personal mass media such as newspaper, television, radio, direct mail, and the Internet. Advertising reach: The percentage of customers in the target market exposed to an as at least once.
Affinity Market: Marketing activities that enable consumers to express their identification with an organization.
Aging: The duration of time merchandise has been in stock.
Alteration costs: Expenses incurred to change the appearance or fit, to assemble, or to repair merchandise.
Anchor Store: A large, well-known retail operation located in a shopping center or Internet mall and serving as an attracting force for consumers to the center.
Ancillary services: Services such as layaway, gift wrap, and credit that are not directly related to the actual sale of a specific product within the sore.
Artificial barriers: In site evaluations for accessibility, barriers such as railroad tracks, major highway, or parks.
Asset turnover: Net sales divided by total assets.
Assortment
ABC analysis: An analysis that rank orders SKUs by a profitability measure to determine which
items should never be out of stock, which should be allowed to be out of stock occasionally, and
which should be deleted from the stock selection.
Accessibility: the degree to which customers can easily get into and out of a shopping center;
ability of the retailer to deliver the appropriate retail mix to the customers in the segment.
Accessories: Merchandise in apparel, department, and specialty stores used to complement
apparel outfits. Examples Includes gloves, hosiery, handbags, jewelry, handkerchiefs, and
scarves.
Adaptive Selling: An approach to personal selling in which selling behaviors are altered based
on information about the customer and the buying situation.
Additional markup: An increase in retail price after and in addition to original markup.
Additional markup cancellation: The percentage by which the retail price is lowered after a
markup is taken.
Additional markup percentage: The addition of a further markup to the original markup as a
percentage of net sales.
Add-on selling: Is selling additional new products and services to existing customers, such as a sales executive encouraging a customer with a purchase of shirt to also purchase pair of trousers or tie.
Advertising: Paid communication delivered to customers through non personal mass media such as newspaper, television, radio, direct mail, and the Internet.
Advertising reach: The percentage of customers in the target market exposed to an as at least once.
Affinity Market: Marketing activities that enable consumers to express their identification with
an organization.
Aging: The duration of time merchandise has been in stock.
Alteration costs: Expenses incurred to change the appearance or fit, to assemble, or to repair merchandise.
Anchor Store: A large, well-known retail operation located in a shopping center or Internet mall and serving as an attracting force for consumers to the center.
Ancillary services: Services such as layaway, gift wrap, and credit that are not directly related to
the actual sale of a specific product within the sore.
Artificial barriers: In site evaluations for accessibility, barriers such as railroad tracks, major highway, or parks.
Asset turnover: Net sales divided by total assets.
Assets: economics resources, such as inventory or store fixtures, owned or controlled by an enterprise as a results of past transactions or events.
Assortment: The number of SKUs within a merchandise category. Also called depth of merchandise.
Assortment plan: A list of merchandise that indicates in very general terms what should be carried in a particulars merchandise category.
Average BOM Stock-to-sales ratio: The number of months in the period divided by planned inventory turnover for the period.
Average inventory: The sum of inventory on hand at several periods in time divided by the number of periods.
Backup Stock: The inventory used to guard against going to stock when demand exceeds forecasts or when merchandise is delayed. Also called safety stock or buffer stock.
Backward integration: A form of vertical integration in which a retailer owns some or all of its suppliers.
Bar code/Universal product code (UPC): The black and white bar code found on most merchandise; used to collect sales information at the point of sales using computer terminal that read the code. This information is transmitted computer to computer to buyers, distribution centers, and then to vendors, who in turn quickly ship replenishment merchandise.
Bargain branding: A branding strategy that targets a price sensitive segment by offering no-
frills products at a discount price.
Barrier to entry: Conditions in a retail market that make it difficult for firms to enter the
market.
Base Stock/Cycle stock: Inventory that results from the replenishment process and is required to
meet demand when the retailer can predict demand and replenishment times (lead times)
perfectly
Assets: economics resources, such as inventory or store fixtures, owned or controlled by an enterprise as a results of past transactions or events
Action Alley: The sales area of a store located immediately after entering.
Ad Slick: Ad slicks refer to the final, camera-ready advertisement. It gets its name from the glossy paper on which it is printed.
Anchor Store: A major retail store used to drive business to smaller retailers that physically surround it. These larger department stores or grocery stores are generally part of a retail chain and are the prominent business in a shopping mall.
ANSI: American National Standard Institute
Average Inventory Cost: Average inventory cost is found by adding the beginning cost of inventory for each month plus the ending cost inventory of the last month in the period. If calculating for a season, divide by seven. If calculating for a year, divide by thirteen.
Big Box Stores: Large stand-alone store with varying market niches.
Bill of Lading: A bill of lading is a document used as evidence that a transport company or carrier received goods from a shipper.
Black Friday: Black Friday is the day after Thanksgiving- it's the biggest shopping day of the year.
Brand: A brand is a name, symbol, or other identifying mark for a vendor's goods or services. It is distinct from other vendors.
Breakpack: A carton received in the warehouse with two or more inner selling units that can be broken down and shipped to the stores.
Break-even Point: The point in business where the sales equal the expenses. There is no profit and no loss.
Brick and Mortar: Brick-and-mortar store are retail shops with permanent physical locations.
Business Plan: A detailed document describing the past, present, and future financial and operational objectives of a company.
Case Pack: Merchandise shipped in full cases. Cartons cannot be broken into smaller cases.
Cash Discount: A percentage reduction in price for payment within a specified period of time.
Cash Flow: The movement of money in and out of a business and the resulting availability of cash.
Category Killer: A large retail chain store that is dominant in its product category. This type of store generally offers an extensive selection of merchandise at prices so low that smaller stores cannot compete.
Chain Store: One of a number of retail stores under the same ownership and dealing in the same merchandise.
Comp Sales: Comparable-store sales are a measurement of productivity in revenue used to compare sales of retail stores that have been open for a year or more. Historical sales data allows retailers to compare this year's sales in their store to the same period last year.
Contribution Margin: Contribution margin is the difference between total sales revenue and total variable costs. The term is applied to a product line and is generally expressed as a percentage.
CO-OP: An advertising allowance offered by a vendor, payable upon proof of an ad having been run.
Cost of Goods Sold: The price paid for the product, plus any additional costs necessary to get the merchandise into inventory and ready for sale, including shipping and handling.
Coupon: A promotional tool in the form of a document that can be redeemed for a discount when purchasing goods or services. Coupons feature specific savings amount or other special offer to persuade consumers to purchase specific goods or services or to purchase from specific retailers.
CRM - Customer Relationship Management: Customer relationship management (CRM) is a business strategy designed to reduce costs and increase profitability by strengthening customer loyalty.
Department Stores: Retailers that carry a broad variety and deep assortment, offer considerably good customer service, and are organized into separate departments for displaying merchandise.
Digital Signage: Digital signage refers to a variety of technologies used to replace traditional retail signs. Instead of static print signs and billboards, digital signage is composed of electronic signs dispersing content and messages in the most targeted, interactive way.
Discount Stores: Retailers that offer low prices and low customer service.
Drop Shipping: Drop shipping is the process, in which a retailer markets a product, collects payment from the customer and then orders the item from a supplier, which is then shipped directly to the customer. The retailer's profit is the difference between the amount collected and the amount spent. No inventory is held and the retailer is not involved in the shipping.
Drug Stores: Retailers that resemble specialty stores who concentrate on health and personal grooming merchandise.
Electronic Data Interchange (EDI): Electronic Data Interchange is the application-to-application transfer of business documents like purchase orders, invoices, shipping notes, etc. between computers.
E-retailers: Retailers who operate their business solely on the internet.
Facing: The number of identical products (or same SKU) facing out toward the customer. Facings are used in plan-o-grams and when zoning a retail store.
Fair Trade: Fair trade is an organized movement developed to promote standards of environmentalism and fair wages; alleviate global poverty; and ensure that companies negotiate with the growers, manufacturers and producers of products for a fair price. This social-responsibility movement focuses on exports from developing countries.
First In, First Out: A method of stock rotation in which goods that are received first are sold first. Newly received product is stocked behind the older merchandise.
FOB: Free on Board or Freight on Board - the point at which the ownership of merchandise passes to the purchaser. Used to indicate that the seller provides transportation from the factory to trucks, railcars or consolidators after which the buyer pays all the carrier charges.
Gondola: Primary merchandising fixture consisting of a base, free-standing vertical wall, and a number of four of sections of shelving.
Gross Margin: Gross margin is the difference between what an item costs and what it sells for.
Gross Margin Percent: The Gross Margin Percent is calculated as follows: Sales - Cost / Sales = Gross Margin Percent.
Gross Margin Return on Investment: A measure of inventory productivity that expresses the relationship between your total sales, the gross profit t margin you earn on those sales, and the number of dollars you invest in inventory.
Hardlines: A store department or product line primarily consisting of merchandise such as hardware, housewares, automotive, electronics, sporting goods, health and beauty aids, or toys.
Home Improvement Stores: Retailers that combine the traditional hardware store with gardening and lumber.
Inventory: Inventory is the merchandise a retail store has on hand. The term also refers to the act of counting, itemizing and recording in-stock merchandise or supplies.
Inventory Turnover: The number of times during a given period that the average inventory on hand is sold and replaced.
Keystone: Keystone pricing is a method of marking merchandise for resale to a price that is double the wholesale price.
Kiosk: The term kiosk, as related to retailing, refers to a small stand-alone structure used as a point of purchase. This can be either a computer or display screen used to disseminate information to customers; or a free standing, full-service retaillocation. Kiosks are often found in malls and other high-traffic locations.
Layaway: Layaway is the act of taking a deposit on store merchandise for a customer to purchase at a later date.
Letter Of Credit: The method of payment for import purchase orders.
LIFO: Last In, First Out - A method used in rotating inventory.
Loss Leader: Merchandise sold below cost by a retailer in an effort to attract new customers or stimulate other profitable sales.
Loss Prevention: Loss prevention is the act of reducing the amount of theft and shrinkage within a business.
LTL: Less then Truckload - mixed freight, not all the same supplier or purchase order.
MABD: Must Arrive by Date - The date in which a purchase order must be received at the warehouse.
Margin: The amount of gross profit t made when an item is sold.
Markup: A percentage added to the cost to get the retail selling price.
Markdown: A planned reduction in the selling price of an item, usually to take effect either within a certain number of days after seasonal merchandise is received or on a specific date.
Marketing Calendar: A marketing calendar is a tool used by retailers to show where and when marketing events, media campaigns and merchandising efforts are happening, as well as the results.
Master Carton: Several cases being shipped in one package. These can be broken down into the individual cases and sent to stores.
Master Pack: Carton received that contains more than one warehouse pack or shipping unit inside it. This is very common in certain orders, such as imports.
Merchandise Mix: A merchandise mix is the breadth and depth of the products carried by retailers. Also known as product.
Minimum Advertised Price: A vendor's pricing policy that does not permit its resellers to advertise prices below some specified amount. It can include the resellers' retail price as well.
Odd-even pricing: A form of psychological pricing that suggests buyers are more sensitive to certain ending digits.
Off -the-mall Stores: Retailers that offer the same selection of merchandise as a department store but are not connected to a mall.
Open-to-buy: Merchandise budgeted for purchase during a certain time period that has not yet been ordered.
Operating Expenses: The sum of all expenses associated with the normal course of running a business.
Plan-o-gram: Visual description, diagram or drawing of a store's layout that includes placement of particular products and product categories.
Point-of-purchase Display: Point-of-purchase displays, or POP displays, are marketing materials or advertising placed next to the merchandise it is promoting. These items are generally located at the checkout area or other location where the purchase decision is made. For example, the checkout counters of many convenience stores are cluttered with cigarette and candy POP displays.
Point of Sale (POS): Point of sale (POS) refers to the area of a store where customers can pay for their purchases. The term is normally used to describe systems that record financial transactions such as electric cash registers or an integrated computer system that records the data that comprises a business transaction for the sale of goods or services.
Private Label: Products that are generally manufactured or provided by one company under another company's brand.
Product Breadth: The product breadth is the variety of product lines offered by a retailer.
Product Depth: Product depth is the number of each item or particular style of a product on the shelves. Product depth is also known as product assortment or merchandise depth.
Product Life Cycle: The stages that a new product is believed to go through from the beginning to the end: introduction, growth, maturity and decline.
Profit Margin: A ratio of profitability calculated as earnings divided by revenues. It measures how much out of every sales dollar a retail business actually keeps in earnings.
Purchase Order: A purchase order (PO) is a written sales contract between buyer and seller detailing the exact merchandise or services to be rendered from a single vendor.
Quantity Discount: A reduction in price based on the amount purchased. May be offered in addition to any trade discount.
Retailing: The sale of goods or commodities in small quantities directly to consumers.
Run of Paper (ROP): Run of paper is an advertising term used by newspapers that refers to an advertisement that may be placed anywhere within the paper.
Sales Floor: The sales floor is the location of a retail store where goods are displayed and sales transactions take place. For example, the receiving of merchandise takes place in the stock room, but all direct sales and customer interactions are done on the sales floor.
Shrinkage: Retail shrinkage is a reduction or loss in inventory due to shoplifting, employee theft, paperwork errors and supplier fraud.
SKU: The stock keeping unit (SKU) is a number assigned to a product by a retailer to identify the price, product options and manufacturer.
Softlines: A store department or product line primarily consisting of merchandise such as clothing, footwear, jewelry, linens and towels.
Specialty Stores: Retailers that concentrate on a limited number of complementary merchandise categories and provide a high level of customer service in an area typically less than 8000 square feet.
Standard Industrial Classification Code (SIC Codes): A coding system using four digits to identify specific c industrial sectors within the federal government. The first two digits identify the broad industrial sector and the last two digits represent a facility's specialty within this broad sector.
Staple Goods: Staple goods are products purchased regularly and out of necessity. Traditionally, these items have fewer markdowns and lower profit margins. While price shifts may raise or lower demand for certain kinds of products, the demand for staple goods rarely changes when prices change.
Trade Credit: An open account with suppliers of goods and services.
Trade Discount: A discount on the list price given by a manufacturer or wholesaler to a retailer.
Turn: Sometimes called a cycle. The number of times a product completes a cycle of moving through a warehouse generally measured within a year's time.
UCCNET: Uniform Code Council Network - A not-for-profit subsidiary of the Uniform Code Council, provides globally-endorsed item registration and synchronization services that reduce the costs and delays associated with bad data. By utilizing UCCnet services, companies and their trading partners can achieve significant improvements in supply chain efficiency by using and exchanging information that is: accurate, up to date and compliant with industry standards.
Vendor Pack: Original packaged quantity or merchandise as shipped from the vendor.
Visual Merchandising: Visual merchandising is the art of implementing effective design ideas to increase in-store traffic and sales volume.
Wholesale: Wholesale is the sale of goods, generally in large quantity, to a retailer for resale purposes.
Working Capital: Liquid assets available to build and grow a retail business. It is measured by current assets minus current liabilities. A positive working capital is needed until the retailer can produce a profit
Retail POS Dictionary
The following glossary terms are frequently used in retail businesses, retail POS systems, retail inventory management systems, and accounting packages.
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X - ZA
AccountA category used to group financial information and to create financial statements for a business. Accounts are typically represented by an account number. A well-defined chart of accounts is essential for good financial records. Accounting interface
A method of transferring distributions and vouchered receivings from retail softwareto an accounting software package. Accounts payableAmounts owed to others (a liability) for goods or services purchased on credit. Accounts receivableAmounts owed to a business (an asset), usually by customers who purchased goods or services on credit. AdjustmentAn increase or decrease to the quantity indicated in the retail software package. The adjustment ensures that the records in the retail software match the actual physical quantity in inventory. Additional markdownAn increase of a previous markdown to further lower the selling price. Address Verification Service (AVS)A service that reduces credit card fraud by verifying the cardholder's address information when the physical card isn't available to swipe through an MSR device (e.g., as with telephone orders). AVS processing doesn't affect whether the charge is approved. Instead, AVS indicates whether or not the address provided by the customer matches the address on file with the credit card company so that the merchant can decide whether or not to process the charge. AgingA process that determines the age (number of days old) of customer open items. Allocated purchase orderA purchase order that includes goods intended for delivery to multiple locations. Items ordered with an allocated purchase order can be shipped to a single location, and then transferred to their final locations, or they may be shipped to each individual location from the vendor. AlphanumericConsisting of letters, numbers, and/or special symbols (*, &, $, etc.) in any combination. Alternate unitRepresents a secondary unit of measure for receiving or selling an item. For example, the stocking unit for an item might be 'each,' but you might receive an item by the alternate unit 'case.' Audit trailA method of tracking transactions through the entire sequence of their history so that all financial information can be traced. Certain reports should be printed or stored electronically in the retail software as part of the business's permanent records. AuthorizationThe act of ensuring the cardholder has adequate funds available against his or her line of credit. If authorized, an authorization code will be generated and adequate funds are set aside. The cardholder's available credit limit will be reduced by the authorized amount. Authorization code (Approval code)A code typically consisting of numbers which is given when a credit card transaction is authorized. Available quantityThe quantity of an item that is currently available for sale. Generally, the available quantity is equal to the on-hand quantity minus any quantities set aside for open orders. Average costAn accounting cost method achieved by calculating or recalculating a weighted average of the cost of all inventory items currently in stock. This cost is recalculated each time items are added to the inventory, and in certain situations, when items are removed from inventory. B
B2B (Business-to-Business)Business model focused on sales to other businesses. Manufacturers, wholesalers, and suppliers are typical B2B companies. B2C (Business-to-Consumer)Business model focused on sales to consumers. Retailers are typical B2C companies. B2G (Business-to-Government)Business model focused on sales to national, state, or local government agencies. Backorder
A type of order normally created when there is insufficient quantity available for a sale or order. Balance sheet inventory accountAn account that tracks the value of on-hand inventory. BarcodeA unique identifier for an inventory item or for a particular color/size combination for an item. A barcode may be printed in machine readable format using one of a number of common symbologies, such as UPC-A, Code 39, etc. Batch processingA processing model for entering several transactions in sequence, then finalizing (or posting) all of these transactions at the same time. Batch processing allows multiple employees to enter and edit the same types of transactions simultaneously in their retail software. Bill of Lading (BOL)A shipping document that serves as evidence that the carrier received shipment and as a contract between carrier and shipper. BinRepresents a physical place to store inventory. Bins are subdivisions of a location and are used to locate items. Generally, bins refer to physical rows/shelves or to actual bins. BiometricA measurable characteristic or unique trait, such as a fingerprint, used to recognize the identity of a person. Biometric devices can be used with retail point of sale systems as a secure log in mechanism. Black FridayThe day after Thanksgiving. While Black Friday is often thought of as the busiest retail shopping day of the year, in fact the busiest retail shopping day of the year is usually the Saturday before Christmas.
The origin of the term Black Friday comes from the shift in profitability during the holiday season. Black Friday marks the day when many retailers shift from being unprofitable, or "in the red," to being profitable, or "in the black."
BuyerAn executive who is responsible for selecting, pricing, and purchasing merchandise. In many companies, the term "buyer" designates a department manager, whose responsibilities include, but are broader than, the purchasing function. C
CalendarA schedule that defines the beginning and end of an accounting year. For retail purposes, the calendar year may be divided into seasons, months, and weeks. Calendar yearA 365-day period that begins on January 1 and ends on December 31. Card Acceptance Processing Network (CAPN)American Express's Card Acceptance Processing Network (CAPN) initiative is system-wide expansion of the American Express credit card processing system. CAPN enhances point of sale security, supports expanded amounts, and adds a transaction lifecycle identifier for all American Express transactions. CAPN-compliance is mandatory for all US processors. Card Verification Value (CVV) or Card Validation Code (CVC)Often represented as CVV2/CVC2, this safety feature provides consumers with added credit card transaction security by requiring additional three or four non-embossed numbers that are only located on the actual credit card. CVV2/CVC2 processing does not affect whether the charge is approved, but it does reduce credit card fraud when the physical card isn't available to swipe through an MSR device (e.g., as with telephone orders).
This system is referred to as CVV2 by Visa (three digit code on back of card), CVC2 by MasterCard (three digit code on back of card), and CID by American Express (four digit code on front of card).
Cash discountsDiscount on the retail price when a shopper pays cash for an item. Many merchants encourage shoppers to pay cash in order to avoid processing fees for credit card transactions. Cash receiptsMoney received from a customer for the purchase of goods or services. CategoryA classification assigned to retail items. Categories are useful for grouping similar items for pricing and reporting purposes. Cell (Color/Size or Color/Size Combination) The block in a retail apparel grid where a color and a size intersect. Certegy (formerly Equifax)A check verification service for merchants designed to expedite the processing and handling of checks and reduce fraud. Charge BackA reversal of a credit card transaction, typically initiated by the card issuer at the cardholder's request. Charge backs can occur for any number of reasons, including customer disputes, potential or actual fraud (on the part of merchant, sales associate and/or customer), processing errors, and authorization issues. Merchants are typically assed fees for charge backs by the bank. Chart of accountsA list of all of a business's accounts in numerical order, usually grouped by type. Check GuaranteeA service that guarantees a customer's payment by check for a specified amount. Point of sale merchants must typically follow standard check authorization procedures. Check VerificationA service used to verify that a checkwriter and/or their checking account information is valid, and/or the account is in good standing. Closing a drawerThe process of recording the ending amount of cash and other payment types in a drawer before performing end of day posting. Normally, a drawer is closed at the end of each day. C.O.D. (Collect On Delivery)A shipping method where the buyer pays for the purchase when goods are delivered. CommissionThe amount of money due to a sales rep when the sales rep makes a sale. Commissions can be based on an item's sales price, profit margin, etc. Commissions dueThe amount of money to be paid to a sales rep who is given credit for a particular sale. CommitTo allocate (commit) inventory to a transaction (e.g., an open order, ticket, adjustment, etc.). Cost
The amount you pay a vendor for merchandise. The derived value of an inventory item, calculated over the lifetime of the item.
Cost methodThe process that determines the cost of each inventory item. Generally accepted methods of costing include average cost method, standard cost method, first-in, first-out method (FIFO), and last-in, first-out method (LIFO). Cost of goods soldCost of merchandise less any discounts, but including transportation and alteration costs.
Cost of goods sold = merchandise – (discounts + transportation + alteration costs)
Counting a drawer
The process of recording the amount of cash and other payment types in a drawer. Normally, the drawer is counted at the end of each business day. Credit
The power or ability to obtain goods, services, or money in exchange for a promise to pay later. The right side of an account of any G/L account. Credits will normally be increases to liability accounts
and decreases to asset accounts. They may also be increases to income accounts and decreases to expense accounts.
CustomerAn individual or organization that purchases goods and services from your company. Cyber MondayRefers to the Monday immediately following Black Friday, which marks the beginning of the Christmas shopping season for online retailers. In recent years, Cyber Monday has become one of the busiest days for online retailers. D
DiscountRepresents a reduction in the price of an item. DistributionsG/L accounting transactions created during posting. DrawerA physical container that stores money and other tender, including checks and credit card drafts, received at the point of sale. Drawer fundThe amount of money left in a drawer after the drawer has been closed. The drawer fund is typically used to provide startup money (change) for the next business day. Drop-shipRefers to an item that will be shipped directly from your supplier to your customer. DUKPT (Derived Unique Key Per Transaction)A method of PIN pad encryption. DunA demand for payment of a bill or account. E
EBT (Electronic Benefit Transfer)An electronic system that allows recipients to receive government benefits (e.g., food stamps) by means of a debit card. Retailers can only accept EBT cards for food items that have been authorized by the USDA’s Food Stamp program EDC (Electronic Draft Capture)An automatic method of authorizing, balancing, and settling credit card transactions entered in your retail software package. EDI (Electronic Data Interchange)Ability to electronically exchange purchasing information between your retail software and the vendor's system. Employee discountA reduction in selling price on merchandise sold to an employee. EncryptionThe technique of automatically scrambling credit card data in the point of sale system before the data is transmitted. Used for security and anti-fraud purposes. End capsThe end pieces of display units typically used to display promotional items or featured items. Ending inventoryMerchandise on hand at the end of an accounting period. Etailer
Merchants who sell retail goods or services through the Internet.
Related terms: internet retail, retail ecommerce, online retailing, ecommerce, e-retail, e-tail, and e-tailing
Exception reportingReporting that only includes information not meeting established criteria. For example, if you plan to sell between 2% and 5% of your inventory per week, then exception reporting would allow you to report on sales outside your criteria limits (e.g., sales that fell below 2% or rose above 5%). ExpensesCosts of operating a retail business. F
FDMS North, First Data North (formerly CES)A credit card processor responsible for processing payment transactions. FDMS South, First Data South (formerly NaBANCO)A credit card processor responsible for processing payment transactions, particularly well-suited for processing transactions in the Caribbean and Latin America. Finance chargeAn amount charged to a customer's account because of past due invoices. Fiscal yearAny accounting period that contains one of the following:
52 weeks 13 four-week periods Calendar year (Jan 1 - Dec 1) Any 12-month period
F.O.B. (Freight On Board)A shipping term indicating that freight charges are included to the specified destination. ForecastingPredicting the future, usually in sales or trends. Form feedThe capability of most printers to automatically feed perforated fixed-size rolls of paper to the top of the next page. Frequent Shopper Program (Customer Loyalty Program)Program designed to reward customers for their continued business, promote loyalty, increase visitation, and encourage future purchases. Rewards may be in the form of discounts, awards, or other perks. G
GAAP (Generally Accepted Accounting Principles)A set of financial accounting standards and reporting guidelines many retail business follow. Gateway, Internet GatewayManages the electronic connection between consumers and financial institutions, and transmits data. An Internet Gateway that processes credit cards is a gateway connection between the point of sale system and the credit card processors. General Ledger (G/L)
The collection of all balance sheet, income, and expense accounts used to keep a business's financial records.
A software package that uses accounts to summarize a company's fiscal records.
Gift certificateA voucher for goods or services that is sold to one customer with the expectation that it will be redeemed by another.
Gift receiptA receipt without prices that allows for easy exchanges of a gift. Gift receipts act as proof of purchase for the gift recipient and allow the purchaser of the gift to keep the original detailed receipt for his or her own records. GridA table or matrix of the available combinations of characteristics for an item, such as color, size, pattern, width, length, and so forth. Retail apparel grids are typically one-dimensional (e.g., color only or size only), two-dimensional (e.g., color/size), or three dimensional (e.g., color/size/pattern). Grid cellThe intersection of two dimensions (e.g., color and size) in an item grid. Also referred to as a color/size combination, or simply color/size. GMROI (Gross Margin Return On Investment)A numerical indicator of the company’s return on its investment for an item or group of items. GMROI measures the profitability of a company. GP% (Gross Profit %)The gross profit divided by the price. Gross profit (margin)The difference between an item's price and cost. H
Hang tagManufacturer's label describing the merchandise, or a hanging price tag used for apparel and similar merchandise. I
Industry TypeDetermines the retailer's processing rate for credit card transactions:
Retail: Offers the best processing rates for card swipe ("card present") transactions. Supports AVS and debit card processing.
Mail-order/Telephone-order (MOTO): Transactions presumed to be "card not present" (no card swipe). Supports AVS and CVV2/CVC2/CID.
Ecommerce: Transactions presumed to be from a website or other secure electronic source (no card swipe). Supports AVS and CVV2/CVC2/CID
Inventory
Merchandise on-hand for sale to customers in the ordinary course of business. The value of merchandise on hand at cost or retail.
Inventory adjustmentsAn increase or decrease made to inventory to match an item's actual on-hand quantity. Adjustments are typically recorded to account for breakage, theft, loss, incorrect receivings, over shipments, and so forth. Inventory costThe actual or average value of on-hand merchandise. InvoiceA document denoting money owed from one entity to another. Issuer, Issuing BankThe financial institution and member of Visa or MasterCard that holds contractual agreements with, and issues cards to, cardholders. ItemA clearly identifiable product or service that may be sold to your customers. J
Journal
Electronic record of transactions, including drawer activity, tickets, inventory adjustments, transfers, purchase requests, and receivings. K
Keystone MarkupA markup equal to the cost of the merchandise. Retail price is determined by doubling the cost of an item. KitA single inventory item that is constructed from other inventory items (components). For example, you might create a kit called "toolbox set" that includes a toolbox, a hammer, a wrench, and a screwdriver. You could then sell the toolbox set as a single item. Kiosk
A small leased area, booth, or cart inside a store or mall. Frequently an extension of a larger retail business.
An interactive computer display used for gift registries, online shopping, merchandise location, or other electronic interactions between a shopper and a retail store.
L
Landed costThe final cost per unit of items received into inventory.
Landed cost = (Purchase cost + freight cost + miscellaneous charges) / quantity received
Last costThe cost of an item as of the most recent purchase of the item. LayawayA method of deferred payment in which merchandise is held for the customer until it is completely paid for. The customer makes periodic payments towards the price. Level II Purchase CardsPurchase cards are Visa and MasterCard cards that look like normal credit cards, but are processed in a special way so that the cardholder (typically a large business or government agency) will receive additional information on the monthly statement regarding the type of goods or services purchased. Level II Purchase cards may also be referred to as Corporate cards, Business cards, or Commercial cards. Line itemA single item on a ticket, order, or PO. Line taxThe sales tax associated with a line item. LocationA physical place where inventory is kept (i.e., a stocking location or warehouse). Lot-controlled itemsItems whose quantities are tracked by unique lot numbers within an item. Lot numbers are commonly used for chemicals, paints, dye-lots, and pharmaceuticals. Loss leaderA pricing strategy where a particular item is sold below cost in an effort to stimulate other, more profitable sales. For example, during the Thanksgiving season, turkeys are frequently sold at pennies per pound in the hopes that the grocery store will profit from other groceries purchased at the same time. Loss preventionStopping or reducing shrinkage inventory losses (or shrinkage) due to shoplifting, employee theft, paperwork errors, and breakage. Loyalty
Commitment to a particular store or brand. Program designed to reward customers for their continued business.
M
Management historyHistorical daily summary figures for registers, categories, payments, sales reps, and taxes. Margin (gross profit)The difference between the cost of an item and its price. Magnetic Ink Character Recognition (MICR)The process of check authorization in which data on a check is read by a MICR device and transmitted to the retail software, which in turn sends the data to the check processor. MICR processing eliminates manual data entry and is less prone to errors. MarkdownA reduction in the original retail price, primarily taken for clearance of broken merchandise, prior stock, or to meet competitor's pricing. MarkupUpward revision of the original retail price, resulting in a price higher than the original price. Merchant agreementA written contract between a merchant and the financial institution that details their respective rights, responsibilities, and warranties. Minimum orderThe smallest sale permitted by a manufacturer or wholesaler (vendor). Miscellaneous chargeAn additional charge that is not normally included in the price of an item, such as a fee for shipping or handling. Magnetic Stripe Reader (MSR)A device that converts the information contained in the magnetic stripe of a credit card into data that can be understood by retail software. MerchandisingBuying and selling of goods. Metrics Measurements of data surrounding sales activities, resources, and/or deliverables. Model stockRepresents the desired inventory stocking level of an item. The model stock is designed to assist in purchasing decisions and to ensure there is an adequate supply of merchandise is on hand. MOTO (Mail-order/Telephone-order)See Industry Type. Multiple-PricingSelling two or more of the same item at a unit price that is lower than the unit price of a single item. For example, $5.99 each or 2/$10. N
Net termsTerms calling for the billed amount of the invoice with no discount allowed. O
Opening a drawerThe process of recording the beginning amount of cash in a drawer before processing tickets. Normally, a drawer is opened at the start of each day. On handInventory that is physically present. On orderMerchandise that has been ordered but not yet received. Open item
A type of customer whose account balance is determined by keeping individual document detail and applying payments to specific documents.
A specific A/R document (e.g., an invoice, finance charge, debit memo, payment, etc.) showing an individual transaction that occurs for an open item customer.
Open-to-buy (OTB)The dollar amount of merchandise that a retailer can order for a particular period.
Interim open-to-buy is calculated by deducting from the period’s planned purchases the amount of merchandise already received and the retail amount of purchase orders planned for delivery within the period.
OrderA request or instruction to buy, sell, or supply goods or services. Original markupThe initial markup on an item from cost to retail price. Original retail priceThe initial retail price at which merchandise is offered for sale. Overage
The amount by which a physical inventory exceeds book inventory. The amount by which the actual drawer amount exceeds the reconciled amount at the time the drawer is
closed.
OverboughtThe condition where a buyer has committed to purchases exceeding the planned purchase allotment for a merchandising period. P
Packing slipA contents list (or a copy of the invoice) included with a shipment. PasswordA word or string of characters assigned to a specific clerk that allows access to the retail software. PABP (Payment Application Best Practices)Guidelines established by Visa to protect credit card data from fraud and misuse. PaymentMoney received from a customer to pay his or her bill. Payments may be made in the form of cash, checks, gift certificates, store credits, debit cards, credit cards, or company-specific A/R charge accounts. PCI DSS (Payment Card Industry Data Security Standards)Data Security Standards (DSS) is a strict set of guidelines designed to protect credit card data from fraud and misuse. DSS guidelines are established and maintained by the PCI Security Standards Council.
PCI DSS may also be referred to as CISP. The Cardholder Information Security Program (CISP) and Payment Application Best Practices (PABP) are guidelines established by Visa to protect credit card data from fraud and misuse.
PeriodA specified contiguous interval of time, such as a week or a month. Periodic inventoryA method of determining the value of retail merchandise at periodic intervals by performing a physical count of the items in stock. Peripheral devicesRetail POS hardware devices used in conjunction with your retail point of sale workstation. Retail POS systems support a number of peripheral devices, including printers, cash drawers, barcode scanners, modems, card readers, check readers, customer displays, weight scales, and PIN pads. Perpetual inventory
A method used by retail software packages to continually track and monitor the value of inventory and the quantity on hand adjusted for sales, returns, and receipts. Physical countThe process of counting on-hand inventory. Also called "physical inventory," "periodic inventory" or "taking inventory." Picking ticketA list of items used for physically gathering items for shipment. Picking tickets typically include item and customer information, where the item is physically located (the bin), quantity ordered, and a place to write the actual quantity of the item being shipped. PIN (Personal Identification Number)The individual number or code used by a cardholder to authenticate card ownership for point of sale debit transactions. Planned salesAnticipated sales for a given period of time based on retail sales trends and planned increases over a period of time. PlanogramSchematic drawings of retail store fixtures that illustrate product placement. Point of Sale (POS)The physical location at which goods or services are sold to customers. Also called point of purchase. PriceThe amount a customer would pay to buy a particular item from you, or what a customer actually paid for an item. Pricing unitThe unit of measure by which an item is priced. Price warCycle that begins when one retailers attempts to underprice another, and results in retailers continuing to lower prices in turn to undercut the other. Prior stockStock that has been in a retailer's inventory for more than six months. Processing feesFees associated with processing credit card transactions. ProcessorA company responsible for processing payment transactions and is either operated by the acquirer or is acting on the acquirer's behalf. Profit center
A distinct area within your company for which sales, expenses, and profits can be calculated separately from the total sales and expenses of the whole company
A segment of the G/L account number used in generating distributions
Profit percentageThe difference between the cost of an item and its price, expressed as a percentage value. PromotionA special item price available for a limited period of time. Purchase order (PO)A record containing the details of an order for merchandise that has been placed with a vendor. Typically, the PO includes the items purchased, costs, discount terms, and shipping information. Purchase requestAn unapproved purchase order. A purchase request contains all the information that will go into a purchase order after the purchase request is approved. PurgeTo remove unnecessary records from your retail software. PVV (PIN Verification Value)The value encoded in the magnetic stripe on the back of a payment card.
Q
Quantity discountA reduction in price based on the volume of the sale. R
RBS Lynk (formerly Lynk)A credit card processor owned by the Royal Bank of Scotland that's responsible for processing payment transactions. ReceivablesMonies owed to a company by customers who have deferred payments. ReceivingA document that details the receipt of merchandise ordered from a vendor. RefundMoney or credit given to customer for the return of merchandise. Regular priceTypically, the suggested retail price. Retail POS System (Retail Point of Sale System)A computerized system made up of retail software and point of sale hardware. Retail POS systems expedite point of sale checkouts, track merchandise performance, reorder items, identify sales trends, enable buyers to make better merchandising decisions, track customers and monitor loyalty, and report on historical sales activity. Retail priceTypically, the highest price at which an item is sold. Retail MethodAn accounting method used to estimate the cost of ending inventory based on the cost of the goods available for sale relative to the retail price of the goods available for sale. RetailerAn individual or company that sells goods and services directly to the consumer. RelieveTo remove quantity from inventory due to an adjustment, sale, etc. ReturnA transaction in which a customer gives back a purchased item in exchange for the amount the customer paid for the item. Return to vendor (RTV)
The process of returning to a vendor any items that were previously received on a PO. A document authorizing the return of items to a vendor.
Revenue (sales)Income produced by a company. ReversalWhen an acquirer successfully represents a chargeback to the issuer, the chargeback is reversed and the funds are returned to the merchant. Rotating stockMethod of stocking new merchandise behind or in place of old merchandise. S
SaleA transaction in the retail software in which a customer exchanges an agreed amount for an item. Sales forecastEstimate of future sales based on current sales figures and current information from manufacturers, wholesalers, accountants, and bankers. Sales per square footNet sales divided by the square feet of retail selling space.
Sales repAn employee for whom sales activity and commission information is tracked. Sales taxAn additional charge levied on the sale of goods and services, usually calculated as a percentage of the purchase price. Sales taxes vary according to the taxable status of the merchandise and customer and can differ according to location. Seasonal merchandiseMerchandise purchased for a specific season that is only in demand for a short period of time (e.g., summer, Christmas, back to school, etc.). Serial numberA number that identifies a unique unit of an item. Serial numbers are used to track specific items from acquisition to sale to history. Serialized itemItems whose individual units are assigned unique serial numbers. SettlementThe act of completing a credit card transaction. Shrinkage (Shrink)The difference between actual stock and book records of stock. Shrinkage represents the aggregate of errors in stock record keeping, plus actual losses of merchandise through shoplifting, employee theft, paperwork errors, breakage, etc. SKU (Stock Keeping Unit)A number used to identify each unique item. SKUs are used in retail software to identify items and may be tied to the item's UPC or EAN barcode. Special orderA type of order typically used for items not generally kept in stock, especially those ordered by you from your vendor for a particular customer. SPIFF (Sales Promotion Incentive Fund or Sales Person Incentive Fund)Cash, reward, or additional commission paid to sales clerks for increasing sales of a particular item or brand of merchandise. Split dialThe capability of a point of sale card terminal to dial different phone numbers to obtain an authorization or settlement of different card types. Statement (Customer statement)A notice sent to a customer describing monies owed. Statements may include details of invoices, payments, credit memos, debit memos, and/or aging along with the current balance of the account. StationA retail point of sale workstation at which tickets and orders are entered and other cash register functions are performed. Stocking unitThe unit of measure by which an item is kept (stocked) in inventory. StoreA physical place at which retail business is conducted. Store creditA document that represents money owed to a customer by the merchant. A merchant normally issues a store credit (also called a "due bill") when a customer returns merchandise that is not eligible for a refund. Store credits can be redeemed (tendered) by the customer for future purchases. Sub-categoryA specific classification within an item category that further defines the characteristics of a group of items. Subscription ServiceA method of delivering periodic retail software updates that may include product updates, new features, and bug fixes. Subscription services typically have an annual fee. SVC (Stored Value Card)The most common type of gift card. Each card is uniquely numbered and represents a specific dollar amount. SVCs typically include a magnetic stripe encoded with a unique ID number allowing them to be processed with a standard MSR device. The "value" of each SVC is typically stored in a central database.
T
TagA physical label attached to merchandise for sale, such as an adhesive price tag, hang tag, or butterfly tag. Target MarketA defined group of consumers whom the retailer attempts to satisfy with their products and services. TaxAn amount levied on an item at the time of sale for the support of national, state, and/or local government. Taxable amountThe per unit amount of an item’s price to which a tax can be applied. TearsheetAn actual copy of a retail advertisement. TeleCheckA check verification service for merchants designed to expedite the processing and handling of checks and reduce fraud. TenderAny form of payment that is offered to purchase goods or services. TermsA set of payment requirements for an invoice. For example, terms of 2/10, net 30 indicate that an invoice paid within 10 days receives a 2% discount; otherwise the undiscounted amount must be paid within 30 days. TicketA transaction used for the sale or return of goods or services. Ticket taxThe total tax amount for one ticket or order. Ticket historyDetailed historical records of the tickets issued in the retail software. Track 1/Track 2Information stored on the magnetic stripe on the back of a card. Track 1 stores the cardholder's name, account number, and expiration date. Track 2 stores the account number and expiration date only. TransactionA completed record in the retail software that involves the exchange of goods, products, or services. TransferA transaction that facilitates the movement of some quantity of items from one location to another. Trunk showOccasion where vendors present their merchandise directly to retail store owners, buyers, and/or customers. TSYS (formerly Vital, formerly VisaNet)A credit card processor responsible for processing payment transactions. Turn rate (Stock turnover rate)A measure of how quickly your inventory sells. For example, a turn rate of 6 would indicate that you sell your merchandise quickly enough to replace it six times per year. U
UnallocatedA purchase request or P.O. where the goods ordered are intended for delivery to a single location. Uniform Resource Locator (URL)A unique address that locates a specific resource on the Internet. Unit
A quantity of one A fixed quantity used as a standard for entering quantities in the retail software. For example, the
stocking unit for an item might be 'each,' but you might receive an item from your vendor by the alternate unit 'case.'
UPC (Universal Product Code)
The standard for encoding a set of lines and spaces (or barcodes) that can be scanned and interpreted by retail software to identify a product. V
VendorAn individual or organization from which a retailer purchases merchandise for resale. VoucheringThe process of creating an Accounts Payable voucher, or record of what is owed to a vendor, for items received from and invoiced by the vendor. W
WarrantyA written guarantee of a manufacturer's or retailer's responsibility. A limited warranty provides specific conditions under which a manufacturer or retailer will repair or replace an item. WorkstationThe computer used to run a retail software package. X - Z
Year
An accounting period most often defined by the company’s fiscal year or as a calendar year (January 1 through December 31).
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