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Retail Glossary


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A-commerce: A-commerce is the buying and selling of products using Augmented Reality to visualize products virtually in the real-world environment before purchasing. It’s a technology that helps in adding potential realism by allowing online shoppers to get a familiarity with products that were only flat images before. This new way of shopping helps consumers with their buying decisions while positively impacting sales and product returns for retailers.

Action Alley: The sales area of a store located immediately after entering.

Advance Shipping Notice: A file that contains all of the SKU information of the shipment, as well as the shipping container serial number.

Audit: The formal process of checking adherence or deviation from the prescribed standard operating procedures (SOPs) or financial plan or book inventory. The checkers called auditors can be either the internal or third party personnel. The audits GAPS are reported and corrective actions are taken.

Augmented Reality (AR):  A technology that superimposes computer-generated sound, image or text on a user's view of the real world thus providing a composite view. It helps customers in getting product information, product trials and visualisation.

Average Inventory: Average Inventory value is calculated by dividing sum of the month’s beginning inventory and the ending inventory by 2. If calculating for a season of 6 months, divide by 7 – beginning inventory value of all six months and ending inventory value of sixth month. If calculating for a year, divide by 13 - beginning inventory value of all twelve months and ending inventory value of twelfth month.

Average Transaction Size (ATS): The average amount spent by customer; also called Average Bill Value (ABV) or Average Ticket Size (ATS) or Average Transaction Value (ATV), ATS is calculated by dividing the value of sales during a given time by the number of transactions in that same period.




Backorder: When a specific quantity of an item could not be filled by the requested date, it is called to be on a backorder.

Bar Code: A machine readable code made up of alternating dark and light bars. The spacing between these bars signals the reader what the numerical code is. Bar codes can be Universal Product Code (UPC) or any number of other formats and almost limitless in length - the longest being 128. Bar codes help retailers track inventory going in and out of the store.

Beacons: Powered by Bluetooth Low Energy (BLE) technology, Beacons are devices that can transmit messages to other Bluetooth-enabled gizmos, such as smart phones, tablets, and smart watches. Beacons have the capabilities to “recognise” devices based on their location or previous interactions enabling retailers to send tailored notifications to shoppers depending on where they are in the store or what type of customers they are.

Big Box Store: A store, usually a hypermarket or department store or superstore that provides a wide variety of products in a large physical space. These stores focus on large sales volumes and are usually very minimalist in design.

Big Data: A massive data set that is so large that it needs a sophisticated program or a data scientist to make sense of it. In retail, big data is used to analyse customer behaviours, demographics, social information, and more.

Brick & Click: The 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 them to provide seamless web-to-store services, like buy online & pick up in store or buy online return in store. It ensures enhanced product/service visibility and reach to larger number of customers.

Bundle Pricing: The sale of goods and services at a lower price than the price if they were all purchased separately.




Card Reader: A magnetic code reading device usually built into a cash register keyboard. When a payment card is swiped through the wedge, the data is read into the machine.

Carrying Cost: The cost involved in maintaining or holding inventory including all costs associated with the inventory investment and storage.

Category: A collective group of items with identical usage such as health drinks, juices, dairy products or coordinated usage such as South Indian foods as one single category would include (though part of other categories) specific rice varieties, traditional spices, coconut milk and vegetables etc.

Cashwrap: The main checkout area of a retail store, where retailers set up their Point of Sale for customers to pay for purchased items. Sometimes cashwraps have shelves or additional section with items that shoppers can pick up on their way out or gift wrapping or for inviting participation in a store loyalty program.

Chargeback: A charge that’s returned to a payment card after a customer successfully disputes a purchase on their account. A chargeback can occur on bank accounts or credit cards due to a variety of reasons such as customer return or duplicate or incorrectly charging error.

Click & Collect: The term, prevalent in omnichannel operation, refers to the act of ordering something online and then collecting from the physical store.

Clienteling: Technique involving relationship-building activities such as using CRM software to collect and track customer data, providing personalised shopping experiences, and following up with shoppers in a relevant and timely way.

Cloud Point-of-Sale (POS):  A web-based Point of Sale system which allows payment processing through internet rather than through local computer or server.

Consignment Merchandise: The inventory that a retailer does not own or pay for until it’s sold. Under the 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 by the consignee for a percentage of the sale as commission.

Consumer: The end user of any product or service.

Consumption: The usage of product or service by consumer.

Consumer Packaged Goods (CPG): The 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.

Contactless Payments: A system of payments which includes Near Field Communication (NFC)-enabled credit and debit cards, smart cards, and smartphones that allows customers to complete transactions for their purchases just by waving their card or phone over a terminal. 

Conversion Rate: The number of people who made purchase divided by the number of people visiting the store. It is expressed in percentage.

Cost Of Goods Sold (COGS): The accounting term is used to describe the total cost value of products sold. This appears on the profit-and-loss statement and is used for calculating inventory turnover.

Cross Merchandising: This refers to the retail practice of displaying or putting together products from different categories to drive add-on sales. For e.g. people often take lemons with their tequila shots, so placing both items together on display will drive their sales. Also called Coordinated Products Grouping (CPG).

Customer: The one who buys product or service and may or may not be a consumer.

Customer-facing Display (CFD): A customer-facing display (CFD) or monitor is usually a separate screen that allows customers to view their order, tax, discounts, and loyalty information during the checkout process. CFDs establish transparency in customer billing and help to reduce inaccuracies and incorrect purchases.

Customer Relationship Management (CRM): Managing and improving customer relationship by retaining and incentivizing customers through customer loyalty program. The stores maintain customer data for this purpose.




Dead stock: Stock remaining unsold for relatively long time, also known as Dog or Obsolete inventory.

Demographics: Identification of population groups based on age, gender, income, occupation, eductaion, religion, race, family size, lifestyle and more.

Discount: A reduction in the price of an item or transaction based upon the customer making the purchase.

Distribution Center (DC): A distribution center is a warehouse or specialized building that stores a set of products to be distributed to retailers (or directly to consumers).

Drop Shipping: An arrangement between a retailer and a manufacturer in which the retailer transfers customer orders to the manufacturer who keeps the inventory. The manufacturer then ships the products directly to the consumer. Also known as Direct shipping.

Dry Storage: In retail warehousing dry storage is typically used to describe non-refrigerated storage of food products, such as canned and dry goods.

Durable Goods: The consumer products that do not need to be purchased frequently as they are made to last for a long time (usually lasting for three years or more).




Electronic Article Surveillance (EAS): Electronic Article Surveillance is a technological method for preventing shoplifting. Under this tags and labels are affixed to high-value or frequently stolen goods and then are removed or deactivated by staff after being purchased so that they don’t set off the alarm system. At the exits of the store, a detection system sounds an alarm to alert the staff when it senses active tags are passing through there.

Electronic Data Interchange (EDI): The transfer of data between two companies in a format that can be read and understood by both parties. EDI messages are sent through a Value Added Network (VAN) - a third party mailbox that both companies use to store the messages in transit. EDI is roughly 100 times faster than fax to send data and maintains an audit trail.

Electronic Point-of-sale (EPOS): A POS system that records sales and inventory movement electronically.

Email Blast: An email sent to a large group of people at once.

EMV Card: EMV stands for Europay®, Mastercard® and Visa® card. An EMV card is embedded with a chip which creates a unique code for every transaction thus reducing the chance of card information being cloned and used in fraudulent transactions. 

Endless Aisle: A brick-and-mortar store that enables customers to browse and shop a retailer’s entire catalog through a touch screen or tablet thus helping him to avoid stocking up every item.

Enterprise Resource Planning (ERP): ERP is the integrated management of core business processes, often in real-time, facilitated by software. These business activities can include; purchasing, inventory management, marketing, customer service, shipping, payment, finance etc. This software is essentially found with large, enterprise-sized retailers.

E-tailing: Electronic retailing is the sale of goods and services through the internet. E-tailing can include business-to-business (B2B) and business-to-consumer (B2C) sales of products and services.

European Article Number (EAN): Thirteen-digit European Article Number (EAN) has one digit being placed the leading left outside the bar code. The next six numbers are assigned to the manufacturer and the remaining six are for product identification.

Everyday Low Pricing (EDLP): A pricing strategy that promises consumers a consistently low price without comparison shopping or a sale.




Facing: The count of customer-facing display of identical products or same SKUs on shelves or wall space. Facings are used in plan-o-grams and when zoning a retail store

Flash Sales: A flash sale is a promotion or discount offered by a store, either ecommerce or brick-and-mortar, for a brief period. Because the quantity of the goods is limited, higher discounts are offered in comparison to frequent promotions. This encourages impulse buying as the time limit and limited availability entices customers to make a purchase through fear of missing out on a bargain.

Footfall: The number of people entering the business premises or retail store or shopping mall.

Forecast: An estimation of the future demand for goods or services. Demand in the past is used to calculate future demand, with adjustments for trends and seasonal trends.

Franchise: A business arrangement wherein products and services are distributed and retailed via a licensing relationship.

Franchisee: The license holder of product or service in Franchise business.

Franchisor: The license issuer of product or service in Franchise business. The franchisor specifies the products and services to be provided to the customers; provides an operating system, the brand, as well as operational support to franchisee.




Gondola: Primary merchandising fixture consisting of a base, free-standing vertical wall, and a number of four of sections of shelving.

Green Retailing: This refers to the environmentally friendly business practices that retailers commit to. This can range from giving customers reusable shopping bags and avoiding use of plastic to adding solar panels to supply electricity to their stores.

Gross Margin (GM): Gross margin is total sales revenue minus the cost of goods sold, divided by its total sales revenue. It can be expressed in value as well as percentage terms.

Gross Margin Return On Investment (GMROII): Gross Margin Return On Inventory Investment is calculated by dividing gross profit value for the year by average inventory at cost. The result is always answers the question - “For every rupee invested in inventory, how many rupees were returned?”

Gross Margin Return On Floor (GMROF): Gross Margin value or %age earned on per square foot of retail space.

Gross Margin Return On Labour (GMROL): Gross Margin value or %age earned per Employee.




Hardlines & Softlines: Also known as hard goods and soft goods respectively. Hardlines and softlines are two major kinds of retail inventory. Soft goods are items that are literally soft, such as clothing. Hard goods are non-personal items such as electronics, appliances, and sporting equipment.

High-speed Retail: High-speed retail is all about optimizing the customer’s shopping experience and ensuring that it goes as quickly and smoothly as possible. Popular examples of high-speed retail are drive-through grocery stores, pop-up stores, mobile businesses such as food trucks, or any business that utilizes an urgent promotion or limited-time sales.




Impulse Purchases: An impulse purchase is a thing that a customer purchases with no prior plan, often because of a sudden whim or impulse. A customer who makes this kind of purchase is considered an impulse purchaser or buyer.

Integrated supply chain:This is a network of businesses and contractors that work and coordinate closely together to manufacture, transport, distribute and sell retail goods through shared information and common systems.

Inventory: Interchangeble term for stock, merchandise, items or product.

Inventory management: Practice of managing and tracking inventory at all points of retail value chain to achieve the goal of right product at the right place and in right quantity.

Inventory Turnover: It is the number of times average inventory is sold during a given period. Though high turnover is desired, the turnover number varies from merchandise to merchandise.

Items Per Transaction: A measure of how many items are contained in the average transaction with each customer. The formula is total items sold for the day, week or month, divided by the number of transactions in the day, week or month.




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.




Layaway: Also called Lay-by, this ervice allows the customer to put an item on hold with a retailer until the item is paid for in full. Payment can be made in installments.

Last In First Out: Accounting principle for accounting sale of mew merchandise before older ones.

Look Book: The book showcases a product line through photos, providing a story, feeling or inspirational overview of the product assortment.

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.

Lot Size: Also called order quantity, this is the quantity of an item ordered for delivery on a specific date.




Markdown: Markdowns are the discounts that retailers make on merchandise from the original marked price. Unlike sales or promotional events, a markdown price is changed to a lower price permanently. Goods that aren’t selling very well are usually marked down.

Market Segment: Market segment is a single part of the market which is separable from rest of the market. It can be clearly identified as being different by a set of distinct and common characteristics such as demographics, lifestyle, geographic location, or buying habits.

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 or will happen during the year, as well as their results.

Markup: The amount by which the cost of a product is increased to derive the selling price or to create a profit margin for business. It can also be defined as a percentage added to the cost to get the retail selling price.

Merchandise Classification:  The grouping of merchandise items done for the purpose of easy identification of specific items and efficient inventory management. It is an outcome of the retailer’s policy of classification and varies from retailer to retailer.

Minimum Advertised Price: This is a supplier’s pricing policy that doesn’t permit retailers to advertise prices below a specific amount. While legally a retailer can’t advertise for less than this price, they can, in fact, sell items in their store for less than this price.

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.

Mobile Shopping: This is the act of shopping on a mobile device, e.g. a smartphone or a tablet. This has become increasingly popular in recent years due to many websites being optimized for display on mobile devices and tablets. It’s virtually the same as shopping on a desktop PC or a laptop, only with a smaller screen.

Monthly Sales Index (MSI): This is a measure of seasonal sales that can be calculated by dividing each month’s sales by the average monthly sales and then multiplying that number by 100. Any result higher than 100 means that there has been growth, if it’s less than 100, then that month there has been a loss.

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.

Mystery shopping: A market research activity to evaluate product or service quality or compliance, using a decoy customer in person or over the phone call 




Net Profit: The actual profit left after working expenses have been paid. It’s calculated by subtracting retail operating expenses from gross profit. It can be expressed in value and percentage terms.

Net Sales: This is the revenue a retailer makes during a specific time period, after deducting customer returns, markdowns, and employee discounts.

Niche Retailing: A niche retailer only sells a single type of product within a specific category. While niche retailers generally don’t appeal to large groups of consumers, they can meet the specific needs of the small groups that they target. Niche retail trends don’t correlate with trends in large, general retailers that sell a variety of goods and as such try to reach as many customers as possible.




Off-Price: Off-price retailers are retailers who provide high-quality items at extremely cheap prices. They usually sell second-hand goods or items that are out of season. These retailers offer brand name soft goods at low prices. They can afford to do this by purchasing irregular pieces straight from the manufacturer, canceled orders, goods purchased by other retailers, and end of season clearance items.

Omni-channel Retailing: Omni-channel retailing is an approach to sales that aims to give customers a fluid shopping experience whatever the means they are using to shop, whether they’re buying from an ecommerce store or over the phone or in a traditional brick-and-mortar store. This approach utilizes multiple means of promoting and distributing goods. For example, websites and apps, phone calls, emails, and social media.

Open-to-buy (OTB):  Merchandise budgeted for purchase during a certain time period that has not yet been ordered. Sometimes it is also defined as purchases made during the season or business month to achieve sale targets.

Operating Expenses – The sum of all expenses associated with the normal course of running a business.

Order Lead Time (OLT): The order lead time is the period between when the retailer places an order with a supplier and when the product is delivered to their store.




Payment Card Industry (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.

Performa Invoice (PI): 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.

Planogram: A detailed diagram plan of floor, wall and fixture layout for demonstrating how and where products should be displayed in a retail store to increase the number of purchases that a customer makes. Planograms are a vital part of merchandising and retail space planning.

Point-of-Purchase (POP): The POP are locations such as shelves, gondolas, display walls or fixtures etc. where merchandise is displayed for customers to make the purchase.

Point-of-Sale (POS): The cash register area (POS) where the actual sale transaction or billing of the items picked up from POP area takes place.

Point-of-Sale (POS) System: A POS system is a cash register including related hardware and software that allows retailers to check out customers, record sales, accept payments, and route those funds to the bank. This features a computer and monitor, a cash drawer, a receipt printer, customer display, a barcode scanner and a credit and debit card reader.

Pop-up Store: Short-term shops or sales spaces, found in empty retail areas, mall booths or any other public place, that come and go within a given period of time.

Prestige pricing: Pricing strategy used by high-end retailers to convery exclusivity, quality or luxury aspect of the product, to attrcat status-conscious consumer.

Price Look Up (PLU): Price Look Up (PLU) is 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.

Private label:Brands owned by retailers, either imported & labelled or manufactured by planning.

Procurement: The process of sourcing, negotiating, and strategically selecting goods for retail shop.

Product Assortment: The range of products in terms of variety and quantity. Assortment Width denotes range of variety in products and Assortment Depth denotes quantity in each variety. Multiplying both will give total count of items.

Product Life Cycle (PLC): Term used to describe a series of stages that each commecrial product goes through after hitting the market.

Purchase Order (PO): Official document prepared for ordering to supplier.




Quantity Discount: An incentive offered to a buyer to purchase a certain quantity for a decreased cost per unit.

Quantity-on-hand: The physical quantity of inventory that a retailer has in possession.

Quantity-in-order: The ordered stock that is yet to be received through open POs or is in manufacturing or transit stage.

Quick Response: Quick response is the name given to the system that immediately replenishes goods based on consumer demand. It is also sometimes referred to as JIT II (Just in Time level two) or in retailing as ECR (Efficient Consumer Response). The use of current technology links the manufacturer, supplier, retailer and retail outlet together to speed up communications, reduce paperwork, reduce inventory carrying costs, and have what the customer wants when they want it.




Radio Frequency Identification (RFID): RFID 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 and to learn more about customers.

Receipt Printer: A specially built narrow carriage printer that is used to print customer receipts.

Relationship Retailing: A strategy that retail businesses use to build loyalty and create lasting relationships with customers including loyalty programs, first-class customer service, great return policies, or personalised experiences.

Retail Supply Chain: A complete value chain of supply wherein a manufacturer manufactures the product and sells to a middleman (wholesaler or distributor) to be further sold to a retailer who ultimately sells it to the final purchaser, the consumer.

Retail: The business of selling products and/or services for the use by end-consumer. 

Retailer: A person who runs or owns retail business.

Retargeting: This is an advertising practice in which online ads are targeted at consumers based on their previous actions.




Self-service: A service system in which customer selects and pays for goods himself without staff assistance.

Sell-out: Sales or shipments to distributor

Sell thru: A KPI that denotes product sale from the available stock. It is calculated in percentage

Showrooming: The consumer practice of examining products in a store and then purchasing them online at a lower price.

Shrinkage: Shrinkage in retail is a reduction or loss in inventory due to shoplifting, employee theft, paperwork errors and supplier fraud. Shrinkage is the difference between recorded inventory and actual inventory.

Social Commerce (S-Commerce): It refers to retail models or ecommerce practices that incorporate social media, user-generated content, or social interaction. The social networks do not necessarily serve as platforms for buying and selling; rather, they’re meant to assist the process and help drive sales.

Stock Keeping Unit (SKU): Term represents all the attributes of an item such as colour, flavour, pack size, packaging type etc.

Store Loyalty: When customer shops from specific retail store repeatedly driven by his/her own choice.

Store Positioning: The position a store occupies in respect to price, fashionability, service, assortments vs. competition.

Suggestive Selling: Suggesting the purchase of related items in addition to the original purchases, like a tie with a shirt, blouse with skirt, hats with jackets and so on.

Supply Chain Management (SCM): 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.




Target Market: The group of consumers the business concept targets to attract.

Top-of-Mind: Refers to the store, brand or product that first comes into a consumer’s mind when he/she thinks of a category of merchandise.

Trading Area: Also called retail area, this is the area from which retail store draws its sales.

Tribetailing: Tribetailing refers to the tactic of catering to a small group, or tribe, of customers. Everything about the business, from products and store design to marketing and communication, is customised to appeal to that niche and not to the general public or a mass market.

Triple Net Lease: 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. This type of lease generally has a lower rental rate than a standard lease.

T-Stand: This is a typical merchandising fixture used to display clothing. It can have straight or waterfall arms.




Unified Brand Experience: In retail, this concept is all about establishing a consistent brand experience or identity throughout multiple channels or platforms, including brick-and-mortar, ecommerce, or mobile.

Units Per Transaction (UPT): Total number of units sold divided by the number of bills through which these are sold.

Universal Product Code (UPC): UPC is a twelve digit code that is made up of a single leading number, five numbers uniquely assigned to a manufacturer or seller, five more numbers assigned by the manufacturer or seller to a specific product and the last number which is assigned as a check digit.




Virtual Companions: Virtual Companions is the trend of creating a mirror image of the user’s personality.

Visual Merchandising (VM): The art of creating visually appealing displays, in-store experiences, and designs that drive traffic and maximize sales. Visual merchandising begins on the outside of the store, often with attractive window displays, to entice the customer to come inside.




Warehouse Management System (WMS): Computer software or processes designed for managing the movement and storage of materials throughout a warehouse. The system is usually divided into three operations: putaway, replenishment, and picking.

Webrooming: Webrooming refers to the act of looking at a product online before venturing out to a physical store and purchasing it from there. It is the opposite of showrooming.

Wholesale: Wholesale is the sale of goods at a lower price, generally in large quantity, to a retailer for resale purposes.

Wholesaler: An individual or company who is in the business of wholesale.

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