Retail Terms

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The largest, or one of the largest, retail stores in a complex. This store helps drive traffic the area as a whole and
supports neighboring retailers. This is sometimes also referred to as a draw or key tenant.

2. Average Transaction Value

The ATV is exactly what it sounds like: the average amount each customer spends. Retailers benefit from training
their staff how to sell and improving their store layout and POS marketing areas to raise the average transaction
amount.

3. Balanced Tenancy

A retail area, like a mall or shopping center, which is carefully planned to have a complementary mix of stores.
It’s the equivalent of a one-stop shop for malls.

4. Beacons

Used by more tech-advanced retailers, beacons can send messages through bluetooth to nearby activated devices.
This allows retailers to interact and communicate with shoppers on yet another level. For instance, one could send
a customer a greeting message when they are within a certain distance of the store. They can also be used to
measure store performance, such as foot traffic and average time spent in the store.

5. Big Box Store

As the name suggests, these are the retail giants. Big box stores are typically large warehouse-style stores that
offer a wide variety of products. Walmart, Costco, Target, and Home Depot are all examples of this.

6. Big Data

This refers to the deepest level of shopping analytics currently available to retailers. This investigates in-store
behavior, social info, demographics, and online action to help retailers customize the retail experience.

7. Buy Online Pickup in Store

Also referred to as Click & Collect, or, BOPIS, this is tool helps alleviate long lines, especially around the
holidays. More and more consumers are using it to save time in the store as well, and it’s highly recommended
that every retailer have both an online and in-person presence.

8. Brand Awareness

This measures the average consumer’s overall knowledge of a certain brand. Great branding becomes more
imperative each year.

9. Brick and Mortar

This term has become more commonly used to distinguish online merchants from those with a physical location.
Thought eCommerce continues to explode, most consumers still prefer shopping at a brick and mortar store.

10. Bundled Pricing

A type of promotional technique, bundled pricing groups various products together into a single discounted price.
There are endless variations on how to structure this. It’s most useful to increase the average spend or to run
through a certain product’s stock.
11. Cannibalization

Not as gruesome as it typically means, retail cannibalization occurs when a retailer introduces a new product that
ruins the sale of an existing one. You want to develop new products that fill a void or complement existing
products, not replace them.

12. Card-on-File

A secure way to store customer’s payment information, card-on-file technology speeds up the checkout process
and rewards regular customers with a smoother experience. It can also easily integrate loyalty rewards into the
system.

13. Cash Wrap

This is another term for the area around the point of sale system. Generally, it is recommended that you fill your
cash wrap with impulse purchases and small, inexpensive items that a customer may have forgotten they needed.

14. Chargeback

This is a disputed charge from a customer. Chargebacks can be a nuisance but can be almost wholly avoided with
a great POS system and an up-to-date EMV or contactless credit card machine. Remember, without this, any
fraudulent transactions that are charged back must be reconciled by you, the retailer.

15. Clienteling

The process of creating a more personalized shopping experience, retailers are using more in-depth data and
analytics to increase sales. The technology used behind this, like big data, is still state-of-the-art and expensive,
but as with any technology, will soon become more affordable for small and medium-sized retailers.

16. Cloud POS

This is a web-based point of sale that runs through the internet rather than a few computers on site. Cloud
technology makes payment processing and inventory much more reliable and simpler.

17. Consignment Merchandise

Consignment shops don’t own the products that they sell. Rather, individual consignors (the owner of the product)
uses the consignee’s (owner of the retail space) shop to sell their goods. The consignee will usually receive a
percentage of each sale.

18. Consumer Packaged Goods

These are usually inexpensive, perishable goods that have a fast turnover time. Examples include pre-packaged
foods, drinks, and other edible, non-durable items. The market for CPGs is highly saturated and extremely
competitive due to the constant demand.

19. Contactless Payment

A safer, more modern form of payment by card, contactless payments use dynamic processing technology to
protect the financial information of the consumer. Every retailer should accept all major forms of contactless
payment. It’s expected that the majority of U.S. consumers will use this form of payment by 2020.

20. Conversions

A term used to describe the finalizing of a sale. This usually goes in conjunction with “leads.” A lead is a
prospective sale, while the conversion is the actual sale.
21. Co-Operative

A business owned by a group of members instead of investors or stockholders. Co-ops can come in a variety of
forms and are feasible in a variety of industries from retail to housing to health care.

22. Cross-Merchandising

A strategy that groups different, unrelated products together to encourage the sale of each or several of them
together. It can feature products that more naturally pair or can get creative and have products that are more
uniquely combined.

23. Customer Resource Management

CRM is a system that can be built into your POS to help organize and manage your communication and
relationship with loyal customers. A powerful POS CRM software stores basic information, allowing your
cashiers to know more about your customers, and helps personalize rewards and promotions.

24. Depth of Assortment

Retailers must determine the number of styles and product variations they will have in stock. It depends on how
much capital and inventory space you have. It’s important to measure historical sales in order to determine the
optimal depth of assortment levels.

25. Destination Retailer

Destination shops are those that consumers seek out specifically due to its selection, price, style, etc., often
regardless of its location.

26. Dead Areas/Stock

Both dead areas and dead stock inhibit profitability. Dead areas of a retail store mean that whatever is stocked
there sells poorly. If this is the case, it’s important to reevaluate your layout and change displays and shelving.
Deadstock refers to a product that doesn’t sell no matter where it’s located. This takes up important space and
should be run out of stock and replaced.

27. Drop Shipping

This form or logistics and shipping transfers orders from the retailer to the distributor upon a purchase. The
retailer might have a showroom and manage the marketing and sales, but doesn’t have any actual stock. Though
Amazon is fulfilling more and more orders internally, it still widely uses drop shipping.

28. Dynamic Clustering

Similar to segmented email campaigns, this technique for structuring sales is useful for retailers that have a
varying customer base. It allows you to cater your products, pricing, marketing, and inventory to certain locations,
thereby appealing to a wider audience.

29. Electronic Article Surveillance (EAS)

Similar to credit card processing, retail fraud prevention has to continue to evolve to face new challenges. One
common technique uses tags and labels attached directly to the products. These devices will trigger alarms if not
removed by a cashier. The technology is getting more subtle and cheaper, allowing more retailers to take
advantage.
30. EMV

Standing for Europay, Mastercard, Visa, chipped credit cards offer a more secure way for consumers to pay. It is
not required that every retailer in the U.S. offer this form of payment, but it is certainly recommended. Any
fraudulent transaction run as a swipe instead of a chip must be reimbursed by the retailer instead of the bank.

31. Endless Aisle

An endless aisle allows customers to look through the whole catalog of products electronically or in a booklet
rather than require them to walk around a retail space. This highlights certain products that might otherwise have
gone unnoticed in a normal shopping experience.

32. E-tailing

Perhaps more simply known as eCommerce, e-tailing just refers to the sale of goods and through the internet.
More and more brick and mortar retailers are adding an eCommerce side of their operations. It requires careful
website planning and a great eCommerce payment platform.

33. FIFO

An inventory management system, FIFO stands for first-in-first-out. This means that whichever product in stock
that was delivered first must be the first one sold. This system helps prevent waste and spoilage for perishable
products.

34. Flash Sale

This type of sale is a limited time offer and typically features at least some heavily discounted products It’s a
great way to start a buzz around your brand and also to create a sense of urgency. Black Friday and Cyber
Monday are simply giant flash sales. They encourage larger purchases and more impulse, extravagant buys.

35. Footfall

Footfall is a measure of foot traffic in a retail store. An accurate count of this coupled with over performance
indicators can contribute vital metrics, such as conversion rates and average transaction values.

36. Franchise

Franchising is a way of a successful business to expand by selling the rights to its name, brand, product, and
operations to an independent party. In return, the owner of the initial franchise receives an upfront franchise fee to
cover all initial overhead costs and residual royalties based on the store’s retail sales.

37. Franchisor/Franchisee

The franchisor is the owner of the franchise, while the franchisee is the purchaser or one or more locations of the
franchise.

38. Gross Margin

A business’s margin subtracts the cost of products from the overall sales revenue. That total is then divided by
sales revenue to give a percentage. The larger the profits are, the higher percentage this will be.

39. Hardlines/Softlines

These refer to the actual physical feel of goods. Hardlines are less personal and often made of metal. Electronics,
vehicles, appliances, etc. are examples of hardlines. Softlines are soft feeling and often can be worn or edible.
40. High-Speed Retail

Consumers have a lot of expectations about their shopping experiences. One of the most important is convenience.
This means creating a seamless and quick retail checkout experience. The most successful retailers are all
thinking about ways to create a high-speed experience.

41. Impulse Purchase

Impulse purchases are made solely because the item is in front of the consumer’s face. There was no plan
beforehand to make the purchase, and there probably won’t be in the future. The most common spot for impulse
products is the area around your POS, or, for eCommerce retailers, on the checkout or receipt pages.

42. Integrated Supply Chain

Consolidating processes into a single platform saves time. The supply chain is no exception. Managing all
relationships with suppliers and distributors through a centralized system is a great way to save time.

43. Inventory Management

Inventory management software is now so much more than just counting your products. Not only can the
counting be done in the fraction of the time through scanning and cloud-based systems, but, your inventory
management can also provide actionable advice on your ordering, shelf placement, pricing, and par levels.

44. Isolated Store

This type of retailer has a freestanding location, adjacent to no other stores. It typically faces less competition,
cheaper rent, and more visibility. It might, however, be inconvenient to get to and offer no variety for shoppers
who visit.

45. Key Performance Indicators

KPIs help retail stores measure their overall success. Different metrics are important to give a broad picture. Some
of the most important KPIs include gross margin, sell-through rate, year-over-year sales, conversion rates, stock
turnover, and product returns.

46. Keystone Pricing

This pricing model makes it simple for retailers. It simply states that merchandise will be marked up double the
wholesale cost of the product. The can also be looked at as a 50% initial markup, or a 50% gross margin on the
product. Most goods cannot be priced at keystone rates, especially if you run a store that requires quick product
turnover.

47. Layaway

Layaway is a sort of credit purchasing method. The customer places a deposit on a product that will be picked up
later and paid for in full at that time. The retailer may not give the consumer the product prior to the balance being
paid, but they may guarantee holding the product for a set amount of time.

48. Leader Pricing

This common strategy is a way to lure new customers into a retail store and familiarize them with a brand. Choose
a product that you’d like to offer at lower margins or even at a loss. This gets people introduced to a product and
brand and hopefully results in them being a long-term customer. This product is also referred to as the loss leader.
49. LIFO

The opposite of FIFO, last in, first out, is more commonly used for accounting purposes. Here, a business records
the most recently ordered products as the first sold. This helps stabilize financial reporting for retailers in an
industry where prices change often. If prices were stable, there would be no difference between the two inventory
costing methods.

50. Loss Prevention

Loss prevention can be a variety of techniques retailers use to combat lost product, whether it’s due to theft,
spoilage, or inventory mistakes. Theft alone accounted for nearly $50 billion in lost revenue in 2017, so it’s
important for all retailers.

51. Merchandising

At its broadest level, merchandising is anything that helps promote the sale of a product. It could be in-store
marketing, advertising, pricing, etc.

52. Market Penetration

This metric measures the total amount of sales of a product for a particular retailer against the total possible
market for the product. This might also be referred to as a market share. If your product has large market
penetration, you might be able to offer the product at smaller margins, for instance. Knowing your market
penetration can also help determine advertising budgets or target demographics.

53. Market Research

Research into a market is simply the study of what consumers want and need. This can come in many different
forms depending on what type of good a retailer is selling.

54. Mass Customization

This refers to the production of goods that can be specifically catered to a person or group, but also still mass
produced. Domino’s Pizza, for instance, has gone even further, and even just given consumers the illusion of mass
customization. We’ve always been able to choose what kind of pizza you would like, but Domino’s makes the
ordering experience much more personalized. Other companies, like Nike, have allowed consumers to design
their own shoes.

55. Mobile Payments

Mobile payments are quickly becoming the payment form of the future, already replacing a lot of cash, credit card,
and check transactions. It’s expected that the majority of U.S. consumers will use mobile payments by 2020.
Retailers should get POS systems compatible with mobile payments as soon as possible.

56. Model Stock Plan

The idea behind a model stock plan is to organize your inventory with maximum and minimum levels for each
product. In doing so, you eliminate overstocking and ensure that you always have an adequate amount on hand to
sell.

57. Monthly Sales Index

This is a simple way of measuring sales from one month against the average. Divide sales from one month and the
average sales. Multiply by 100. A number greater than 100 indicates growth while a number less than 100 means
there has been decline. This is just one of many KPIs that a retail business can use.
58. Near-Field Communication

More commonly referred to as NFC, this radio frequency technology is used to facilitate secure communication
for contactless payments. The credit card machine is only capable of communicating with one device at a time.
And the communication uses dynamic banking numbers, making the theft of the data worthless.

59. Net Profit

The net profit is sometimes called the bottom line. This is the amount of money earned after all expenses are
accounted for. The gross profit is the total sales made prior to any expenses being taken out.

60. Never-Out List

A marketing term, a never-out list contains the retailer’s best selling products. The model stock plan is in place to
ensure that no products are out of stock. This list is an additional buffer for those products that the retailer cannot
afford to be off the shelves.

61. Niche Retailing

A niche retailer caters to a very specific audience, specializing in just one product, or a small group of closely
related products. This allows them to be more creative and targeted with advertising, design, and marketing.
Unlike big box stores or more broad retailers, niche retailers don’t benefit from reaching a large audience. TOMS
and LuluLemon are examples of this type of retail store.

62. One-Stop Shop

As the name suggests, one-stop shops offer a wide variety of products in hopes of attracting more shoppers. This
is the exact opposite approach from niche retailing.

63. Off-Price Chain

These retailers sell higher-end products at large discounts. They are able to do so by buying straight from the
manufacturer, often getting off-season items, products with slight imperfections, or overstocked inventory.
Sometimes off-price chains also sell second-hand goods.

64. Omni-Channel Retail

This is the wave of the retail future. Omni-channel retailing involves reaching your customers and selling on
multiple avenues. Typically, this includes a physical/brick and mortar location, an online shop, mobile
optimization, and perhaps even phone and catalog ordering. It also involves marketing through email, social
media, and apps. Furthermore, the experience should be one that gives the customer a seamless journey through
each channel.

65. Order Lead Time

Sometimes just called lead time, this is the time between an order being initiated from a retailer to a supplier and
the product actually arriving. Depending on the industry, order lead time can range from a day to months.

66. PCI Compliance

This is the Payment Card Industry Data Security Standard that every retailer must follow if cards are accepted.
The PCI DSS is in place to protect banks and cardholders. Make sure that your credit card processing company is
PCI compliant.
67. Perceived Risk/Reward

This measures a consumer’s feeling about a product. Retailers must try to lower the perceived risk and raise the
perceived reward. This can be accomplished in a number of ways, including through salespeople, peer reviews,
authoritative reviews, guarantees, warranties, to name a few.

68. Perpetual Inventory

Done through a retail point of sale system, a perpetual inventory count updates your product levels automatically
and immediately upon each sale. This saves time and improves accuracy, keeping a retail store running more
smoothly.

69. Planogram

This representation allows retailers to analyze the space to optimize store layout and merchandising. Product
placement, aisle lengths, displays, POS marketing, and other factors are scrutinized in order to improve the
average customer spend and overall sales.

70. Point of Sale System

A great retail POS system is essential for all shop owners. At the most basic level, a point of sale completes each
the exchange of a product for payment. It comes with a credit card reader and receipt printer. There is also a wide
range of software available with a POS. Points of sale can offer retail management, too, from inventory and order
automation to customer data and accounting.

71. Point of Purchase Display

This is a form of merchandising found near or at the point of sale and checkout area. It’s meant to attract
last-minute purchases that raise the average transaction value. Typically, these feature promotions, bundled deals,
impulse buys and easily forgotten everyday items. Managing the marketing around your POS can have a big
impact on a bottom line.

72. Pop-Up Shop

This type of retail attracts attention with its limited availability. Pop-up shops are short-lived and or sporadically
occurring. They might be found in a mall, festival, fair, or park. Pop-ups have become increasingly popular for
small niche retailers and restaurants/QSRs.

73. Predatory Pricing

Many of the big box retailers have been accused of predatory pricing at some point. The idea behind it is that
large retail chains can afford to undercut their competition with prices so low that smaller retailers are left helpless.
A smaller retail store must either lower their prices and take a loss or lose the majority of their business to the
larger chains. The practice is now more widely regulated.

74. Prestige Pricing

One of many pricing strategies, prestige pricing is an artificially high price on a product to give it a sense of
higher quality. It can also be used as a decoy to make similar products that are priced much more cheaply seem
like a bargain.

75. Price Look-Up

4 or 5 digit PLU codes are attached to each product in order to provide a name and brief description. This ensures
that the sale is being recorded correctly in the inventory system, keeping ordering and accounting efficient and
organized.
76. Product Depth/Breadth

Larger retailers usually reach a deeper product depth and larger breadth. The depth refers to the number of
products within a single line, while the breadth refers to the number of lines that are owned or carried by a retail
store.

77. Product Life Cycle

A product’s life cycle refers to the time from when the product was an idea in development until it’s taken off the
shelves. This length of this cycle can vary greatly. Retailers always try to extend the length of their product life
cycles through marketing, branding, and promotions. It’s important to pay attention to trends with product lines to
better determine overall performance.

78. Psychological Pricing

Another common pricing strategy, this attempts to trick the consumer into identifying something as being cheaper
than it actually is. Psychologists have long concluded that the average person gives higher priority to the first
number in a price, leading most retailers to price items and $1.99 instead of $2.00, for instance. Another common
theory maintains that the average consumer is more attracted to odd priced items than even.

79. Quantity-on-Hand

This just means the amount a retailer has in stock. Many retailers also refer to quantity-on-order, which means the
amount of a product that is currently an open order with a supplier.

80. Radio Frequency Identification

RFID is a form of communication between devices that are used to complete the secure transfer of banking data
for contactless payments. RFID technology is also used in the products themselves, often as an anti-theft device.

81. Relationship Retailing

Relationship retailers seek to build long-term or even lifetime relationships with their customer base. This can be
done through loyalty programs, rewards, and excellent customer service.

82. Return on Investment

An ROI is the amount of money returned to the retailer after an investment is made. This can refer to the money
spent and earned on products themselves, but it can also be applied to many other areas of retailing: email
marketing, product photo shoots, store renovation, eCommerce platform, or many others.

83. Routine Decision Making

People make hundreds of routine decisions each day without even thinking about them. Retailers often try to offer
and market products that tap into these easy sales.

84. Sales Forecasting

A sales forecast estimates the future performance of a product or group of products. Its accuracy is important so
that retailers can plan business operations, workforce, and cash flow each year.

85. Showrooming

Showrooming is a recent trend that stems from the rise of eCommerce. More and more consumers will shop for a
product at a physical location only to buy the same thing online at a cheaper price. Consumers often like to see the
product in person prior to committing to a purchase. Price comparison apps and online price matching can turn
brick and mortar stores in no more than showrooms.
86. Shrinkage

Shrinkage refers to any loss of goods for a retailer. This can have a variety of causes, including shoplifting,
employee theft, supplier mistakes/fraud, wasted product, damaged goods, cashier errors, or administrative
mistakes. It’s important to account for shrinkage in order to maintain an accurate inventory.

87. Social Commerce

Social commerce uses social networks to facilitate eCommerce. Some social media platforms sell products
through the website itself. Other social commerce sites encourage purchases through product reviews.

88. Standardization

Standardization is used by retailers who require a perfectly consistent product each time it is purchased. It uses a
series of checks and balances to ensure a uniform standard for each item sold.

89. Stock Keeping Unit

Similar to a PLU, an SKU is just exclusively for inventory purposes. Each product is assigned a unique code that
can be used to accelerate inventory counting or quickly identify a product.

90. Stock Turnover

Turnover of any inventory stock is an important unit of measurement for retail stores. Knowing how quickly
something sells helps optimize ordering and inventory par levels.

91. Tribetailing

This is a synonym for niche retailing. In this scenario, everything a retailer does is catered to a specific tribe or
group of people.

92. Triple Net Lease

In a triple net lease, the retailer is responsible for all building utilities, insurance premiums, and repair issues. The
rent is typically much cheaper than standard retail rent agreements.

93. Unified Brand

This goes hand in hand with the omni-channel experience. If you offer products on multiple platforms, it’s
important to maintain a unified brand and experience through each of them. This way, your customers feel no
different shopping on your website, on mobile, or in person.

94. Units Per Transaction

Another retail KPI, units per transaction measurements help determine where you can improve your store layout,
pricing, or employee training. Encouraging more units per transaction will boost retail sales.

95. Webrooming

The exact opposite of showrooming, webrooming is when a customer shops online for a product and then leaves
to purchase it at a brick and mortar store. Webrooming is facilitated by image-based sites like Pinterest and
Instagram. It makes browsing much each. The trends of webrooming and showrooming are great examples of
why creating an omni-channel experience is so important.

96. Wholesale

Many distributors and suppliers practice wholesaling. They sell products to another business rather than to a
customer. Because these products are often bought in bulk, sometimes raw, and come with basic or no packaging,
the prices are much cheaper, allowing retailers to sell individual products at a premium and make a profit.