Trying to make sense of the jargon in today’s retail sector can be tough, with new words seeming to pop up all the time, mostly due to rapidly developing retail technology. We’ve put together a handy list so you’re clued up on all the latest retail terms. Maybe grab a cuppa first though, because there’s quite a few…
Add-On-Sale – The sale of additional goods to a shopper. In retail, this is generally a product that is suggested by the sales assistant at check out, such as batteries for an electronic product, and is sometimes known as upselling.
Anchor Store – Generally, a large department store or supermarket used to provide a major point of interest for a shopping centre. It is usually a well know chain store that is popular with consumers. The presence of this type of store can entice customer to visit a shopping centre and possibly continue to shop at the smaller stores within the centre.
Application Service Provider (ASP) – A business that provides computer-based services to customers over a network. i.e. providing EPoS software over a secured broadband connection.
Average Transaction Value (ATV) or Average Basket Value (ABV) – The average amount spent by shoppers in one transaction. This is calculated by dividing the total value of all transactions by the number of transactions or sales. It can be calculated on a daily, monthly or annual basis and retailers often set a goal to increase their ATV.
Augmented Reality (AR) – A live view of a real world environment that is augmented through the use of computer technology to add sensory elements such as sound, imagery, videos or GPS data. Many retailers are using Augmented Reality as a way of improving in-store or general brand experience, for example IKEA use AR to help shoppers actually picture a piece of furniture in their own home.
Big Box Store – A large rectangular or square shaped retail store. It is typically characterised by a large amount of floor space and a wide array of products for sale across different categories. Big box stores generally offer products at lower prices. This is because products are sold in high volume, therefore they are able to lower their profit margin, which results in competitively priced products.
Black Friday – The name given to the shopping day after Thanksgiving in the US, which is typically the last Thursday in November. On Black Friday, many retailers run special deals to entice shoppers. It is often seen as a kick starter for people to start their Christmas shopping. It has now become popular in the UK, with the 2014 Black Friday being the most popular yet.
Brick and Click (otherwise known as Multichannel or omnichannel retailing) – This refers to retailers that integrate their bricks and mortar stock with their ecommerce website. This allows retailers to offer shoppers convenient services which utilise their website and store including click and collect, reserve and collect and online returns in store.
Bricks and Mortar – refers to a retailer’s physical store(s).
Click and Collect – A service which allows shoppers to purchase an item on a retailers’ website and choose to pick it up in store. This offer retailers the convenience of picking up their item when and where they want. This is a service that can be offered by retailers with an integrated EPoS and Ecommerce system.
Cloud Computing – Internet-based computing, whereby shared resources, software and information are provided to computers and other devices on-demand. i.e. providing EPoS software over a secured broadband connection.
Consignment Merchandise – an arrangement whereby a retailer sells merchandise that they do not own on behalf of someone else and takes an agreed percentage or commission when the goods are sold.
Contactless Payments – A convenient technology system used to allow shoppers pay for items contactless with a credit or debit card, keyfob, mobile phone or other mobile devices. Contactless payments use either radio-frequency identification (RFID) or near field communication (NFC).
CRM – Stands for Customer Relationship Management or donor or supporter management for charity retailers, a business strategy designed to reduce costs and increase profitability by strengthening customer loyalty.
Cross-Merchandising – This is when retailers display products from different categories together in store in order to encourage shoppers to buy several products rather than one. This is used for products that can be logically linked to one another, such as socks and shoes, and is a common tactic used to increase sales.
Cross-Sell – Cross-selling is when retailers sell an additional product or service to an existing customer. This is often done via offers in-store or online. Online it is common practice to cross sell by showcasing additional products that other customers also bought when buying the current product in the basket.
Cyber Monday – The name given to the first Monday after Thanksgiving in the US. This is much like Black Friday where retailers run special deals but it is focused on online retail.
Dead Stock– Dead stock describes products that were not sold before being removed from sale, usually because they were outdated. Dead stock is often warehoused and sold through outlet stores, but it can also subsequently be offered for sale and typically retains its original package and tags.
Drop Basket or Basket Abandonment – When a visitor to an ecommerce website adds goods to their virtual basket but exit the site without completing the transaction. Retailers who can track such incidences on their ecommerce site often send basket reminder emails to shoppers who abandon their basket in an attempt to prompt them to complete the checkout process.
Drop Shipping – This is a fulfilment model that allows retailers to buy products individually from a supplier and have them shipped directly to the customer. This offers retailers many benefits including; lower stock holding and the ability to offer a wider product selection as you are not having to pre-purchase products you sell.
E-commerce – Stands for ‘electronic commerce’ which allows people to buy and sell products over the internet.
EPoS – Stands for ‘electronic point of sale’, a computer system used in retail stores to process payments, record sales, keep an inventory of stock, collect customer information and more.
Etailing – The practice of selling goods over the internet, otherwise known as ecommerce.
E-Receipts – A transaction receipt that is sent electronically via email to a customer by a retailer to save paper wastage, provide a more convenient, longer lasting proof of purchase.
First In, First Out (FIFO) – FIFO is an acronym that stands for first-in, first-out. This means that the oldest inventory items are shipped/distributed/sold first. LIFO (Last in, first out) is the opposite of this.
Flash Sales – Sale events that take place for a limited time period which can be anywhere from a few hours on one day to a couple of days.
Forecasting – In retail, forecasting anticipates the future purchasing actions of shoppers by evaluating past revenue and consumer behaviour over a previous period to check for patterns and develop forecasts for the upcoming months. The data can be adjusted for seasonal trends, and then a plan for ordering and stocking products follows the analysis. This process is then repeated for each period.
Inventory or Stock Management – The monitoring and control of goods and stock so that new stock can be ordered as required and the right numbers and quantities made available at all times.
Inventory Turnover (also known as Stock Turnover) – Inventory turnover is a measure of the number of times inventory is sold in a time period such as a year. The equation for inventory turnover equals the cost of goods sold divided by the average inventory.
Keystone Pricing – Selling an item at twice the wholesale price is was bought for to produce a gross margin that is 100% of the cost price.
Leader Pricing – Selling selected products in a product category for less than their normal profits margins in order to introduce a new brand or generate consumer interest in a product or family of products.
Loss Leader – Products or goods advertised and sold below their cost price. The idea is to generate footfall and new customers, with the assumption that once the customer has tried the goods they will buy it again, as well as purchase other goods whilst visiting the store. This is a popular tactic in Fast Moving Consumer Goods (FMCGs).
Loss Prevention – The concept of putting policies and procedures in place to prevent the loss of stock or monies in a retail environment typically through theft, fraud, waste, misconduct etc.
Markdown – A markdown is a devaluation of a product based upon its inability to be sold at the original planned selling price.
M-commerce – Stands for ‘mobile commerce’ which allows people to buy or sell products over the Internet using a mobile device e.g. a smartphone or tablet.
Merchandising – the way in which retailers plan to ensure they are marketing the right product or service at the right time, in the right place, in the right quantities and at the right price.
Mobile Payments – Mobile payments are often referred to as mobile wallet. It is when a consumer pays for a transaction using a mobile device as a contactless payment method, usually a mobile phone, rather than paying with cash or a credit or debit card. This is done using NFC (Near Field Communications) technology.
Mobile PoS – Stands for ‘mobile point of sale’, a mobile device such as a tablet or smartphone which performs the functions of an electronic point of sale system. This is often used as an additional till point during busy times in a store to help reduce queues.
Multi-Channel Retail – This is when a retailer uses multiple sales channels (stores, website, catalogues etc.) to sell its products.
Omni-Channel Retail – The concept of providing a seamless, consistent and complementary retail experience, regardless of the channel or device.
Off Price – A practice in retailing where branded goods are sold at a lower price than usual. Not to be confused with an outlet, which tends to only sell one brand, an off price retailer works with many different vendors.
Open-to-Buy – This is derived from the WSSI. The merchandiser adds in forecasted sales and how much stock they have agreed to take in with the supplier; where the sales outstrip the stock intake there is an open to buy created in which the merchandiser can make the decision at a later date what product they want to purchase more of from the supplier.
The use of Open To Buy enables the Merchandiser to work with a certain amount of flexibility. They are committed to little stock and then able to buy into the better selling lines.
Pop Up Shop – Often powered by mobile point of sale, a pop up shop is a temporary retail space. Retailers open pop up shops for many reasons which include; moving into a new market, boosting brand awareness, to test a new start up and more.
Planogram – A planogram is a visual diagram, drawing, or schematic that provides detailed information where every product in a retail store should be situated. A planogram should also illustrate how many facings are allocated for each SKU. The complexity of a planogram may vary by the size of the store, the software used to create the planogram and the need of the retailer. Planograms are also known as plano-grams, plan-o-grams, schematics and POGs.
Product Life Cycle (PLC) – A Product Life Cycle represents the stages that a product typically goes through from the beginning to the end. There are four stages within a PLC, these are: Introduction, Growth, Maturity and Decline.
S-commerce – S-commerce means social commerce. Social commerce is an element of ecommerce that involves predominately social media and user contributions to assist online buying and selling of goods. Essentially it is the sale of goods online instigated through social media. Also known as Social Selling.
Sell-Through Rate – The sell through rate is often referred to as STR or Sell Through Analysis. It is a calculation that compares the amount of stock a retailer receives from a manufacturer or supplier against what is actually sold to the consumer. The rate is often represented as a percentage.
Shopping Cart – There are typically two types of websites, transactional and non-transactional. The main point of difference is transactional websites has a shopping cart facility. A shopping cart is an element of e-commerce software that enables visitors to purchase goods off a website.
Show-Rooming – This is when a shopper visits a retailer’s physical store to check out a product before purchasing it online for a lower value.
Shrinkage – Refers to a reduction or ‘shrinkage’ in stock due to theft including: shoplifting, employee theft and supplier fraud as well as genuine administration errors. Retailers often deploy loss prevention software applications to reduce overall shrinkage.
Software as a Service (SaaS) – is a model of software deployment over the Internet on a subscription basis.
Stock Cover – This is usually calculated in terms of weeks or days, and it means the number of days or weeks the current inventory levels will last for based on past weekly demand.
Stock Keeping Unit (SKU) – Every manufacturer, distributor and retailer talk about SKUs. This acronym stands for Stock Keeping Unit. A SKU is a code that helps retailers identify each individual product line. A SKU code often appears as a machine-readable bar code that helps the item to be tracked for inventory.
Supply Chain – the system involved in the creation and sale of a product from the delivery of source materials, to manufacturing and its eventual delivery to the end user or ‘customer’. This includes the individuals, organisations, activities and technology involved in the process which can be quite a complex network.
Units Per Transaction (UPT) – the average number of products bought in one transaction. This is calculated by dividing the total number of items purchased by the number of transactions. Much-like ATV or ABV, this can be calculated on a daily, monthly or annual basis to track progress against set goals.
Visual Merchandising – refers to the practice of developing floor plans and sales displays within retail shops to engage customers and boost sales activity.
Warehousing – performance of administrative and physical functions associated with the storage of products in a warehouse, including receipt, inspection, verification, putting away, picking products to be sent out and more.
Web–Rooming – This is the opposite of show-rooming. It refers to when a shopper does their research into a product online, but ultimately purchases it in a store.
WSSI – Stands for Weekly Sales and Stock Intake (pronounced ‘whizzy’). This is a spreadsheet used by retailers to calculate sales and stock intake by week (as the name suggests). The Merchandiser then plots “supplier-availability” for that line over the coming weeks; forecasted sales are added to the spreadsheet for each item for each week. With all merchandising teams carrying this out for each product, the business has a view of the stock-holding and performance, and those areas where they may be over- or under-stocked.