Retail and Store Operations: Key Terms and Concepts

Add-On

An additional product suggested to a customer to complement their original purchase

Anchor Store

A big retail store, often a department store or a supermarket, that drives foot traffic to the mall, due to its brand recognition and large customer base

AOV

Average Order Value. Calculated by dividing total sales value by total number of orders

Assortment Planning

The process of creating a detailed product assortment plan that shows which products to carry and sell at the stores in the coming season

Banking

A task performed as part of the store opening process in the morning, where sales from previous day are reconciled, and the cash proceeds from those sales are deposited at the bank

Barcode

A visual representation of data that is encoded in the form of an image and can be scanned and read by specific devices, i.e. barcode scanners or readers

Big-Box Retailer

A retailer operating large format stores that occupy large physical spaces

BNPL

Buy Now, Pay Later. A payment method that allows customers to pay on installments through a third-party service provider

BODFS

Buy Online, Deliver from Store. A fulfillment model, in which online orders are fulfilled from a brick & mortar retail store, rather than from a warehouse or distribution center

BOPIS

Buy Online, Pickup in Store. A retail fulfillment model for online orders through store locations that the customer chooses

Broken Sizes

A term used in fashion business to describe an assortment that does not have full size range anymore, due to the sell out of some sizes

Bundling

Creating an offer that combines different products together and gives the customer a better price for the bundle compared to when each product is bought separately

Cannibalization

The reduction of sales at one or more store locations as a result of opening another location for the same brand nearby

Cash Float

An amount given to cashiers at the beginning of the shift, to be able to provide change to customers when needed

Cash Shortage

When the amount collected from a cashier's till at the end of their shift is lower than the amount on the system

Cashwrap

The area at the retail store where customers pay for their purchases and checkout. This is where the cash counter and POS are placed

Chargeback

A reversal of a payment transaction, due to a dispute raised by a cardholder through their issuing bank

Clearance Sale

A markdown event that retailers use to clear the excess inventory at very low prices

Click & Mortar

An omnichannel retail strategy that integrates online retailing with brick & mortar retailing, in order to give the customers the flexibility of starting their shopping journey on one channel and completing it at the other

CLV

Customer Lifetime Value. The amount a customer spends on average during his/her lifetime with the business

Consignment

A method of sales where the retailer sells merchandise that belongs to other people or vendors in return for a commission

Convenience Store

A small retail store that sells a limited line of merchandise, that includes snacks, beverages and tobacco, as well as everyday grocery items

Conversion

The share of total store visitors who convert into customers by making a purchase

Cross Merchandising

A technique used in visual merchandising, where products from different categories are displayed together

Cross Selling

The process of selling customers additional products from different categories relevant to the ones they have picked

Curbside Pickup

A fulfillment model for online orders, where the customer chooses to pickup the order at the store of their choosing, and a store employee meets them at their car to give them their ordered items

Cycle Count

An inventory audit procedure, where a small number of SKUs are counted and the result is compared against the system inventory level for those SKUs

Dead Stock

Inventory that is deemed unsellable or has become obsolete

Department Store

A large-format retail business that sells a wide variety of products through multiple departments, such as apparel, jewelry, beauty, home furnishings and toys

Destination Store

A retail store that provides a unique product collection and experience, that customers are willing to go out of their way and drive specially to its location, even if it's out of the city center

Dollar Store

A small-format general merchandise store that sells products at low prices

Doorbuster

A type of offer where a product, or a group of products, are offered at a deep discount for a limited time or while supplies last, resulting in a rush of traffic at store opening time

Everyday Low Price

A retail pricing strategy, where the retail price is set at a low level from the start, eliminating the need or expectation for future discounts

Facing

A visual merchandising technique for arranging products on display, where the remaining products in stock are brought forward to the front of the shelf, facing the customer

Fast Fashion

A business model in the fashion business that relies on bringing the latest trends straight to the consumers in a matter of weeks, instead of the traditional industry cycle that takes months

Flagship Store

The most important store in a retail company's store portfolio in a certain region or market

Floorset

An activity performed at retail stores, where the visual presentation of products and marketing materials is changed, to reflect the coming selling period.

Footfall

The number of people who visit a retail store during a specific period of time.

Gross Margin

The profit percentage you gain out of the sale amount of a certain product.

Inventory Allocation

The process of assigning specific products, in specific quantities to be delivered to store locations, where they will be displayed and sold.

Inventory Liquidation

The process of turning inventory into cash, by selling it at a deep discount, sometimes even at lower than its original cost.

Key Holder

A supervisory role in retail operations that is equivalent to a shift supervisor. Key holders are responsible for opening and closing the store, and performing administrative and supervisory tasks during their shifts.

Keystone Pricing

A cost-based pricing strategy, where the merchant doubles the cost price of the product, and sets this as the retail price.

Loss Leader

Loss leader pricing strategy is a marketing tactic used by retailers to sell one product at loss (the loss leader) in a hope that it will lead to more traffic and result in higher sales and profits overall.

Loss Prevention

A function in retail businesses that is responsible for protecting the assets of the business and preventing or minimizing loss.

Loyalty Program

A program that is designed to reward customers for their loyalty and repeated purchases, for example by giving them points that they can accumulate and redeem later on.

MOQ

Minimum Order Quantity. The lowest number of units a supplier is willing to sell to a single buyer at one time.

MSRP

Manufacturer's Suggested Retail Price. It is a price that the product manufacturer recommends the retailers sell at in their stores to the end consumer.

Mystery Shopping

An audit process, where the brand recruits or uses a secret shopper that poses like a real customer to assess the conformance & compliance of the stores to the brand's service standards, and assess in-store customer experience & service quality.

NOOS

Never Out Of Stock. It's a type of merchandise that is sold and stocked all year round, and is not subject to seasonality.

NPS

Net Promoter Score. A metric based on a survey that asks customers how likely they are to recommend the business to others.

Open to Buy

A type of budget that determines the amount you need to buy products with, in order to achieve the set sales budget for a certain period.

Overstocking

Having more inventory on hand than what is needed to deliver forecasted sales and have an adequate stock cover.

Packing Slip

An itemized list that details the content of a package (box, carton, pallet..etc.).

Petty Cash

A small amount of cash kept at the store to be used for minor expenses, such as meals, stationery, staff transportation..etc.

Physical Inventory

The process of counting the actual inventory of the business, in order to compare it with the amount on the books and make adjustments if there are discrepancies, so that the books will be updated with the actual count.

Planogram

A visual merchandising tool used to plan which products will be displayed in which area & fixture at the retail store.

Pop-Up Shop

A store that is set up temporarily for a short period of time, usually a few days to few weeks.

POS

Point of Sale. It is a system that is installed at retail stores, to enable them to record and process transactions.

Product Attributes

Tangible or intangible characteristics that describe a product, and are used by customers to make a purchase decision.

Quarter

A 3-month period. It is usually used in retail to budget and report sales, as well as the company's financial results.

Range Plan

An outline for the products that a retail buyer is going to order for the business.

Recovery

A process done during trading hours at retail stores, where different tasks are performed by the team on the floor to bring back the store to a state that conforms to the visual standards of the brand.

Replenishment

A process that is set in place to ensure every product that gets sold at the store is restocked, so that the store does not get into an out-of-stock situation.

Shoplifting

The act of obtaining merchandise from a retail store without paying for it, or without paying the full amount.

Showrooming

The practice of examining a product at a brick & mortar retail store, and then buying it online.

Size Curve

A size curve represents the distribution of quantities of different sizes in the size run a retailer is carrying inventory for.

Size Run

A size run is all the sizes a particular product is being manufactured in.

Sizing

An activity performed at retail stores, especially fashion stores, where the merchandise is arranged and displayed by size.

SKU

Stock Keeping Unit. A unique identifier that is assigned to products at a business, to help in tracking their sales and inventory levels.

Stockout

An event where a product goes out-of-stock (OOS).

Stocktake

A verification process where the physical inventory of a business is counted and compared with the amount on the books.

Store Brand

A brand that is manufactured exclusively for one retailer, to be sold at its own stores.

Store Layout

The schematic design that shows the entire retail space and the locations of display fixtures around the store.

Terminal Stock

Merchandise that is about to get obsolete or become dead stock, due to aging.

Turnover Rent

A type of rental agreement where the rent amount is linked to the sales of the store location.

Upselling

The process of selling customers a higher value item, instead of the one they picked.

Visual Merchandising

The art of using a retailer's products and combining them with other visual elements (props, lighting, materials, artwork,..etc) to create an appealing visual display of the merchandise.

White Label Product

A product that is created by a manufacturer and sold by other sellers under their own branding.

YoY

YoY stands for Year-over-Year, and sometimes also referred to as Year-on-Year. It is used to compare data for a certain time period in a year with the same time period of a previous year.