Retail Terms Glossary
The retail sector is full of industry terms used only by other merchants. As technology and concepts change, it’s easy to forget what every term means. Whenever you can’t quite remember a definition, just refer to our handy list of the top 100 retail terms below.
Top 100+ retail terms glossary
| Term | Category | Definition |
|---|---|---|
| All In One (AIO) | Hardware | A computer which includes the monitor, usually built into a single device. |
| Automation | Operations | This is a software feature that eliminates manual entry for a specific action. For example, tax automation could refer to a feature that automatically calculates taxes during every sale. |
| Average Inventory Cost | Finance | Average purchase cost of an inventory item. Generally, this is calculated by taking the total cost of goods purchased or produced in a period divided by the total number of items purchased or produced. The average cost method is also known as the weighted-average method. |
| Average Basket Size | Finance | This is calculated by dividing total # of items sold for a given period by the total number of transactions for that same period. This will tell you the average # of items your shoppers buy every time they make a purchase. |
| Average Transaction Value (ATV) | Finance | The average transaction value is calculated by dividing the total value of all transactions by the number of transactions or sales. This can be calculated on a daily, monthly or annual basis. |
| Back Office | Operations | Those functions or departments in a company that are not client-facing. Examples include marketing, purchasing, accounting, etc. |
| Back Order or Special Order | Inventory | A backorder is a purchase order for a good or service that cannot be fulfilled at the time of sale due to it being out of stock. When an item is backordered, there is already a purchase order placed with the supplier. |
| Barcode | Inventory | A barcode is a way to encode information into a visual pattern that a machine (a barcode scanner) can read. Most retailers use either 1D (1 dimensional) or 2D (2 dimensional) barcodes. 1D barcodes are those black and white lines that are often called GTIN, UPC or manufacturer barcodes. There are different types of 1D barcodes depending on whether you're working with products, cartons, etc. 2D barcodes are usually QR codes and can store more information than 1D barcodes. It's important to remember that not all barcode readers/scanners can read all different types of barcodes. Make sure to check that the reader/scanner you have is compatible with the type of barcodes you're planning to scan. |
| Brick and Mortar | Operations | The term "brick-and-mortar" refers to a business that offers products and services to its customers face-to-face in a physical location or store that the business owns or rents. Brick and mortar businesses are traditionally street-side so that walk-in visitors (foot traffic) may enter the physical store to shop in person. |
| Bulk Edit | Operations | When working with long lists of data (e.g. inventory or customer lists), bulk editing refers to the ability to make changes to multiple rows at the same time. |
| Buy Online Pickup In Store (BOPIS) | Omnichannel | Also known as Click and Collect. BOPIS refers to the e-commerce fulfillment option that allows shoppers to place orders online for nearby store pickup. It is one of the fastest growing omnichannel processes today as it is more cost-effective for retailers to encourage shoppers to use BOPIS instead of shipping out online orders. While both terms are used interchangeably, there is a tendency for the grocery industry to use the term Click and Collect versus BOPIS by other retailers. |
| Cashout or Daily Close | Finance | This is a cash handling procedure for retail stores that accept cash as a form of payment. Traditionally this involves a process whereby the starting cash (the "float") is tracked separately from the cash and other payments received throughout the day. Normally, cash and all other payments received will be reconciled daily by the cashier or a supervisor at the time of closing for accuracy. |
| CCPA | Legal | The California Consumer Privacy Act of 2018 (CCPA) gives consumers more control over the personal information that businesses collect about them. While any retailer that sell to shoppers in California would need to comply with CCPA since 2018, because it is the highest standard for privacy regulation in the US, most retailers consider it the de facto standard for the entire country. |
| Chargeback | Finance | A chargeback is a charge that is returned to a payment card after a customer successfully disputes an item on their account statement or transactions report. A chargeback may occur on debit cards (and the underlying bank account) or on credit cards. Chargebacks can be granted to a cardholder for a variety of reasons. It is important for retailers to review their business practices to protect themselves against chargebacks. For example, the use of EMV card payment terminals is one of the key ways to avoid chargeback liability. |
| Click and Collect | Omnichannel | Also known as Buy Online Pickup In Store (BOPIS). Click and Collect refers to the e-commerce fulfillment option that allows shoppers to place orders online for nearby store pickup. It is one of the fastest growing omnichannel processes today as it is more cost-effective for retailers to encourage shoppers to use Click and Collect instead of shipping out online orders. While both terms are used interchangeably, there is a tendency for the grocery industry to use the term Click and Collect versus BOPIS by other retailers. |
| Clicks to Bricks | Omnichannel | Strategies that focus on using “digital storefronts” or “pre-shopping discovery” online to drive foot traffic into stores instead of encouraging customers to mainly shop online. Even if you offer delivery, there are a lot of benefits to focusing on store-driven online shopping. |
| Cloud POS | Operations | This is a Point-of-Sale software solution for retail management hosted on the cloud, not in a physical device in store. The most obvious benefit of a cloud-based POS system is that it enables retailers to access their company's data from anywhere, at any time, as long as they have internet acccess. In contrast, data stored on legacy POS systems can only be retrieved by other devices on the same computer network (LAN). While older cloud POS systems were still designed for specific hardware devices (e.g. iPads), the latest cloud POS solutions can be used by any device or operating system (e.g. Windows, iOS, Mac, Android). |
| Configuration | Operations | Most software solutions have default settings enabled the first time it is used. Software configuration refers to personalizing the software settings to make the system work best for a specific business. For example, this could mean choosing the settings in a POS system to make it work best for a grocery store vs. a clothing store. |
| Consent | Legal | Permission or to agree to do something. In the retail industry, this usually refers to privacy consent. Current privacy regulations generally require businesses to get consent from shoppers for the right to contact, communicate or market to them. |
| Contactless Payments | Payments | This refers to using credit cards and debit cards, key fobs, smart cards, or other devices, including smartphones and other mobile devices, that use radio-frequency identification (RFID) or near-field communication (NFC, e.g. Samsung Pay, Apple Pay, Google Pay, Fitbit Pay, or any bank mobile application that supports contactless) to make secure payments. Many people refer to contactless payments as "tap". Generally speaking, the ability to accept contactless payments in store is controlled by the card terminal and the merchant processor, not the point-of-sale software system. |
| Conversion | Marketing | According to MarketingSherpa, conversion is “The point at which a recipient of a marketing message performs a desired action.” In other words, conversion is simply getting someone to respond to your marketing. For example, someone opening a marketing email is a conversion. Someone clicking on a link inside that email is another conversion. Going to your online store and adding a product to a shopping cart is another conversion. And, of course, complete a sale online is the ultimate conversion. Generally speaking, when people refer to conversion, they are referring to conversion related to digital marketing since it is the most trackable form of marketing. |
| Cost of Goods Sold (COGS) | Costing | Cost of goods sold is the carrying value of goods sold during a particular period. For retailers, this is usually the sum of all direct costs associated with purchasing inventory. For most retailers, the basic formula for COGS = Beginning Inventory + Cost of Purchases - Ending Inventory. COGS is usually calculated over a specific period of time (e.g. month or annually). |
| Customer Facing Display (CFD) | Hardware | A secondary monitor or screen to display order information to customers during checkout. |
| Customer Relationship Management (CRM) | Operations | A computer system that helps a business manage all of the company’s relationships and interactions with existing and potential customers. |
| Deadstock | Inventory | This is inventory that has not been sold or used for a long period of time and is not expected to be sold in the future. This type of inventory has to be written-down or written-off and can cause large losses for a company. Deadstock is also referred to as dead inventory, obsolete inventory or excess inventory. |
| Discounting or Discount Pricing | Operations | This is a promotional pricing strategy where the original price for a product or service is reduced with the goal of increasing store traffic, moving old inventory, and increasing sales. |
| Distribution Center (DC) | Operations | A facility or building commonly used to distribute goods to retail stores. Generally distribution centers are used by larger retailers who need an efficient way to split consolidated purchases from suppliers amongst multiple stores. With the rise in e-commerce, some distribution centers are increasingly being used as "order fulfillment centers" to ship goods directly to consumers. A distribution center can also be called a warehouse, a DC, a fulfillment center, a bulk break center, and a package handling center. |
| Dynamic Pricing | Marketing | A pricing strategy whereby a merchant offers constantly changing sell prices instead of fixed sell prices. Typically, dynamic pricing requires specialized retail pricing software as most retailers cannot manually update their sell prices multiple times a day based on changing market conditions. It's important to note that dynamic pricing is not the same as personalized pricing. |
| Electronic Data Interchange (EDI) | Operations | Electronic interchange that allows one company to send information to another company electronically. |
| Endless Aisle | Omnichannel | A term used to describe a marketing and sales technique by which retailers are able to offer shoppers products that are either not carried or not in stock. Today, it's not important whether a shopper is in-store or online. Endless aisle refers to offering customers the ability to virtually browse or order a wider range of products than what is actually in-stock. There are different approaches to fulfilling endless aisle. Some merchants will back order items for customers to pick up at the store while others will dropship orders directly from their suppliers to their customers. |
| Europay, Mastercard, Visa (EMV) | Payments | Payment that involves using a smart chip. The EMV standard is a security technology used worldwide for all payments done with credit, debit, and prepaid EMV smart cards. |
| First-In First-Out (FIFO) | Finance | For retailers, this is an inventory valuation method by which inventory produced or acquired first are sold, used, or disposed of first. For tax purposes, FIFO assumes that assets with the oldest costs are included in the income statement's cost of goods sold (COGS). |
| Flash Sale | Marketing | A discount or promotion offered for a short period of time. Sometimes they are intentionally unscheduled or unplanned to increase the sense of urgency with shoppers. |
| Float | Finance | This is the total value of cash counted and removed from the till, but not included in the bank deposit. Typically floats are required for any store that accepts cash payment as they ensure that cashiers have enough cash (in a variety of denominations) on hand at the start of every day to make change when shoppers pay with cash. Some stores will set different float amounts every day based on sales of the previous day. Larger retail stores will usually set fixed float amounts for every till at the start of every shift for easier cash reconciliation. |
| Foot Traffic | Operations | The number of people that enter a store, mall, or location over a given period of time. This term is more commonly used in the US vs. footfall in the UK. |
| Footfall | Operations | The number of people that enter a store, mall, or location over a given period of time. This term is more commonly used in the UK vs. foot traffic in the US. |
| Fractional Quantities | Inventory | Inventory quantity that includes a decimal rather than a whole number. This is particularly important for businesses that sell products by weight or in bulk. If you sell these types of products, it's important to check if your retail management system can handle fractional inventory quantities during sales as rounding differences due to inaccurate inventory quantities can create issues when reconciling inventory values or sales over time. |
| Fractional Pricing | Inventory | Pricing that includes a decimal rather than a whole number. While most systems will accept 2 decimal places, not all retail management systems can handle the type of currency rounding required to sell to the 3rd or 4th decimal for high value inventory such as saffron or gold. |
| GDPR | Legal | The General Data Protection Regulation 2016/679 is a regulation in EU law on data protection and privacy in the European Union and the European Economic Area. When it came into effect in May 2018, it was considered the most stringent privacy regulation and allowed the EU to fine businesses that violate the law. Since then, other areas of the world have passed similar laws. For example, the state of California passed the CCPA (California Consumer Privacy Act) which became effective on January 1, 2020. |
| GMROI | Finance | Gross margin return on investment (GMROI) is an inventory profitability evaluation ratio that measures the efficiency with which your retail operation transforms inventory into gross profit. It is calculated by dividing the gross margin by the average inventory cost and is used often in the retail industry. If a retailer's GMROI ratio is above 1, they are selling that inventory at a higher price than they bought it for, resulting in a profit. A GMROI below 1 indicates they're selling at a loss. There is no one specific GMROI target that all retailers should strive for. While some suggest that a GMROI in the vicinity of 2 or 3 is a good rule of thumb, what constitutes “good” GMROI will depend on many factors, including one’s sector, inventory type, and inventory turnover. |
| Gross Margins | Finance | The amount of money a company has made after the amount spent on the cost of goods sold (COGS). It's important to remember that Gross Margin is only net revenue. Selling, marketing, general or administrative costs would need to be deducted from gross margin to calculate profitability. |
| Guideshop | Omnichannel | This is a new retail trend of merchants opening small physical stores where no physical items are sold in the stores. The purpose of a guideshop is to allow customers to touch, feel or try on products before ordering an item for pick up at the store or delivery at home. This allows retailers to minimize the carrying cost of inventory while still giving shoppers the ability to experiences items before they buy. Disadvantages include losing sales when customers don't want to wait and having more competition since the barriers to entry are low. Guideshops generally work best with businesses that sell unique, differentiated products that customers cannot easily buy elsewhere after experiencing them in store. This is why so many Direct-to-Consumer (DTC) brands often start with this approach. The practice of a guideshop is also known as "showrooming". |
| Impulse Purchases | Marketing | This refers to purchases where shoppers make unplanned decisions to buy a product or service. This is typically associated with brick and mortar stores as the experiential nature of shopping in-store makes it significantly easier to encourage shoppers to purchase additional products impulsively. This is one of the key reasons why physical retail stores generally sell more per shopper in-store versus online. |
| Integrated Supply Chain | Inventory | A tightly linked supply chain where retailers and suppliers work together to maximize their performance together in the creation and distribution of products. |
| Internet of Things (IoT) | Operations | IoT devices are physical objects with sensors, processing ability, software, and other technologies that connect and exchange data with other devices and systems over the Internet or other communications networks. |
| Inventory Count or Stock Take | Inventory | An inventory count, or inventory counting, is the physical checking of the quantity and condition of products that are in stock in a physical location (e.g. warehouse or on the shelves in a store). This is done by staff members in order to carry out an audit on whether the technical bookkeeping stock (in their POS) matches the physical warehouse stock (actual quantities in stock). Traditionally, merchants in the retail industry will do their major inventory count right after their high season or at the end of their fiscal calendar year (accounting period) when their inventory stock levels are at their lowest. This reduces the overall cost as manual inventory counts are time consuming and most accurate when done while stores are closed and there is no additional inventory movement (e.g. receiving or sales). Retailers with a lower quantity of SKUs or higher value products will sometimes run partial or more frequent counts. Inventory counts are an important way in which to double check the accuracy of inventory assets vs. actual sales and keep an eye on potential shrinkage (theft). As RFID tags have fallen in cost, large mainstream retailers are increasingly using RFID scanners to eliminate manual inventory counts which are traditionally labor-intensive. While RFID tags can create issues if tagged incorrectly and require significant reliance on technology, overall they increase accuracy and allow merchants to have near real-time inventory accuracy as the tags are constantly sending data. |
| Inventory Management | Inventory | Inventory management is a management system that helps companies identify which and how much stock to order at what time. It tracks inventory from purchase to the sale of goods. It also helps retailers identify and responds to trends to ensure there's always enough stock to fulfill customer orders. A good inventory management system will also have a way to remind merchants when they need to re-order products with enough time to receive delivery prior to them selling out. |
| Invoice vs Receipt | Finance | The invoice acts as a request for payment, and the receipt acts as a proof of payment. |
| Keystone Pricing | Finance | While this is less used today, keystone pricing is a product pricing strategy whereby a retailer determines the retail sell price by simply doubling the wholesale cost they paid for a product. |
| Kiosk | Hardware | This is a standalone device or a software application that helps shoppers self-serve themselves. Retail kiosks are most commonly used for self-checkout stations and are used to accelerate processes and transactions without the need for human assistance. |
| Landed Cost | Finance | The total cost of a product including all logistics costs (e.g. shipping, duties, handling fees, etc.) once it is received by a merchant. |
| Last-In First-Out (LIFO) | Finance | Last in, first out (LIFO) is a one of the methods used to account for inventory costs for accounting purposes. Under LIFO, the costs of the most recent products purchased (or produced) are the first to be expensed. Generally speaking, LIFO is used only in the United States and governed by the generally accepted accounting principles (GAAP). LIFO is not allowed in countries such as Canada as it generally lowers profitability (for tax purposes) by allowing merchants to deduct higher amounts for their Cost of Goods Sold. |
| Leadtime | Inventory | The amount of time needed between ordering inventory from a supplier and when it is delivered. |
| Lipstick Effect | Inventory | This is when shoppers still spend money on small indulgences during recessions, economic downturns, or when they personally have little cash. When shoppers do not have enough money to spend on big-ticket luxury items, many will find the cash to purchase small luxury items, such as expensive lipstick. For this reason, companies that benefit from this lipstick effect tend to do well even during economic downturns. |
| Manufacturer Suggested Retail Price (MSRP) | Finance | The retail sale price that a product's manufacturer or supplier recommends. MSRP is usually only available for mainstream products that are sold in mass in many different retailers or sales channels. |
| Margin | Finance | How much profit your business has generated for each dollar of sale. Margin is sales minus the cost of goods sold and can be calculated by $ or %. Product margin is this calculation at the individual product level. |
| Markdown | Finance | A reduction in the sell price of a product. |
| Markup | Finance | The amount by which the cost of a product is increased in order to calculate the selling price. |
| Mobile Point-of-Sale (mPOS) | Operations | Portable point-of-sale (POS) system on a smartphone or tablet that functions as a register. The key difference is that mPOS are mobile (not tethered) and can be used by moving sales associates. While traditional mPOS systems only work on a store network (LAN), modern mPOS systems operate via the internet and can be used from anywhere there is internet access, inside or outside of a brick & mortar store. |
| Net Profit | Finance | This is the amount of money earned after deducting all cost of goods sold and total operational expenses for a specific period of time. |
| Net Sales or Net Revenue | Finance | This is total revenue after subtracting the cost of goods sold for a specific period of time. Some businesses will also deduct all returns, allowances, and discounts. |
| Obsolete Inventory | Inventory | This is inventory that has not been sold or used for a long period of time and is not expected to be sold in the future. This type of inventory has to be written-down or written-off and can cause large losses for a company. Obsolete inventory is also referred to as dead inventory, deadstock or excess inventory. |
| Omnichannel Retailing | Omnichannel | This is refers to retail operations that sell across multiple channels such as brick-and-mortar stores, marketplaces, social channels, online stores and more. |
| Onboarding | Operations | It is the process through which new users learn the necessary knowledge, skills, and behaviors in order to become “up and running” and effective users of new software. |
| Online Showcase | Omnichannel | Also known as a product showcase. This is an online catalog of products that is accessible to the general public on the internet. While a product showcase can be found in an online store, it can also be simply a viewable catalog without any e-commerce function. |
| Online Storefront | Omnichannel | This is a usually a website or webpage that represents a retail business on the internet. |
| On-Premise POS | Operations | On-premise POS, also known as legacy POS or traditional POS is retail management software that saves data on local hardware in the store and runs on a local network only within the store. While on-premise POS works well for businesses that need offline capaibility, it is more complicated if the retail business sells omnichannel (across multiple in-store and online sales channels) as the data in the system is not fully accessible via the internet. |
| Order Management System (OMS) | Omnichannel | Built for retailers, an order management system (OMS) is a technology that helps track orders across commerce channels. The system helps with order processing and order fulfillment. |
| Park or Suspend Transaction | Operations | Putting a transaction on hold during a sale. Parked or suspended transactions can be recalled with all of the products already added to allow a cashier to quickly resume and finalize the sale. |
| PCI Compliance | Legal | PCI compliant means that any company or organization that accepts, transmits, or stores the private data of cardholders is compliant with the various security measures outlined by the PCI Security Standard Council to ensure that the data is kept safe and private. |
| PIPEDA | Legal | Canadian privacy law that governs how private sector organizations collect, use, and disclose personal information in order to carry out their business. |
| Point-of-Sale (POS) | Operations | In the past, this was the time and place where a retail transaction is completed. Today, the "point of sale" is also a "point of return" or "point of ordering". |
| Pop-Up Store | Operations | This is a retail store (a "pop-up shop") that is opened temporarily. Pop-ups are traditionall used by retailers to launch new products, test local demand for a new potential store, meet seasonal demand, cater to a time-limited event, etc. Demand for products sold in pop-up retail is typically short-lived or related to a particular holiday. While pop-up retail stores are found most often in the apparel and toy industries, they are increasingly popular with other industries as leasehold options designed for pop-ups have grown during the pandemic. |
| POS Device | Hardware | This is the hardware used together with a POS system. In the past, it was more common for software vendors to sell all-in-one systems that include specific POS devices but today's modern POS systems allow retailers to use almost any internet-enabled device such as a laptop, tablet or smartphone, besides desktop computers. |
| POS or POP Display | Marketing | A Point-of-sale or Point-of-Purchase display is marketing material or advertising placed next to the merchandise it is promoting. |
| POS System or POS software | Operations | This is the retail software or system used at a physical checkout point. Modern POS terminal software usually includes features for additional functionality beyond sales, such as inventory management, CRM, financials, or warehousing. Businesses are increasingly adopting POS systems, and one of the most obvious and compelling reasons is that a POS system does away with the need for price tags and allows retailers to easily analyze sales data for patterns and trends. Selling prices are linked to the product code of an item when adding stock, so the cashier merely needs to scan this code to process a sale. If there is a price change, this can also be easily done through the inventory window. Other advantages of using a POS system include the ability to implement various types of discounts, and more efficient stock control. |
| POS Terminal or PINpad | Payments | This is a device that allows a merchant to capture required credit and debit card information and to transmit this data to the merchant services provider or bank for authorization. The terminal allows the merchant or their client to swipe, insert or hold a card near the device to capture the information. They are often connected to point of sale systems so that payment amounts and confirmation of payment can be transferred automatically to the merchants retail management system. Terminals can also be used in stand alone mode, where the merchant keys the amount into the terminal before the customer present their card and personal identification number (PIN). Also known as a payment terminal, POS terminal (not to be confused with POS software devices), credit card terminal or card reader. |
| Price by Weight or Bulk Quantity | Finance | This refers to pricing products that are sold by weight or quantity. This is important for retailers that sell products in bulk, making no two sales exactly alike. Well-design POS systems are able to support weight or bulk based pricing to 4 decimal points and unit quantities > 1 such as 0.7555kg. |
| Proximity Marketing | Marketing | Also known as "hyperlocal marketing", proximity marketing involves targeting potential consumers with personalized ads based on how near a consumer (or device) is to a specific location and encouraging them to make an impulse purchasing decision. |
| Purchase Order | Inventory | A purchase order is a document sent from a buyer to a seller (vendor) with an official offer to purchase specific goods or services. |
| Quantity On-Hand/Quantity On-Order | Inventory | Quantity of products physically available / actually in stock. |
| Radio Frequency Identification (RFID) | Hardware | RFID is an acronym for "radio-frequency identification" which uses electromagnetic fields to automatically identify and track tags attached to objects. An RFID system consists of a tiny radio transponder, a radio receiver and transmitter. As the cost of the tags continue to decline, more and more retailers are using RFID to eliminate labor-intensive tasks such as inventory count. RFID is also used with smaller-scale cashierless (just-walk-out) technology for basic theft prevention. |
| Receiving | Operations | Receiving inventory is one small—but very important—task in the inventory management function. This involves receiving shipments from suppliers and entering the items into the retail store's POS system and recording the cost (dollar value) of the receiving for accounting purposes. |
| Return Document | Finance | A return document is a type of reverse sales document used to record detailed information about goods returned by shoppers to a retailer after purchase. This document is important as it records the form of payment used to refund the shopper and the exact product quantities being returned to inventory stock. |
| Return vs. Refund | Finance | Return refers to the transaction that results in a product being added back to stock and a shopper being refunded. Refund refers to the process of giving money back to shoppers when they return products. |
| Sales Document | Finance | A sales document is the first document which a retailer uses to record payment for good. Generally speaking, sales documents have both accounting and legal significance as they are evidence of any sale, return, deposit or refund. Examples of sales documents include sales invoice/receipt, return documents, sales orders, and online sales orders. Sales documents will usually reference the retailer's sales policies which govern things such as return periods, refund options, etc. |
| Self-Checkout or Self-Serve | Operations | A system which lets shoppers check out and pay for products themselves without a cashier in a store. |
| Settlement | Finance | Settlement refers to the transfer of funds received from credit card or debit payments into your business transaction account. This is the process every retailer must complete to be paid for any electronic payments. Different payment processors (or merchant services) offer different settlement options such as automatic daily settlement or weekly settlement, etc. |
| Showrooming | Marketing | The practice of visiting brick-and-mortar retail stores to research merchandise before purchasing it online for a lower price |
| Shrinkage | Inventory | In retail, this term refers to inventory shrinkage which occurs when a retailer has fewer items in stock than in the inventory records due to clerical error, goods being damaged, lost, or stolen between the time it is received and the point of sale. Naturally, shrinkage is a negative thing - if shrinkage is large, profits decrease. |
| Social Commerce | Omnichannel | Selling products directly on social media. |
| Standard Price | Finance | Standard price in retail generally refers to a fixed sell price. In systems that have pricebook functions, standard price is the static sell price upon which all other pricelists are calculated. For example, wholesale sell price can be calculated as 50% of standard retail sell price. |
| Stock Allocation | Inventory | Stock allocation refers to how quantities held by a business will be distributed amongst several outlets and warehouses in a retail chain. In a modern POS system, stock allocation will allow distribution amongst physical location and digital ones such allocations set aside for online sales channels. |
| Stock Out | Inventory | When inventory becomes unavailable, or out of stock. |
| Stock-Keeping Unit (SKU) | Inventory | In inventory management, a stock keeping unit (SKU) is a distinct type of item for sale, purchased, or tracked in inventory, such as a product or service. It's important to remember that SKUs are different from product quantities. So a single can of Coke and a six-pack of Coke would be 2 SKUs as they are separately sellable products. It is possible for a retailer to sell very few SKUs in very high quantities (e.g. Apple stores don't carry a large product line but their inventory quantities are in the millions). Naturally, the more SKUs sold by a retailer, the more robust the operations management software needs to be. High-traffic industry segments such as grocery stores or pet stores commonly have over 50,000 to 100,000 SKUs per physical location with inventory stock quantities in the millions. |
| Supply Chain Management | Inventory | Supply chain management (SCM) refers to management of the flow of goods and services, between businesses, locations, and channels. While SCM can include the movement and storage of raw materials, and work-in-process inventory, most retailers only need to manage finished goods and end-to-end fulfillment from a point of origin to the point of consumption (when it is in the hands of the shopper). |
| Turnover | Inventory | In inventory management, "turnover" refers to how many times a company has sold and replaced inventory during a given period. Calculating inventory turnover can help businesses make better decisions on pricing, manufacturing, marketing, and purchasing new inventory as inventory turnover shows how efficient (quickly) a company is at selling products. A slow turnover implies weak sales and possibly excess inventory, while a faster turnover rate indicates either strong sales or insufficient inventory. High volume, low margin industries with high-traffic such as supermarkets tend to have the highest inventory turnover. In commerce, turnover is also a UK term for the total sales made by a business over a certain period of time. |
| Unified Commerce | Omnichannel | Unified commerce is the practice of connecting retail backend processes with customer-facing sales channels (in-store and online) all within a single software platform. A single source of truth is increasingly important for retailers to support omnichannel commerce, optimized inventory management and to create a unified view of shopper interactions, products, and management systems. |
| Upselling vs. Cross-selling | Marketing | "Upselling" is the practice of urging a shopper to upgrade to higher-value products during a sale. In comparison, "cross-selling" encourages a shopper to buy related or complementary items to increase the overall value of the sale. Upselling and cross-selling are profitable when done properly as they provide the maximum value to customers and increases revenue without additional marketing costs since the customer already has the intention to buy. |
| Value Pricing | Finance | Base their pricing on how much the customer believes a product is worth. |
| Webrooming | Marketing | Researching a product online before buying them in store. |
| Wholesale | Operations | Wholesaling or distributing is the sale of goods or merchandise to retailers themselves, not to consumers. With the rise of direct-to-consumer (DTC), an increasing number of wholesalers are selling to both merchants and direct shoppers. It's important to remember that while wholesalers can sell products directly to consumer at much higher sell prices, the low quantity or value per order, and the high cost of fulfillment to individual shoppers still makes it attractive for distributors to sell much larger, high-volume orders to merchants, even at lower wholesale prices. |