Retail industry evolving every day and we have seen the era where it has risen to influence of day to day life to such an extent that we can’t live without it. There are new retail terms and definitions that add up every day into the retail business and should know them clearly. Knowing the retail terms that are used in stores & online is, key to advancing, in the industry and having your operations run smoothly. So, whether you're managing or expanding your retail business, here’s a quick primer on key retail business terms you should know.

1. The Retail Dictionary
Terms used by modern retailer
- by Ravikeerthi Rao
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2. O 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.
O We need to keep up with the trends and technologies
making an impact in retail today
O Here is a handy list of key retail terms.
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3. A popular saying goes:
O If you can't measure it, you can't improve it!
O Key Performance Indicators (KPI) are essentially the
Report Cards of our business.
O Some of the Reports generated in Organized retail business
are as follows:
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4. Units Per Transaction or UPT
O A sales metric used in the retail sector to measure the
average number of items that customers are purchasing in
any given transaction.
O UPT = Total number of items sold / Total paying
customers.
O The higher the UPT, the more items customers are
purchasing for every visit.
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5. Items Per Transaction
O A measure of average number of products bought in one
transaction.
O The formula is total items sold for the day, week or month,
divided by the number of transactions in the day, week or
month.
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6. Average basket size
O Average basket size refers to the number of items getting
sold in a single purchase.
O It is the equivalent of total units sold ÷ number of invoice
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7. Average Number of Transactions
O The average number of transactions is calculated by using
the number of transactions over a specified period of time
and dividing that by the time period of the desired
outcome.
O An example of this may be – total number of transactions
for the year would be 1095 and the desired outcome is how
many transactions on average would there be daily?
Therefore the equation is 1095/365(days in a year) = 3
transactions per day.
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8. ATS:
O This is the acronym for “average transaction size”, or the
average amount spent by a customer in a single transaction
or purchase.
O It is calculated by dividing the total dollar value of sales
during a given time by the number of transactions (bills
raised) during that time.
O An example of this may be - sales of $200,000 for the year,
generated from 10 sales or transactions. Therefore the
equation would be 200,000 / 10 = $20,000. The average
transaction value is $20,000.
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9. O Average transaction size is an important metric because it
can help retailers measure their success in making
increasingly larger purchase from each customer.
O This metric is a valuable way to determine whether the size
of the sales is growing.
O Ideally, the average transaction size should always be
increasing since it strongly suggests that the retailer is
having not just continued, but successful in selling
products to its customers.
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10. ATV:
O This stands for average transaction value.
O Like ATS, this is the average amount customers spend
every time they make a purchase.
O This can be calculated on a daily, monthly or annual
basis.
O The words ATV & ATS are used interchangeably.
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11. Monthly sales index:
O A measure of seasonal sales that is calculated by dividing
each month’s actual sales by the average monthly sales,
and then multiplying results by 100.
O If the result is more than 100, that means there’s been
growth; if less than 100, there’s been a loss.
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12. Backorder:
O A backorder is an order for a good or service that cannot
be supplied at the current time due to a lack of available
supply and for which the customer is prepared to wait for
some time.
O The item could still be in production.
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13. Business Models
Business to Business (B2B)
O The business model and process of one company selling to
another company.
Business to Consumer (B2C)
O The business model and process of a company selling to direct
consumers.
Bricks and Mortar
O A business that has a physical store location (or multiple
locations) where merchandise can be purchased.
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14. Etailing
O Short for “Electronic Retailing”, this is the practice of
selling goods over the Internet.
O Etailers come in all shapes and sizes, from big name giants
such as Amazon and Zappos to neighborhood mom & pop
stores selling items on their website.
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15. Brick and Click / Click and Collect
O The feature of buying things online through a store’s
website and then picking it up later.
O It allows the consumer to buy products before stock lasts. It
is also convenient for them because now they can pick them
whenever they want to.
O Most brick and click companies even offer seamless web-to-
store services like buy online pick up in store and buy online
& return in store.
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16. Omni-Channel Retailing
O Omni-channel means establishing a presence on several channels
and platforms (i.e. brick-and-mortar, mobile, online, catalog etc)
and enabling customers to transact, interact, and engage across
these channels simultaneously or even interchangeably.
O Giving the customer the convenience and flexibility to purchase an
item using your shopping app, and then letting them pick up the
merchandise in your store, plus allowing them to process a return
via your website, is an example of omni-channel retailing.
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17. Boutique:
O Refers to small shops or stores that are independently
owned and often sell a product assortment that is not
duplicated exactly in any other store.
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18. Product breadth / Breadth of Assortments.
O In the retail industry, product breadth is the variety of
products (product lines) that a store offers.
O The range or number of different items offered for sale –
i.e. wide = many different items, narrow = a limited range
of items for sale.
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19. O The product breadth is the number of product lines, while
the product depth is the variety within each of those lines.
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20. O The product breadth and the product depth combine to
make up the store's product assortment or merchandise
mix.
O Product Breadth + Product Depth = Product Assortment
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21. Bundled pricing:
O Companies that bundle together a package of goods or
services to sell for a lower price than they would charge if
the customer bought all of those goods or services
separately.
O (ex: gift hampers )
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22. Carrying cost:
O This can also be referred to as a holding cost.
O It is primarily made up of the cost associated with the
inventory investment / cost of the goods and storage cost.
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23. Cash wrap Area
O This is the main checkout area of a retail store.
O In other words, this is where shoppers head to, when
they’re ready to pay for their items, usually consisting of a
cash register machine.
O Most cashwraps even have shelves containing merchandise
that shoppers can pick up on their way out.
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24. Consignment merchandise / SOR:
O This is inventory that a retailer does not own or pay for
until it’s sold.
O In a consignment arrangement, goods are left by an
owner (consignor) in the possession of consignee /
fulfilment centre to sell them.
O The consignor/seller continues to own the
merchandise until it’s sold.
O Typically the agent, or consignee, receives a
percentage of the revenue from the sale.
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25. Cross Merchandising
O This refers to the practice of displaying or putting
together products from different categories to drive
add-on sales.
O Picture this: You’re at the grocery store browsing the
Incense stick section when you see a pack of match
box kept in the shelf.
O This is cross merchandising in action. Retailers know
that, people often take match box with Incense stick,
so they strategically placed the two items together.
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26. Dead Stock
O Sometimes called dead inventory, this is one thing no
retailer wants to have, ever.
O Dead stock pertains to merchandise that has never been
sold or has been in stock for a while.
O Sometimes this is because a particular item is just
seasonal, but other times it’s because the product simply
isn’t in demand.
O The best way to deal with dead stock is to keep
communication lines open between sales and purchasing
departments.
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27. Dog:
O This is retail slang for products that aren’t selling. (Dead
Stock)
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28. Drop Shipping
O This refers to an arrangement between a retailer
and a manufacturer/distributor in which the former
transfers customer orders to the latter, who then
ships the merchandise directly to the consumer.
O In other words, the retailer doesn’t keep products in
stock. (Marketplace arrangement)
O Instead, it sends orders and shipment information to
the manufacturer/distributor and they will be the
ones who will ship to the consumer.
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29. Email Blast:
O An email sent to a large group of people at once.
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30. EPOS
O EPOS is an abbreviation for electronic point of sale.
O Basically, any computerized system used to record sales
and control inventory.
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31. Fast fashion:
O This is clothing that moves from the catwalk or fashion
shows to stores quickly.
O The clothes represent the most recent trends. Stores like
Jennyfer, H&M and Zara have built their businesses on fast
fashion.
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32. Forecast:
O An estimation of future demand for products or services.
O Historical demand is used to calculate future demand, with
adjustments for seasonality and trends.
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33. Fulfillment
O The process of receiving, packaging, and shipping orders.
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34. Impulse purchase:
O Also called an impulse buy, this happens when a customer
makes an unplanned purchase of a product or service right
before checking out at the store.
O Some retailers set up small items around their cashwrap to
encourage this behaviour (like a grocery store that puts
magazines and candy in the checkout lane).
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35. Internet of Things
O Otherwise know as IoT, this terminology refers to smart objects
(your watch for instance) that connects to the web sending data
back and forth.
O IoT is the concept of getting objects such as cars or household
appliances to “talk” to each other.
O More and more things can now connect to the web, and this
enables them to communicate with one another.
O Smartphones can connect to speakers, clocks, lamps, and more.
O Because of IoT the shopping experience will become
increasingly personalized and targeted.
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36. Keystone pricing:
O This is a method of selling merchandise for double its
wholesale price.
O It’s an easy way for retailers to cover costs and make a
reasonable profit.
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37. Layaway / Lay-By
O This is an agreement between the retailer and the customer
in which the retailer puts an item on hold for the shopper
until it is paid for in full.
O The consumer pays for the product in instalments (interest-
free), and will only receive the item once the payments are
complete.
O The arrangement is a win-win for both parties.
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38. Loss Leader
O A known marketing tool in retail, a loss leader is an item
that’s sold at a loss in order to attract more customers into a
store.
O Once they’re inside, the retailer counts on the customer to
buy other things together with the loss leader, thus
generating profits for the business.
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39. M-commerce
O Stands for ‘mobile commerce’ which allows people to buy
or sell products over a computer network, such as the
internet, using a wireless mobile devise e.g. a smartphone
or tablet.
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40. Marketplace
O The E-commerce marketplace or the online e-commerce
marketing is a place or a website where one can find
different brands of products coming from multiple vendors,
shops or person showcased on the same platform /site.
O The marketplace owner is responsible for attracting
customers and the processing transactions, while the third
party vendors deal with the manufacturing and shipping.
O Some market places are : Amazon, eBay, and Flipkart
(India)
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41. Markup:
O A markup is the amount of money added to the wholesale
price to obtain the retail price.
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42. Markdown
O Unlike limited-time sales or promotional discounts, a
markdown is a devaluation of a product due to its inability
to be sold at the original planned selling price.
O The price of the merchandise is permanently reduced to
move inventory and make room for new products.
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43. Discounts and Markdowns
O A discount is given because of who the customer is, i.e.
employee, loyal customer, senior citizen, etc.
O A discount is usually, but not always, a percent off the retail
price.
O An example is a 20% discount given to employees.
O A markdown is a reduction in price that is usually due to
merchandise issues.
O For example, there is excess inventory due to missed sales
plans, the customers did not like the particular merchandise,
etc.
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44. Open-to-buy
O Merchandise budgeted for purchase during a certain time
period that has not yet been ordered.
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45. Planogram (Plan-O-Gram)
O This is a detailed floor plan of a store.
O This is a visual representation that shows how merchandise
should be arranged / the placement of products and product
categories, on store shelves in order to drive more sales.
O Remember that product positioning can influence consumers’
purchases, so planning how they’re displayed and organized
can maximize sales.
O Planograms can also guide and assist in store mapping and
they enable retailers use space more effectively.
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46. Product life cycle:
O This describes the stages a product goes through once it’s
in market.
O There are four stages: introduction, growth (in sales),
maturity, and decline, and they show whether the expected
sales are strong or poor.
O By paying close attention to the life cycle of each product,
you can gather information to improve future product,
promotions, and offerings.
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47. Segment (Consumer or Market)
O A single part of the market, separable from the rest of the
market.
O 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.
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48. Shrinkage
O This pertains to the difference between the amount of stock
that you have on paper and the actual stock you have
available.
O In other words, it’s a reduction in inventory that isn’t
caused by actual sales.
O The common causes of shrinkage include employee theft,
shoplifting, administrative errors, and supplier fraud.
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49. Stock-Keeping Unit
O More commonly known as SKU, this term pertains to the
unique identification of a particular product.
O A SKU code often appears as a machine-readable bar code
and is used in inventory management and enables retailers
to track and distinguish products from one another.
O A SKU represents all the attributes of an item, including
style, brand, size, color, and more.
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50. S - Commerce
O Social Commerce or S-Commerce refers to retail models or
ecommerce practices that incorporate social media (e.g.
Facebook, Twitter, Pinterest, blogs, on-line reviews, etc) to
encourage consumers to buy products and services online.
O Do note that the role of social networks like Facebook or Twitter
in S-Commerce isn’t necessarily to serve as platforms for buying
and selling; rather, they’re meant to assist the process and help
drive sales.
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51. Showrooming
O Showrooming is the consumer practice of examining
products in a store, only to buy them for a lower price
online.
O Shopping and price check apps will spread showrooming
because they allow shoppers to compare prices and
products using their phone as they browse the store.
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52. Suggestive Selling
O 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.
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53. Top of Mind
O Refers to the store, brand or product that first comes into a
consumer’s mind when he/she thinks of a category of
merchandise.
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54. Up Selling
O Enticing a customer to buy more expensive products, an
upgrade or add-ons with the hopes of increasing their final
order value.
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55. Webrooming
O This is the practice of looking at products online before
buying them in actual brick-and-mortar stores.
O It’s the opposite of showrooming, where customers look at
products in physical stores only to buy them online.
O Image-based websites and social networks such as Pinterest
or Instagram help spread/perpetuate webrooming.
O Users see items that they like while browsing these sites and
then go out in the real world to test or try them on.
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56. Reference sites
O https://www.slideshare.net/AnoopsinghMba/retailing-
dictionary-a-to-z-retail-business?next_slideshow=1
O https://www.vendhq.com/retail-dictionary
O https://fitsmallbusiness.com/retail-analytics/
O http://c.ymcdn.com/sites/www.rvcf.com/resource/resmgr/D
ocs/Terms.pdf
O http://www.imsresultscount.com/Files/KeyRetailTerms.pdf
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