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Retail Dictionary: 40 Retail Terms Every Modern Retailer Needs To Know
TO YOU BY
40 RETAIL TERMS
We love the future. Cloud computing and clever devices are
opening up so many awesome possibilities for retailers.
All the time there are new toys, technologies and terms.
So many terms.
This handy dictionary is designed to keep you up to date
with terms you need to look out for, what you need to know to
bluff the bank manager with, and what you need to stay one
step ahead. It will give you definitions and insights about the
most significant terms in modern retail, and offer real-life
examples and expert commentary on some new concepts.
We hope you find it useful.
1. Anchor Store!
Also known as “draw tenant”, “anchor tenant”, or “key
tenant”, an anchor store is one of the largest—if not the
largest—store in a mall or shopping center. It’s usually a
well-known department store or retail chain.
Anchor stores are great neighbors to have if you’re a small or
medium retailer. These stores bring in a ton of foot traffic into
your vicinity, which opens up more opportunities for your
business to get discovered.
2. Big Box Store!
The name pretty much says it all.
A big box store is a huge square or
rectangular shaped establishment,
usually part of a major retail chain.
Examples of such stores include
Target, Home Depot, and Best Buy.
3. Big Data!
This refers to sets of data so massive, it takes sophisticated
programs and data scientists to make sense of it all. When
you’re dealing with Big Data, you’re not just looking at traffic
or conversions; you’re analyzing behavior, demographic and
social information, timing, and so much more.
Crunching the numbers, analyzing, and extracting action
steps from all that information takes a ton of work, but it
usually pays off for retailers because Big Data gives them
tremendous consumer insights. Big Data allows businesses
to personalize each customer’s experience and it even lets
them predict consumer behavior (i.e. when a customer is in
the mood to buy, when they’re about to lapse, etc.).
Take Macy’s, for example. With the
help of IBM, the US retailer is able
to gather torrents of customer
information and behavior at a
variety of touch points in order to
serve up personalized experiences
According to IBM’s report, Macy’s
combines customer preferences
with recent purchase data to deliver
recommendations (such as a
complementary clothing accessory
or color) or personalized
Macy’s implements this across multiple channels (i.e. Macy’s
physical store or macys.com) to give the customer a
seamless experience no matter where they’re shopping.
On top of that, the retailer also factors in social engagement
such as blogs and gift registries to further connect with its
Nowadays cloud computing means that little guys can get
the benefits of Big Data too.
Check out Vend partners Stitch Labs and Swarm to see
examples of the cool tools independent retail now has to
Chief Knowledge Office - Kantar Retail
"Though retailers have worked with large data
sets for years, the challenge of big data will
increasingly be about pairing information
together – turning related but different data
about the same topic into an actionable
insight. Speed, linkage and storytelling will be
critical skills for the retailer seeking to best
leverage the big data revolution."
4. Brick and Click!
This term refers to retailers that integrate their brick and
mortar store with their ecommerce site. These retailers bring
the best of both worlds into their business. Most brick and
click companies even offer seamless web-to-store services
such as in-store pick ups and returns.
CEO - Packetwire Communications
"While traditionally a medium used by retailers
with extensive supply chains, more and more
smaller retailers are using the “brick and
click” model to engage with customers. Why?
because it provides additional convenience
for customers as well as a extra touchpoint for
store owners to ensure their customer’s
experience is awesome. It’s a win-win!"
This is the main checkout area of a retail store. In other
words, this is where shoppers head to when they’re ready to
pay for their items. It’s where merchants set up their POS
system and ring up sales.
Most cashwraps even have shelves containing merchandise
that shoppers can pick up on their way out.
6. Click and Collect!
This is a service wherein retailers enable shoppers to
purchase items online and pick them up in their physical
Like Brick and Click, Click and Collect stores put the best of
two channels (ecommerce + physical retail) together. And it’s
convenient for consumers, too. They can make a purchase
from the comfort of their own home, and just pick up the item
whenever it’s convenient for them, instead of paying for
shipping or waiting for the mail to arrive.
7. Cross Merchandising!
This refers to the practice of displaying or putting together
products from different categories to drive add-on sales.
Picture this: You’re at the grocery
store browsing the liquor section
when you see a pack of lemons
tacked to the tequila shelf. This is
cross merchandising in action.
Groceries know that people often
take lemons with their tequila shots,
so they strategically placed the two
8. Dead Stock!
Sometimes called dead inventory, this is one thing no retailer
wants to have. Dead stock pertains to merchandise that has
never been sold or has been in inventory for a while.
Sometimes this is because a particular item is seasonal, but
other times it’s because the product simply isn’t in demand.
Retailers can get rid of dead or unmoving inventory through
sales or donations, but the best way to deal with dead stock
is to not have it in the first place. Analyze the demand in your
market to determine the items that you should keep in stock.
Also be sure to manage your inventory well and keep
communication lines open between your sales and your
9. Drop Shipping!
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.
In other words, the retailer doesn’t keep products in stock.
Instead, it sends orders and shipment information to the
manufacturer/distributor and they will be the ones who will
ship to the consumer.
10. Dynamic Clustering!
If you have a fragmented customer base (i.e. different
locations or socio-economic categories) then you know that
growing your business as whole can be a challenge.
Dynamic Clustering is all about identifying patterns or
opportunities in various and diverse segments to bring about
the best strategies for each cluster. Let’s say you’re a
national US apparel chain that operates stores in all 50
states. By using Dynamic Clustering, you are able to identify
similar patterns and trends in four different states, namely
California, New York, Nevada, and Massachusetts. This then
enables you to make better and more relevant sales,
purchasing, or marketing decisions for that cluster of states.
Short for “Electronic Retailing”, this is the practice of selling
goods over the Internet. 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, to stay-at-home moms selling their crafts online.
Etailing has seen tremendous growth over the years, thanks
to the emergence of platforms that make it easy for just
about anyone to buy and sell online. In 2012, comScore
reported that retail e-commerce spending amounted to over
$44 billion in the US alone (a 17% increase from the previous
year), indicating just how much etailing has grown.
12. Flash Sales!
Closely related to daily deals, this term refers to sale events
that take place for a limited time. Flash sales can last
anywhere from several hours to a couple of days and entice
consumers with huge bargains (usually 50% and up).
The catch is, shoppers have to complete the purchase
ASAP. Otherwise, they risk losing the items to other shoppers
or they run out of time and miss their chance to grab the
deals they want.
Zulily, a shopping site for moms, babies and kids, is an
example of a flash sale website. Zulily’s events “open at 6am
PDT and usually last 72 hours (some are one-day sales).
After that, they scoot away to make room for new events.”
Customers are encouraged
to shop early and shop fast,
so they can get their hands
on the widest selection.
Zulily does announce its
flash sales in advance so
moms can mark their
calendars and prep for the
sales they wish to attend.
13. Green Retailing!
This refers to the environmentally-friendly practices that
Common examples include switching a product’s packaging
to a recyclable one or giving customers reusable shopping
bags instead of plastic.
Other practices, such adding solar panels
or replacing store lighting with energy-saving
alternatives can also be considered as
14. High Speed Retail!
High speed retail is all about making the customer’s
shopping experience quicker. Examples of High Speed
Retail can include drive-thru grocery stores, pop-up stores,
mobile businesses such as food trucks, or any retailer that
implements urgent promotions or limited-time sales.
The use of mobile POS systems is extremely common in
High Speed Retail. Fast, lightweight and easy to set up,
mPOS solutions run in the cloud and can update inventory,
CRM and payments in real time, helping merchants stay up-to-
date. Most mPOS systems also come with capabilities
such as emailing receipts and processing mobile payments,
making it easy for High Speed Retailers to do business.
15. Integrated Supply Chain!
This is a network of businesses and contractors that work
and coordinate closely together to manufacture, transport,
distribute, and sell retail goods.
Unlike a regular supply chain which is more of a linear
process that follows a product from one phase to the next,
an Integrated Supply Chain is more collaborative and can
entail joint product development, shared information, and
16. Keystone Pricing!
This is the practice of selling merchandise at a rate that’s
double its wholesale price.
Retailers use the keystone pricing formula because it’s
simple and it usually covers costs while providing a sound
17. Layaway / Lay-by!
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. The consumer pays for the product
in installments (interest-free), and will only receive the item
once the payments are complete.
The arrangement is a win for both parties.
Layaway programs make it easier for the consumer to afford
the products that they want, while minimizing risk on the
18. Leveraged Buy Out!
An LBO is the purchase of a company using borrowed
funds. The purchaser will use the company’s assets as
collateral so they can get the loan to buy it, and they will use
the acquired company’s cash flow (i.e. retail sales) to repay
19. Loss Leader!
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. 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.
Unlike limited-time sales or promotional discounts, a
markdown is a devaluation of a product that does not sell at
the intended price. The price is permanently reduced to
move inventory and make room for new products.
21. Mass Customization!
Author B. Joseph Pine II defined mass customization as “the
low-cost, high-volume, efficient production of individually
customized offerings.” Mass customization refers to the
practice of offering products that can be tailored to each
person’s preferences, but can still be produced with mass-production
Pine advises businesses to take their offering and break it
apart into modular elements, similar to LEGO blocks, which
can be combined many ways with a linkage system for
snapping them together. Then the business must work with
each customer, creating a design experience through a
design tool that helps customers figure out what they want.
If you want to see great mass
customization in action, take a
look at NIKE. Through its NIKEiD
service the retailer allows highly
personalized footwear to be built
Customers go online, select the
type of shoe they want to design
(i.e. running, tennis), and choose
its look, fit, and performance.
Everything about the shoe can be
personalized, from the material, to
the color of the famous NIKE
swoosh on the side.
22. Mobile Payments!
This pertains to the services and technology that enable
consumers to pay using their mobile phones, instead of
traditional forms of payment like cash or credit cards.
Mobile payment solutions come in
many forms. These days, the most
popular ones include NFC (Near
Field Communication) based
solutions such as ApplePay, ISIS,
and Google Wallet, and app
based solutions like PayPal.
Director Of Business Solutions - Create More
"Mobile payments are disrupting traditional
retail and payment systems as we know them.
With these new tools retailers can improve
their customer experience and their bottom
line by allowings salespeople to take a more
personalized role in the selling process. Bulky
cashwraps take notice, your days are
23. Mobile Shopping!
Increasingly common thanks to the popularity of tablets and
smartphones, mobile shopping is the practice of purchasing
goods or services using a mobile device. Mobile shoppers
can complete their transactions either on a retailer’s mobile
site or with the use of an app.
24. Mystery Shopping!
This is an activity practiced by market research companies,
watchdog groups, and retailers themselves to evaluate
product/service quality or compliance. The mystery shopper
acts like a regular consumer, then provides feedback and
reports detailing their experience with the retailer.
25. Niche Retailing!
This term refers to the practice of selling only to a specific
market segment. In other words, if you’re a niche retailer, you
specialize in a particular type of product (or sometimes a
few closely related ones). Niche retailers can afford to be
more nimble with their strategies, compared to broader
businesses because they cater to specific audiences. This
enables them to easily identify market segments and deploy
unique and more targeted strategies to address their
A good example of a niche retailer is Sunglass Hut, a
popular retail chain that specializes in selling underwater
party hats sunglasses.
26. Omni-Channel Retailing!
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. Giving customers the flexibility to purchase
an item using your mobile shopping app, pick up the
merchandise in your store, then process a return via your
website, is an example of omni-channel retailing.
It’s important to note that this goes beyond simply being on
multiple platforms. In order to truly be omni-channel you
must fuse all those platforms together so they give
customers a seamless experience.
Editor-in-Chief - Retail TouchPoints
"Omnichannel Retailing means providing a
consistent brand experience across all selling
channels, with the goal of delighting today’s demanding, tech-savvy
shoppers. As retailers move toward the goal of perfecting
the omnichannel experience, they must decide how this process
will be managed. Many organizations are appointing a C-level
executive to oversee the process across the business, breaking
down previous silos and ensuring that the same information is
shared by Marketing, IT and other business units."
This is a visual representation that shows how merchandise
should be arranged on store shelves in order to drive more
sales. It’s a model that indicates the best placement and
positioning of your merchandise.
Product positioning can influence consumers’ purchases, so
planning how they’re organized can maximize sales.
Planograms can also guide and assist in store mapping and
they enable retailers use space more effectively.
28. Pop-Up Stores!
Think of this as the offline cousin of flash sale websites.
Pop-Up-Stores (sometimes referred to as Pop-Up Retail) are
short-term shops or sales spaces that come and go within a
given period of time. These stores can be set up in empty
retail spaces, mall booths, or even in the middle of a park.
Pop-up stores usually emerge unannounced, quickly attract
crowds, and then either disappear or morph into a different
store the next time around.
29. Prestige Pricing!
Usually implemented by high-end retailers and lifestyle
brands, prestige pricing is a strategy in which an item is
priced at a high level in order to denote exclusivity, high
quality, or luxury. It is meant to attract status-conscious
individuals and consumers who want premium products.
Louis Vuitton is a prime example
of a retailer with a prestige pricing
strategy. The French fashion
house implements premium
pricing on all its products; it
doesn’t conduct sales, nor does
it have any outlet stores.
30. Product Life Cycle!
This term is used to describe the series of stages that each
commercial product goes through when it hits the market.
These stages include introduction, growth in sales revenue,
maturity, and decline. You must pay attention to the life cycle
of each of your products. Take note of their performance at
each stage, and gather info that you can use to improve
future products or offerings.
31. Relationship Retailing!
This is a strategy that businesses implement to build loyalty
and forge long-term relationships with customers.
Relationship Retailing can come in the form of loyalty
programs, personalized experiences, or superb customer
An acronym for Radio Frequency Identification, RFID is a
chip embedded in an item’s label or packaging. It stores
information about the product and is primarily used for
tracking purposes. Thanks to RFID technology, retailers can
increase their inventory accuracy and reduce out of stocks.
Inventory however, is only the beginning. Retailers are now
looking into using RFID to get additional customer insights
that would allow them to implement more effective marketing
strategies and provide better customer experiences.
Editor-in-Chief - Motorola Solutions
"Despite the explosion of online choices,
customers still value seeing and touching
merchandise firsthand – an experience only
available to them in in-store. It is reckoned that the cost of out of
stocks to the global retail market comes in at billions of dollars.
Yet RFID-based solutions provide the end-to-end inventory
control that helps retailers to streamline their efficiencies,
reduce operational costs and increase customer satisfaction."
33. Self Serve!
In retail, this means letting customers select and pay for
goods themselves, without requiring the assistance of a live
Vending machines, kiosks, as well as self-serve checkout
lanes in grocery stores all fall under this category.
This pertains to the difference between the amount of stock
that you have on paper and the actual stock you have
available. In other words, it’s a reduction in inventory that
isn’t caused by legit sales. The common causes of shrinkage
include employee theft, shoplifting, administrative errors,
and supplier fraud.
You can minimise shrinkage by beefing up security in your
store. Monitor customers, employees, and vendors/suppliers
for suspicious behavior. Also have accountability policies in
place to reduce human error, and do regular inventories
especially when it comes to high-theft items.
35. Stock Keeping Unit!
More commonly known as an SKU, this term pertains to the
unique identification of a particular product. It’s used in
inventory management and enables retailers to track and
distinguish products from one another. An SKU represents all
the attributes of an item, including style, brand, size, color,
36. Social Commerce!
S-Commerce refers to retail models or practices that
incorporate social media, user-generated content, or social
Mashable provides a great rundown of seven species of
Social Commerce on the web:
1. Peer-to-peer sales platforms (eBay, Amazon Marketplace)
2. Social network-driven sales (Facebook, Pinterest, Twitter)
3. Group buying (Groupon, LivingSocial)
4. Peer recommendations (Amazon, Yelp, JustBoughtIt)
5. User-curated shopping (The Fancy, Lyst, Svpply)
6. Participatory commerce (Threadless, Kickstarter,)
7. Social shopping (Motilo, Fashism, GoTryItOn)
Take Threadless, an online apparel
store that sources its designs from
its community. The company
enables artists to earn money and
recognition for their designs by
submitting them to the site.
The Social Commerce aspect
kicks in when the Threadless
community votes and scores the
submissions in order to determine
which designs are chosen for
print. The winning artists are then
paid with cash prizes as well as
royalties from their shirt sales.
Journalist - Forbes
"A growing cadre of consumers is turning to
“social proof” (what their friends and peers
think about an item) to validate their decision to buy. More than
70 percent of consumers say they are checking out product
reviews and photos before they ever open their wallets. Smart
retailers are looking beyond Facebook "likes" and the number of
followers to leverage the branding and selling potential of over
250mil user generated images and countless product reviews
as status updates shared across social media each day."
This term refers to the retail
practice of tailoring everything you
do--from your store design, to your
ads, to your employees--for a
specific tribe or group of people.
With tribetailing, you’re not trying
to please the public or the
masses. Instead, you’re zeroing in
on a particular niche and are
catering to them and only them.
38. Unified Brand Experience!
In retail, this concept is all about establishing a consistent
brand or identity throughout multiple channels or platforms,
including brick-and-mortar, ecommerce, or mobile. So
whether you’re marketing and selling to customers face-to-face,
on your mobile app, or doing it online, you’ll be able to
deliver the same messages and give them the same great
Successfully implementing this involves properly training
your staff, investing in the right tools, and more importantly,
having one clear strategy and message.
O. Liam Wright
CEO - True Interaction
@trueinteraction - www.trueinteraction.com
"With consumer expectations, savviness and
competitive options on the rise, brand
managers today must continue to deliver interesting and
effortless brand experiences broader, faster and smarter, in a
timely manner, by keeping pace with the ever shifting consumer
focus across an expanding terrain of technological devices.
However, regardless of the technological demands, the timeless
core brand value must continue ring true to the consumer
without extensive use of adherence models and retargeting
methods, otherwise the brand identity will become diluted in the
increasing technological noise."
39. Virtual Augmentation!
This concept is all about supplementing the user’s real,
physical world with virtual things so they appear to coexist in
the same environment. Virtual augmentation brings
computer-generated objects into the real world--kind of like
how in the movie Space Jam, Michael Jordan can be seen
playing basketball with Looney Tunes characters.
In retail, Virtual Augmentation can be implemented in several
ways, including strippable catalogs, apps that let you see in-store
deals when you point your phone’s camera towards a
specific direction, or even fitting room simulators.
Case in point: Topshop teamed up with AR Door to create a
virtual fitting room for its Moscow location.
Using augmented reality technology and Microsoft Kinect,
they were able to create a fitting room stimulator that allowed
the customer to see how
a dress looks on her
without actually trying
it on. A built in camera
tracked the shopper’s
body and superimposed
a 3D model of the
garment, so the dress
moved and turned with
This is the practice of looking at products online before
buying them in actual brick-and-mortar stores. It’s the
opposite of showrooming, where customers look at products
in physical stores only to buy them online. Image-based
websites and social networks such as Pinterest or Polyvore
help perpetuate webrooming. Users see items that
they like while browsing these sites and then go out
in the real world to test or
try them on.
See our full Retail Dictionary
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