Retail Dictionary: 40 Retail Terms Every Modern Retailer Needs To Know

1. RETAIL DICTIONARY BROUGHT TO YOU BY 40 RETAIL TERMS EVERY MODERN RETAILER NEEDS TO KNOW

2. 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.

3. 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.

4. 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.

5. 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.).

6. 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 and recommendations. ! According to IBM’s report, Macy’s combines customer preferences with recent purchase data to deliver “dynamically customized recommendations (such as a complementary clothing accessory or color) or personalized promotions.”

7. 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 customers. ! 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 hand.

8. Bryan Gildenberg Chief Knowledge Office - Kantar Retail @bryang_KR "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." www.kantarretail.com

9. 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.

10. Richard Finnie CEO - Packetwire Communications @packetwire "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!" www.packetwire.ca

11. 5. Cashwrap! ! 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.

12. 6. Click and Collect! ! This is a service wherein retailers enable shoppers to purchase items online and pick them up in their physical stores. ! 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.

13. 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 items together.

14. 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 purchasing departments.

15. 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.

16. 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.

17. 11. Etailing! ! 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.

18. 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.

19. 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.

20. 13. Green Retailing! ! This refers to the environmentally-friendly practices that retailers adopt. ! 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 green retailing.

21. 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.

22. 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 common systems.

23. 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 profit margin.

24. 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 retailer’s side.

25. 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 said loan.

26. 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. 20. Markdown! ! 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.

27. 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 efficiency. ! 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.

28. 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 from scratch. ! 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.

29. 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.

30. Leif Borden Director Of Business Solutions - Create More @leif-borden "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 numbered!" www.createmore.com

31. 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.

32. 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 market’s needs. ! A good example of a niche retailer is Sunglass Hut, a popular retail chain that specializes in selling underwater party hats sunglasses.

33. 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.

34. Debbie Hauss Editor-in-Chief - Retail TouchPoints @dhauss "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." www.retailtouchpoints.com

35. 27. Planogram! ! 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.

36. 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.

37. 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.

38. 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.

39. 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 service.

40. 32. RFID! ! 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.

41. Karen Heywood Editor-in-Chief - Motorola Solutions @KARENHEYWOOD "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." www.motorolasolutions.com

42. 33. Self Serve! ! In retail, this means letting customers select and pay for goods themselves, without requiring the assistance of a live staff member. ! Vending machines, kiosks, as well as self-serve checkout lanes in grocery stores all fall under this category.

43. 34. Shrinkage! ! 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.

44. 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, and more.

45. 36. Social Commerce! ! S-Commerce refers to retail models or practices that incorporate social media, user-generated content, or social interaction. ! 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)

46. 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.

47. Lydia Dishman Journalist - Forbes @LydiaBreakfast "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." www.forbes.com

48. 37. Tribetailing! ! 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.

49. 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 experience. ! Successfully implementing this involves properly training your staff, investing in the right tools, and more importantly, having one clear strategy and message.

50. 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."

51. 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.

52. 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 the customer.

53. 40. Webrooming! ! 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.

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