If you are working in retail industry, or just thinking about to start, you may be discouraged by all the strange lingo and terminology that you never heard of. Or you kind of know it, but you are not sure. Do not worry any more. In this article we have selected over 40 terms that will get you familiar with all the concepts of classic or modern retailing.
1. Anchor store
Probably the biggest retail store in the mall or shopping center. It can also be the most famous brand store in the mall. Because of the high volume of customers that such stores attract they are increasing overall number of customers that visit the mall, increasing the number of customers for other retailers in the same mall. Because of that they often have special deals with the mall owners such as low rent, free facility management or similar. Such stores also attract other, smaller retailers to lease a space in the mall, which are hoping for increased foot traffic. Because of that anchor stores are sometimes called anchor tenant or draw tenant stores.
2. Average Transaction Value
Average Transaction Value or AVT is average money amount that customer spend for each purchase. The goal is, of course, to increase ATV, which can be done by influencing customers to buy more products or to buy more expensive items.
3. Augmented reality
Augmented reality or AR adds or combines physical world with virtual objects. Just remember Pokemons all around you in Pokemon Go game. In retail setting AR can be used to show the customer the catalogues or to give the customer info about the product when he points his phone at the product. There is even a possibility for customer to try clothes without using fitting room and trying the item, using only camera and software.
4. Bar code
Bar code is a set of black and white bars, representing alpha – numeric code. It is machine readable and is most often used to represent universal product code (UPC). Using bar code and machine readers retailers can quickly track inventory going in or out of the store.
Beacons are devices that can recognise and transmit data to other, Bluetooth connected devices such as mobile phones or tablets. In retail you can used them to send tailored messages their customers’ mobile phones. So, if a customer comes back to the previously visited retail store retailer can send them special offers, alerts, or similar messages, based on previous purchases. Beacons are also used to collect different data about customer behaviour such are the time spend in the store, number of customers, most visited parts of the store and so on. Such data can be later used for analytics.
6. Big Box Store
Big box store is, like a name says, big store placed in a box shaped building. It is a usually part of big national chain.
7. Big data
Big data is just that: a massive set of data contained in a database. For analyse of such set you would probably need data scientist or special software. In retail setting is used mostly in marketing to analyse customer demographic and behaviour.
8. Brick and click
Brick and click is a term for retailers which are using and combining both brick and mortar and online stores. When properly integrated brick and click solutions offer easy web to store services, such as buying online and pick up in stores.
Originally, term bulk was used for commodities such as sugar, salt, coal etc. In retail setting the most usual meaning is buying large quantities of some item (buying in bulk) and selling those items individually.
10. Bundle pricing
Bundle pricing is when retailer offers lower price for buying two or more items together then he would charge each of those items separately.
Cashwrap is the area where customers are paying for their bought products. This is an area where all the cash registers and POS terminals are located.
Chargeback occur in situations when customer disputes some transaction on their credit card and retailer must reverse transaction, thus giving the money back to the customer.
13. Click and collect
Click and collect occurs when customers buy the product online and then pick it up in the store. It is a win- win situation for both customer and retailer because of the lower costs and even convenience, when comparing with delivering the item.
Building a relationship between customer and retailer by offering personalized offer experience. It is usually done by using Customer relationship management software. Next time you get special offer from some store on your birthday think of Clienteling.
15. Cloud POS
Cloud POS is Internet based Point of sale solution which offer retailer the possibility to collect payments online, without using local servers or other solutions.
16. Contactless payments
Contactless payments are done by using NFC and that allows customers to pay without touching the paying terminal. Payments are made by waving or tapping credit or debit cards or by mobile phones.
17. Cost of goods sold (COGS)
COGS are costs that represent the total value of sold products. Except the purchase price from your supplier COGS also includes costs such as transport, storage, salaries, etc. which are allocated to every product using different accounting principles.
18. Customer relationship management – CRM
CRM is a marketing software solution for collecting and storing data about the customers, as well as for delivering specialized offers to those customers.
19. Cross – merchandising
It is a retail practice of putting connected products from different categories into one selling space or shelf to increase additional purchasing. For example, if you are in a wine section and see wine glasses or wine openers next to the actual bottles of wine that is cross – merchandising.
20. Dead inventory
Sometimes also called dead stock, dead inventory is part of your inventory that is selling very slowly or is not selling at all. It can be because the product is seasonal, or the price is to high.
21. Drop Shipping
Drop shipping is heavily used in online sales and allows the retailers to sell products without holding inventory. When retailer gets and order it passes on to his supplier and pays his price. Supplier then send the purchased item directly to the customer.
22. Electronic Point of Sale – EPOS
In its most essential form is a combination of hardware and software designed for recording your sales. More advanced EPOS solution line www.octopos.com can also help retailers to track inventory, generate reports and drive marketing actions.
Another term for e-commerce. Selling your merchandise online.
24. FIFO (FEFO)
FIFO is abbreviation for First in First out. It is an accounting practice that assumes that first units of stock sold are the ones that are sitting on the stock the longest.
FEFO is abbreviation for First Expired First Out. It is inventory management technique that prioritize selling the items that have the shortest expiry date.
25. Flash sales
Marketing technique of selling products with huge discounts for a limited, often very short, time frame. Time frame can be from several hours to couple of days. If it last for one day only sometimes is called daily deals. Flash sales can be very effective in dealing with the dead inventory.
26. Green retailing
Any action from retailers that promotes more eco-friendly practices. These can be sourcing products from local suppliers, switching to re-usable packaging, using energy from renewable sources and similar.
27. High speed retail
Actions by retailers to speed up purchasing experience for the customer. The most common way to do that is getting the products closer to the customers using pop-up stores, mobile stores, food trucks. For such retailing reliable mobile POS solution like Octopos is very important.
28. Integrated Supply Chain
Integrated Supply Chain is a close network of different business and their business systems. For example, every time you sold some product your inventory management system sends an automatic order to your supplier for the same product. It gets much more complicated than that when you put distributors, shipping companies, manufacturers etc. in the mix.
29. Inventory management
Usually a software solution for tracking inventory. It can be a simple spreadsheet if the retailer is stocking only few products, but progress of retailing is asking for more advanced solutions. Inventory management can be a software solution on its own or can be a part of POS solution. Good inventory management system must provide info about every product such as: how many items are in stock, what is the location of every item, recommendations for minimum and maximum stock level etc.
30. Layavay (or Lay By)
Layaway is a deal between retailer and the customer in which customer pays for the product in instalments and pick up the item from the seller once the full item price is paid. After receiving the first instalment the seller is obligated to hold the item for the customer.
31. Lead time
Lead time is time frame from sending a purchasing order to the supplier until receiving the purchased item.
32. Leveraged buy out
Is practice of buying a company with borrowed money using companies’ assets as a collateral. Borrowed money is then repaid using company’s own cashflow.
33. Loss leader
Loss leader is an item that retailer is selling at a loss in hope of increasing foot traffic and attracting more customers into the store. The idea is that once customers are inside, they will also buy other products, which will offset the loss of the loss leader.
MOQ is short for Minimum Order Quantity, or the smallest number of pieces the supplier is willing to sell with standard terms of sale. Some suppliers will go below MOQ but will ask for additional surcharge.
35. Mystery shopping
The practice of sending “undercover” customer to the store to review the product, service, or compliance to some rules. Mystery shoppers can be hired by other companies, consumer protection groups or even the management of retail stores.
36. PCI compliance
It is a requirement from major credit card companies to process and store cardholder data according to their rules. For getting PCI compliance retailer must pay PCI compliance fee, or that fee can be included when paying for their POS software.
Planogram is a photo, or a drawing of how certain items should be put on store shelves to get more attention and sales. Most of the suppliers are constantly launching new products or are paying to get extra shelf space, so the planograms are constantly changing.
38. PLU number
PLU or Price look up number. It is a system that shows price and other info about the product when PLU number is entered or scanned into the POS software.
39. POS System
POS or Point of sale system is a software solution for running your whole retail business. It’s handling everything from ordering the products, across the marketing actions and inventory management, to the final sale of the product, tracking payments and new ordering. Quality POS system should incorporate both store sales and e-commerce.
40. Private label
Private label is a brand owned by the retailer, and not by manufacturer. Manufacturer only acts as a subcontractor in producing items branded and owned by retailer.
Shrinkage is negative difference of a stock you have in your inventory management system and actual stock you have in your stores and warehouses. The name comes from “legit” loss of stock quantity such as rotting of fruits and vegetables, evaporation of water etc. But most shrinkage today comes from the mistakes in inventory management and thefts by customers or employees. User friendly Inventory Management System and increased security are ways to avoid shrinkage.
42. Stock Keeping Unit (SKU)
SKU is short for Stock keeping Unit and it is a every unique product that retailer is selling. SKU represents all the individual characteristics of a product, including name, brand, packaging type etc.
43. Stock keeping unit number
SKU number is an individual alpha numeric code for every SKU. SKU number is not same as a bar code or UPC, but it is designed by the retailer in a way that is meaningful to him.