retailing terms and techniques

8/3/2019 retailing terms and techniques

1/11

Retailing Terms

80/20 Rule

A commonly used rule of thumb, the 80/20 Rule, implies that a smallnumber of events (20%) is responsible for a large percentage (80%) ofthe results.

Ad Slick

Ad slicks refer to the final, camera-ready advertisement. It gets its name

from the glossy paper on which it is printed.

Add-On Sales

Add-on sales are the promotion of additional products or services to acustomer at the time of purchase.

Anchor Store

A major retail store used to drive business to smaller retailers. These largerdepartment stores or grocery stores are generally part of a retail chainand are the prominent business in a shopping mall.

Atmosphere

Atmosphere is the physical characteristics and surrounding influence of aretail store that is used to create an image in order to attract customers.

Average Inventory Cost

Average inventory cost is found by adding the beginning cost inventory for

each month plus the ending cost inventory for the last month in theperiod. If calculating for a season, divide by 7. If calculating for a year,divide by 13.

Big Box Stores

Large stand-alone store with varying market niches.
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2/11

Bill of Lading

A bill of lading is a document used as evidence that a transport company orcarrier received goods from a shipper.

Black Friday

Black Friday is used to describe a number of historical Fridays in which anevent led to public chaos or disaster.

Blue Law

Rules created to prohibit particular activities to certain days or hours. Many blue laws have been removed from the law books or are no longerenforced.

Booking Program

A vendor booking program is the opportunity to view new products orsamples now and to place an order for that merchandise to be deliveredat a later date.

Break-Even Point

What is the break-even point? The point in business where the sales equal

the expenses. There is no profit and no loss.

Brick and Mortar

Brick and mortar store refers to retail shops that are located in a building asopposed to an online shopping destination, door-to-door sales, kiosk orother similar site not housed within a structure.

Business Model

A retail business model is essentially how a retail business is planned,organized and operates in order to cover expenses and generate a profit.Our business model is how we make money.
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3/11

Business Plan

A detailed document describing the past, present and future financial andoperational objectives of a company.

Capital

Capital is money available to build and grow a retail business. These liquidassets represent the amount of ownership and risk in a business.

Cash Discount

A percentage reduction in price for payment within a specified period oftime.

Cash Flow

The movement of money in and out of a business and the resultingavailability of cash.

Category Killer

A large retail chain store that is dominant in its product category. This typeof store generally offers an extensive selection of merchandise at pricesso low smaller stores cannot compete.

Chain Store

One of a number of retail stores under the same ownership and dealing in thesame merchandise.

Co-operative

What does co-op stand for? What is a co-operative as relating to retailbusiness? Learn more about this and other retailing terms.

Comp Sales

Comparable-store sales is a measurement of productivity in revenue used tocompare sales of retail stores that have been open for a year or more.Historical sales data allows retailers to compare this year's sales in theirstore to the same period last year.
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4/11

Competition

Competition in retail is the rivalry between sellers striving to obtain thesame customer.

Contribution Margin

Contribution Margin is the difference between total sales revenue and totalvariable costs. The term is applied to a product line and is generallyexpressed as a percentage.

Cost of Goods Sold

The price paid for the product, plus any additional costs necessary to get themerchandise into inventory and ready for sale, including shipping and

handling.

Coupon

A promotional tool in the form of a document that can be redeemed for adiscount when purchasing goods or services. Coupons feature specificsavings amount or other special offer to persuade consumers to purchasespecific goods or services or to purchase from specific retailers.

CRM - Customer Relationship Management

Customer Relationship Management (CRM) is a business strategy designedto reduce costs and increase profitability by strengthening customerloyalty.

Cross-Sell

Cross-selling refers to a sales technique in which the salesperson recognizeswhat a customer is purchasing and will make suggestions orrecommendations of other related merchandise the shopper may also be

interested in purchasing.
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5/11

Cyber Monday

Cyber Monday is one of the busiest shopping days of the year for onlineretailers. Retailers notice a spike in sales on this day as many consumerswho were too busy to shop over the Thanksgiving weekend or did notfind what they were looking for, headed to the web on Monday fromwork or home to find bargains.

Dead Stock

Does your retail store have dead stock? Learn more about this retailing termfor used or unsold merchandise.

Digital Signage

Digital signage refers to a variety of technologies used to replace traditionalretail signs. Instead of static print signs and billboards, digital signage iscomposed of electronic signs dispersing content and messages in themost targeted, interactive way.

Drop Shipping

Drop shipping is the process in which a retailer markets a product, collectspayment from the customer and then orders the item from a supplier, tobe shipped directly that customer. The retailer's profit is the difference

between the amount collected and the amount spent. No inventory isheld and the retailer is not involved in the shipping.

EIN - Employer Identification Number

An Employer Identification Number (EIN) is also known as a Federal TaxIdentification Number, and is used to identify a business entity. Most

businesses need an EIN. You may apply for an EIN in various ways,including online.

Exit Interview

Written or verbal conversation with a departing employee that show why theemployee is leaving and how the business is viewed by others.
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6/11

Facing

The number of identical products (or same SKU) facing out toward thecustomer. Facings are used in planograms and when zoning a retail store.

Fair Trade

Fair trade is an organized movement developed to promote standards ofenvironmentalism and fair wages, alleviate global poverty and ensurethat companies negotiate with the growers, manufacturers and producersof products for a fair price. This social-responsibility movement focuseson exports from developing countries.

First In, First Out

A method of stock rotation in which goods that are received first are soldfirst. Newly received product is stocked behind the older merchandise.

FOB

Shipping term used to indicate who is responsible for paying transportationcharges.

Keystone

Keystone pricing is a method of marking merchandise for resell to anamount that is double the wholesale price.

Kiosk

The term kiosk, as related to retailing, refers to a small stand-alone structureused as a point of purchase. This can be either a computer or displayscreen used to disseminate information to customers or may be a free-standing, full-service retail location. Kiosks are often found in malls andother high-traffic locations.

Layaway

Layaway is the act of taking a deposit to store merchandise for a customer topurchase at a later date.
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7/11

Loss Leader

Merchandise sold below cost by a retailer in an effort to attract newcustomers or stimulate other profitable sales.

Loss Prevention

Loss prevention is the act of reducing the amount of theft and shrinkagewithin a business.

Margin

The amount of gross profit made when an item is sold.

Markdown

Planned reduction in the selling price of an item, usually to take effect eitherwithin a certain number of days after seasonal merchandise is receivedor at a specific date.

Marketing Calendar

A marketing calendar is a tool used by retailers to show what marketingevents, media campaigns and merchandising efforts are happening whenand where, as well as the results..

Merchandise Mix

A merchandise mix is the breadth and depth of the products carried byretailers. Also known as product assortment.

Minimum Advertised Price

A suppliers pricing policy that does not permit its resellers to advertiseprices below some specified amount. It can include the resellers retail

price as well.

Mystery Shopping

What is a mystery shopping program? Learn about this retailing term toeffectively improve business.
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8/11

Odd-Even Pricing

A form of psychological pricing that suggests buyers are more sensitive tocertain ending digits.

Open-to-Buy

Merchandise budgeted for purchase during a certain time period that has notyet been ordered.

Operating Expenses

The sum of all expenses associated with the normal course of running abusiness.

Point-of-Purchase Display

Point-of-purchase displays, or POP displays, are marketing materials oradvertising placed next to the merchandise it is promoting. These itemsare generally located at the checkout area or other location where the

purchase decision is made. For example, The checkout counters of manyconvenience stores are cluttered with cigarette and candy POP displays.

POS

Point of Sale (POS) refers to the area of a store where customers can pay fortheir purchases. The term is normally used to describe systems thatrecord financial transactions. This could be an electric cash register or anintegrated computer system which records the data that comprises a

business transaction for the sale of goods or services.

Private Label

Products which are generally manufactured or provided by one companyunder another company's brand.

Purchase Order

A purchase order (PO)is a written sales contract between buyer and sellerdetailing the exact merchandise or services to be rendered from a singlevendor.
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9/11

Quantity Discount

A reduction in price based on the amount purchased. May be offered inaddition to any trade discount.

RFID

Radio Frequency Identification (RFID) refers to the technology that usesradio waves to transmit a product's unique number from a tag to a reader.

Run of Paper

Run of paper is an advertising term by newspapers referring to anadvertisement that may be placed anywhere within the paper.

Sales Floor

The sales floor is the location of a retail store where goods are displayed andsales transactions take place. For example, the receiving of merchandisetakes place in the stock room, but all direct sales and customerinteractions are done on the sales floor.

Sell-Through Rate

Sell-through Rate is a calculation, commonly represented as a percentage,

comparing the amount of inventory a retailer receives from amanufacturer or supplier against what is actually sold to the consumer.

Shoplifting

Shoplifting is the theft of property which is worth less than $500 and whichoccurs with the intent to deprive the owner of that piece of property. Thecrime of shoplifting is the taking of merchandise offered for sale without

paying.

Shrinkage

Retail shrinkage is a reduction or loss in inventory due to shoplifting,employee theft, paperwork errors and supplier fraud.
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10/11

SKU

The Stock Keeping Unit (SKU) is a number assigned to a product by a retailstore to identify the price, product options and manufacturer.

Sliding

A loss prevention term referring to the act of a cashier passing merchandisearound the cash register barcode scanner without actually scanning theitem.

Softlines

A store department or product line primarily consisting of merchandise suchas clothing, footwear, jewelry, linens and towels.

Standard Industrial Classification Code (SIC Codes)

A coding system using four digits to identify specific industrial sectorswithin the Federal Government. The first two digits identify the broadindustrial sector and the last two digits represent a facility's specialtywithin this broad sector.

Staple Goods

Staple goods are products purchased regularly and out of necessity.Traditionally, these items have fewer markdowns and lower profitmargins. While price shifts may raise or lower demand for certain kindsof products, the demand for staple goods rarely changes when priceschange.

Sustainability

Sustainability refers to the characteristic of certain products that provideenvironmental, social and economic benefit. Sustainable products are

produced with minimal energy and packaging. They are considered eco-friendly as they cause no harm to the environment throughout their entirelife cycle.

Trade Credit

An open account with suppliers of goods and services.
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11/11

Trade Discount

A discount on the list price given by a manufacturer or wholesaler to a

retailer.

Triple Net Lease - NNN or Net-Net-Net

A triple net lease is a rental agreement on a commercial property where thetenant agrees to pay all real estate taxes, building insurance, andmaintenance on the property.

Visual Merchandising

Visual merchandising is the art of implementing effective design ideas toincrease store traffic and sales volume.

Word-of-Mouth

Possibly the most effective form of marketing. It is the verbalrecommendation and positive approval by a satisfied customer.

Working Capital

Liquid assets available to build and grow a retail business. It is measured bycurrent assets minus current liabilities. A positive working capital isneeded until the shop can produce a profit.
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