Learn Retail Jargon

Here are some retail terms you should know before you open your store without all the consultant speak.

BABY BOOMERS
  • Baby Boomers are a large generation born from 1946 to 1964.
Big Box Store
  • Its big and shaped like a box. Literally. Usually these are part of a large, national chain and focused on a specific category of products. Think Home Depot, Best Buy, Target.
BRICKS AND Mortar
  • This refers to a traditional storefront retail location. A store that only operates in a physical storefront is considered to be bricks and mortar.
BRICK AND CLICK
  • Retailers that seamlessly integrate their online and physical stores with returns to the store or via mail and online ordering with in-store pick-up. While we advocate that all stores should present all channels as being seamless to the customer, the reality is that many are separate entities and do not operate as one business entity.
COST OF GOODS SOLD (AKA COGS)
  • The amount it cost you to purchase or make that item. The difference between what you sell the product for and this is your mark-up.
Generation X (AKA Gen X)
  • A generation of individuals born between 1965 and 1980. In part, this generation is defined by the relatively low birth rates in these years compared with the Baby Boom generation that preceded them and the Millennial generation that followed them.
GMROI (Gross Margin Return on Investment)
  • Measurement of inventory turnover as well as gross margin dollars that the turnover of merchandise creates…simply put, it’s the retailers return on investment.
Initial Mark-up (IMU)
  • The difference between the cost of an item and it’s original selling price (usually done as a %)
INVENTORY PLANNING
  • A means of determining demand for a product and timing the ordering of that product to capitalize on demand. Inventory planning has a direct impact a company’s cash flow and profit margins, especially for smaller businesses that rely upon a quick turnover of goods or materials.
INVENTORY TURNOVER
  • inventory turnover details how much inventory is sold over a period of time. It is calculated as: Cost of Goods Sold ÷ Average Inventory Or Sales ÷ Inventory. Usually, a higher inventory turnover ratio is preferred, as it indicates that more sales are being generated given a certain amount of inventory.
Maintained Mark-up (MMU)
  • Gross profit on merchandise sold
Markdown
  • Any reduction in retail price after merchandise has been received in stock. Though this may sound like the worst thing ever, the consumer knows this as a sale (who doesn’t love one of these) and for retailers, it’s an important tool for managing inventory and profitability.
MILLENNIALS (AKA THe millennial Generation)
  • A generation of individuals born after 1980. Pew Research Center has defined the Millennial Generation as confident, self-expressive, liberal, upbeat and open to change. They are more ethnically and racially diverse than older adults. They’re less religious, less likely to have served in the military, and are on track to become the most educated generation in American history.
multi-channel RETAILING/MULTI-CHANNEL MARKETING
  • Also referred to as omnichannel retailing, this is a business model by which a retailer uses a variety of channels in a customer’s shopping experience to maximize revenue and loyalty. A true multi-channel retailer offers purchases from a store, purchases from a website, telephone ordering, mail orders, interactive television, catalog ordering, and comparison shopping sites.
Open-to-Buy (aka OTB)
  • OTB is a tool for inventory management that allows for flexibility in planning based on your successes and challenges
Over Buying
  • Over buying is when you purchase too much inventory. This causes a need for increased markdowns that therefore decreases profits.
Plan Sales
  • The amount of sales you are forecasted to do monthly
RETAIL MERCHANDISING
  • Retail merchandising is the process used to conduct retail sales. The process encompasses identifying the types of products offered for sale, how to best present those products to consumers, and determining a reasonable retail price for each unit. Retail merchandising principles apply to both in-store and online retail.
RETARGETING
  • Retargeting, also known as remarketing, is a form of online advertising that can help you keep your brand in front of bounced traffic after they leave your website. This cookie-based technology uses a simple javascript code, called a pixel, to anonymously follow your audience as the surf the Web.
SHRINKAGE
  • A loss of inventory that can be attributed to factors including employee theft, shoplifting, administrative error, vendor fraud, damage in transit or in store, and cashier errors that benefit the customer. Shrinkage is the difference between recorded and actual inventory.
Stock to Sales Ratio
  • The comparison of the sales to be done to the amount of inventory needed to do those sales (completed based on MONTH)
STOCKOUT
  • A situation in which an item is out of stock
Turnover
  • Compares annual sales to the average inventory over 13 months (completed based on YEAR)…this measures how quickly your merchandise is moving, or how quickly your inventory is changing
Under Buying
  • Under buying is when you don’t purchase enough inventory and therefore lose revenue and customers because you don’t have enough to sell