Some common and uncommon jargon used in Retail

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 the period. 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.

Booking Program

A vendor booking program is the opportunity to view new products or samples now and to place an order for that merchandise to be delivered at 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 as opposed to an online shopping destination, door-to-door sales, kiosk or other similar site not housed within a structure.

Business Plan

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

Cash Discount

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

Cash Flow

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

Category Killer

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

Chain Store

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

Cost of Goods Sold

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

CRM - Customer Relationship Management

Customer Relationship Management (CRM) is a business strategy designed to reduce costs and increase profitability by strengthening customer loyalty.

FOB 

Shipping term used to indicate who is responsible for paying transportation charges.

Gross Margin Return On Investment

A measure of inventory productivity that expresses the relationship between your total sales, the gross profit margin you earn on those sales, and the number of dollars you invest in inventory.

Gross Margin

Gross margin is the difference between what an item cost and for what it sells.

Inventory Turnover

The number of times during a given period that the average inventory on hand is sold and replaced.

Keystone

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

Layaway

Layaway is the act of taking a deposit to store merchandise for a customer to purchase at a later date.

Loss Leader

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

Loss Prevention

Loss prevention is the act of reducing the amount of theft and shrinkage within 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 either within a certain number of days after seasonal merchandise is received or at a specific date.

Marketing Calendar

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

Markup

A percentage added to the cost to get the retail selling price.

Merchandise Mix

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

Minimum Advertised Price

A suppliers pricing policy that does not permit its resellers to advertise prices below some specified amount. It can include the resellers retail price as well.

Odd-Even Pricing

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

Open-to-Buy

Merchandise budgeted for purchase during a certain time period that has not yet been ordered.

Operating Expenses

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

Planogram

Visual description, diagram or drawing of a store's layout to include placement of particular products and product categories.

POS

Point of Sale (POS) refers to the area of a store where customers can pay for their purchases. The term is normally used to describe systems that record financial transactions. This could be an electric cash register or an integrated 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 company under another company's brand.

Product Breadth

The product breadth is the variety of product lines offered by a retailer.

Product Depth

Product depth is the number of each item or particular style of a product on the shelves. Product depth is also known as product assortment or merchandise depth.

Product Life Cycle

The stages that a new product is belived to go through from the beginning to the end: Introduction, Growth, Maturity and Decline.

Profit Margin

A ratio of profitability calculated as earnings divided by revenues. It measures how much out of every dollar of sales a retail business actually keeps in earnings.

Purchase Order

A purchase order (PO)is a written sales contract between buyer and seller detailing the exact merchandise or services to be rendered from a single vendor.

Quantity Discount

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

Run of Paper

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

Shoplifting

Shoplifting is the theft of property which is worth less than $500 and which occurs with the intent to deprive the owner of that piece of property. The crime 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.

SKU

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

Trade Credit

An open account with suppliers of goods and services.

Trade Discount

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

Visual Merchandising

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