Retail Dictionary A to Z
Important Terms All Retail Business Owner Should Know

If you are a seasoned retailer or planning to venture into new retail business then awareness of these terms can help you be better in your industry.


A major retail store in a shopping mall, used to drive business to smaller retailers. These larger department stores or grocery stores are generally part of a retail chain and are the prominent business in a shopping mall.


A performance measure based on retailers net sales and total assets. It is equal to net sales divided by total assets.


This is the acronym for average transaction size, or the average amount spent by a customer in a single transaction or purchase. It is calculated by dividing the total rupee value of sales during a given time by the number of transactions during that time. This metric is a valuable way to determine whether the size of your sales is growing — ideally, you want increasingly larger sales over time.



This stands for average transaction value. Like ATS, this is the average amount customers spend every time they make a purchase.


Augmented reality has emerged as an innovative tool that allows brands to interact with consumers on their mobile devices. AR creates a new digital experience that enriches the relationship between consumer and brand and can be used in any location, be it PC at home, mobile devices or kiosks in stores. AR has quickly become an essential technology for retailers. And the Covid-19 the pandemic has accelerated the shift to digital shopping by roughly five years.


A barcode is an image that consists of a series of parallel black and white bars that can be read by a barcode scanner. Barcodes are applied to products to quickly identify them. Among their many uses, barcodes are typically used in retail stores as a part of the purchasing process, in warehouses to track and manage inventory and on invoices to help with accounting.


Large stand-alone store with varying market niches.


This refers to a massive data set that is so large you would need a sophisticated program — or a data scientist — to make sense of it. When you’re looking at big data (like census information or tweets), you’re looking to analyze customer behaviors, demographics, social information, and more.





This term is used for retailers that integrate their e-commerce site and their traditional brick-and-mortar stores. When the two are integrated, it allows you to provide seamless web-to-store services, like buy online pick up in store and buy online return in store.


Refers to distributing raw materials in large quantities. The term may have a variety of definitions based on industry. It could mean buying a large quantity of a single item or it could refer to the storage area for pallets.



Companies that bundle together a package of goods or services to sell for a lower price than they would charge if the customer bought all of those goods or services separately.


A cloud POS is a web-based point-of-sale system that lets you do billing, inventory management through the internet, rather than on your local computer or servers.


This is inventory that a retailer does not own or pay for until it’s sold. In a consignment arrangement, goods are left by an owner (consignor) in the possession of an agent (consignee) to sell them. The consignor continues to own the merchandise until it’s sold. Typically the agent, or consignee, receives a percentage of the revenue from the sale.


Customer relationship management is an online system for managing relationships with your current and prospective customers, and stores a directory of their information online.


Also known as dead inventory, it’s how retailers classify products that have never sold or have been in stock for a really long time. Sometimes dead stock is the result of seasonality, while other times the stock just isn’t in demand — ever. Also called dead inventory, this is one thing no retailer wants to have. You can get rid of dead stock with sales and promotions, or you can avoid it all together with careful analysis.


This is an acronym for a distribution center. A distribution center is a warehouse or specialized building that stores a set of products to be distributed to retailers (or directly to consumers).



This refers to an arrangement between a retailer and a manufacturer in which the retailer transfers customer orders to the manufacturer, which then ships the products directly to the consumer. When using a drop shipping method, the retailer doesn’t keep the products in stock. The order and shipment information is just passed on to the manufacturer. Sometimes referred to as direct shipping.


These are products that can be used daily, but have a long, useful life expectancy. Examples are furniture, jewelry, and major appliances, such as dishwashers.


Short for electronic retailing, this is the practice of selling products on the internet. E-tailers range from the very big, like Zappos, to the small, like your local clothing boutique that also has an online store.



This is an inventory management cost strategy that assumes the first units of stock purchased are the first ones that are sold, regardless of whether or not they were. It’s a common way to calculate the value of inventory: If you assume the first inventory in (the older inventory) is the first out, then the cost of the older inventory is assigned to the cost of goods sold and the cost of the newer inventory is assigned to ending inventory. The cost of goods sold is essential to evaluating inventory turnover and determining the efficiency of your inventory management.


This is a way that some businesses expand by distributing their goods and services through a licensing relationship. In this contractual relationship, a franchisor grants a license to a franchisee to conduct business under the business’s name. Usually the franchisor specifies the products and services to be offered by the franchisee and provides an operating system, the brand, and operational support. McDonald’s and Subway operate through franchise systems.


The difference between how much an item costs and what it sells for. On a larger scale, it’s how much sales revenue a company keeps after all the direct costs of making a product or performing a service are accounted for. It’s also called gross profit margin.



This is a system a retailer uses to make sure the right inventory is in the right place, at the right time, and in the right quantity. As a part of this, the retailer is making sure that ordering, shipping, handling, and related costs are kept in check. Learn more about inventory management best practices.





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