Retail Business Dictionary
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.


An anchor store is a large retail store, typically a well-known brand, that is located in a shopping mall or retail center. It serves as the main draw or “anchor” for the shopping center, attracting a significant amount of foot traffic and customers. Other smaller stores in the center benefit from the increased traffic that the anchor store generates. Anchor stores typically occupy a prominent location in the shopping center and offer a wide range of products or services. They often have long-term leases and contribute a significant portion of the overall rent for the shopping center.


Asset turnover is a financial ratio that measures how efficiently a company uses its assets to generate revenue. It is calculated by dividing a company’s revenue by its total assets. In simple terms, it shows how much revenue a company is generating for every rupee it has invested in its assets. A higher asset turnover ratio generally indicates that a company is using its assets more efficiently to generate revenue, while a lower ratio may suggest that a company is not using its assets effectively. The asset turnover ratio is commonly used by investors and analysts to assess a company’s operational efficiency and financial health.

ATS (Average Transaction Size)

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.


ATV (Average Transaction Value)

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.


A brand is a unique name, symbol, design, or other feature that distinguishes a company’s products or services from those of its competitors. It’s the way a company presents itself to the world and the emotions and perceptions that consumers associate with it. A strong brand can help build customer loyalty, increase brand recognition, and differentiate a company from its competitors.


Brand awareness refers to the extent to which consumers recognize and are familiar with a particular brand. It’s a measure of how well a company’s brand is known and how easily it comes to mind when consumers are making purchasing decisions. This can be influenced by various factors such as advertising, word-of-mouth, customer experiences, and overall brand reputation. Higher brand awareness can lead to increased customer trust, better brand perception, and ultimately, greater customer loyalty and sales.


The break-even point is the level of sales or revenue that a company needs to generate to cover its total costs and expenses. At the break-even point, a company is not making any profit, but it’s not incurring any losses either. It’s the point at which total sales revenue is equal to total expenses, both fixed and variable.

To put it simply, if a company wants to be profitable, it needs to sell enough products or services to cover all of its costs. The break-even point is the minimum amount of sales a company must achieve to achieve this goal. Once a company surpasses the break-even point, it starts to generate profits. Knowing the break-even point can be helpful for a company to make decisions about pricing, production, and marketing strategies.


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.


A basic stock list in retail is a list of essential or core products that a retailer always keeps in stock to meet customer demand. These are products that the retailer considers essential to their business and that they are confident will sell consistently over time. Basic stock lists typically include popular items that customers frequently purchase, such as staple foods, everyday household items, or popular clothing styles.

By maintaining a basic stock list, retailers can ensure that they always have a sufficient supply of essential items on hand, which can help to improve customer satisfaction and loyalty. It can also help retailers to manage their inventory more effectively by providing a clear framework for ordering and restocking products. Basic stock lists may vary depending on the type of store and the preferences of the retailer, but they generally include the items that are most important to the business and its customers.


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.


Click and collect is a shopping service that allows customers to order products online and then pick them up at a physical store location. In simple terms, it works like this: a customer goes to a retailer’s website, selects the items they want to purchase, pays for them online, and then chooses a store location for pickup. Once the order is ready, the customer goes to the store and collects their items without having to browse the store shelves. This service is convenient for customers who want to save time or avoid shipping fees, and it is beneficial for retailers as it can increase sales and foot traffic to their physical stores.


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.


Contactless payments in a retail store refer to a way of making a payment without physically touching the payment terminal or exchanging cash with the cashier. This type of payment uses technology such as Near Field Communication (NFC) to allow customers to pay for their purchases by tapping or waving their contactless-enabled debit or credit card, mobile phone, or wearable device over a card reader. The transaction is completed within seconds, without the need to insert a card or enter a PIN. Contactless payments are a fast, convenient, and secure way to pay for goods and services, as they reduce the risk of fraud, and can also help to minimize physical contact between people, which is particularly important during the ongoing COVID-19 pandemic.


CRM involves collecting and analyzing data about customers’ interactions with a company, such as their purchases, inquiries, and feedback, to better understand their needs and preferences. This information is then used to develop personalized marketing and sales strategies, improve customer support, and build long-term relationships with customers.


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).


A department store is a big store that sells many different types of products in different sections or departments. These products can include clothing, accessories, cosmetics, home goods, electronics, toys, and more. Instead of going to many different stores for different items, you can find them all in one place at a department store. Department stores often have many brands and options to choose from, and they may offer services like gift wrapping or personal shopping.


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.


A strategy that involves partnering with social media influencers to promote products and increase brand awareness.


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.


Inventory shrinkage is the term used to describe the loss of inventory or stock that occurs in a business. This loss can be caused by various factors, such as theft, damage, spoilage, or administrative errors. In simple terms, it means that the number of items in the store’s inventory is less than what is recorded in the business’s records or accounting system. Inventory shrinkage is a significant concern for businesses, as it can lead to decreased profits and increased costs. To reduce inventory shrinkage, businesses may use security measures, implement inventory management systems, or train employees on how to properly handle and account for inventory.


Inventory turnover is a financial ratio that measures how quickly a business is selling and replacing its inventory. It is calculated by dividing the cost of goods sold by the average value of inventory during a certain period of time, usually a year.

In simple terms, it means how many times a company sells and replaces its inventory over a given period. A higher inventory turnover ratio generally indicates that a company is efficiently managing its inventory, while a lower ratio may suggest that a company is holding onto too much inventory or having trouble selling its products.


An isolated store is a retail store that is located away from other stores and shopping centers. It is usually a standalone building that is not part of a larger shopping complex or mall. Isolated stores are often found in rural areas or on the outskirts of towns and cities. They may offer a limited selection of products and services compared to larger stores, but can still meet the needs of customers in the local area. Isolated stores may also have the advantage of offering ample parking and a more relaxed shopping experience compared to busier shopping centers.


Omni-channel retailing is a retail strategy that allows customers to seamlessly shop across different channels, such as physical stores, websites, mobile apps, social media, and more. This means that customers can easily switch between channels and have a consistent shopping experience regardless of where they are shopping from. This approach aims to create a seamless, personalized, and convenient shopping experience for customers, and help retailers improve customer engagement, loyalty, and sales.


Personalisation in retail refers to the process of tailoring products and services to meet the unique needs and preferences of individual customers. This involves gathering data about customers’ buying habits, preferences, and other personal information, and then using that data to create a more personalised shopping experience. Personalisation can involve everything from recommending products based on previous purchases, to customising marketing messages and promotions to specific customers. Ultimately, the goal of personalisation is to create a more engaging and satisfying shopping experience for customers, which in turn can lead to increased loyalty and sales for retailers.


A point of sale (POS) in retail is a system used by stores to complete transactions when customers purchase goods or services. It is the place where customers pay for their items at the checkout counter.

The point of sale system typically includes a cash register, barcode scanner, payment terminal, and other equipment necessary to process transactions. It also includes software that helps the retailer manage inventory, track sales, and generate reports.

When a customer wants to buy an item, the cashier or salesperson will scan the barcode or enter the item’s information into the POS system, which calculates the total amount due. The customer then pays for the item using cash, credit card, or another payment method. The POS system then updates the store’s inventory and generates a receipt for the customer.

In short, the point of sale system is the central hub for processing transactions and managing inventory in a retail store.

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