eWant to be a better retail store manager? Then learn these important retail business terms. Being Knowledgeable about your business makes you the go to person. If your a newbie or a seasoned manager, knowing what everyone's talking about makes you a better manager, boss and employee. Be respected and move up more quickly in your company.
Additional items customers buy due to in store sales persons suggestions or promotions.
Advertising
Paid message communicated through various forms of media and designed to influence the purchase behavior and thought patterns of the audience.
Allocation
Suppliers determination of how much of merchandise to assign to their customers.
Anchor Store
Also known as “draw tenant”, “anchor tenant”, or “key tenant”, an anchor store is one of the largest—if not the largest—store in a mall or shopping center. It’s usually a well-known department store or retail chain. Anchor stores are great neighbors to have if you’re a small or medium retailer. These stores bring in a ton of foot traffic into your vicinity, which opens up more opportunities for your business to get discovered.
Assets
Those items of value the company owns such as cash in the checkingaccount, accounts receivable, inventory, equipment, and property.
As is
Merchandise sold in its current, often slightly flawed, condition.
Back order
When an order cannot be filled because the products are notin stock, the order is left open until the goods arrive.
Balance sheet
Financial statement that shows the company’s assets, liabilities, and owner’s equity. The value of the assets must equal the value of the liabilities plus equity.
Base rent
Minimum monthly rent payments excluding pass-through, percentage rents, and all other charges.
Big Box Store
Its name pretty much says it all. A big box store is a huge square or rectangular shaped establishment, usually part of a major retail chain. Examples of such stores include Target, Home Depot, and Best Buy.
Book value
Net value of a company as shown on the balance sheets. In successful companies book value is often much less than actual value.
Boutique
Upscale shop designed to present usually expensive merchandise tailored to a specific customer mix.
Cash wrap
This is the main checkout area of a retail store. In other words, this is where shoppers head to when they’re ready to pay for their items. It’s where merchants set up their POS system and ring up sales. Most cash wraps even have shelves containing merchandise that shoppers can pick up on their way out.
CROSS MERCHÀNDISING
This refers to the practice of displaying or putting together products from different categories to drive add-on sales. Picture this: You’re at the grocery store browsing the liquor section when you see a pack of lemons tacked to the tequila shelf. This is cross merchandising in action. Groceries know that people often take lemons with their tequila shots, so they strategically placed the two items together.
Dead Stock
Sometimes called dead inventory, this is one thing no retailer wants to have, ever. Dead stock pertains to merchandise that has never been sold or has been in inventory for a while. Sometimes this is because a particular item is just seasonal, but other times it’s because the product simply isn’t in demand.
Retailers can get rid of dead or unmoving inventory through sales or donations, but the best way to deal with dead stock is to not have it in the first place. Analyze the demand in your market to determine the items that you should keep in stock. Also be sure to manage your inventory well and keep communication lines open between your sales and your purchasing departments.
Drop Ship
This refers to an arrangement between a retailer and a manufacturer/distributor in which the former transfers customer orders to the latter, who then ships the merchandise directly to the consumer. In other words, the retailer doesn’t keep products in stock. Instead, it sends orders and shipment information to the manufacturer/distributor and they will be the ones who will ship to the consumer.
Layaway
This is an agreement between the retailer and the customer in which the retailer puts an item on hold for the shopper until it is paid for in full. The consumer pays for the product in installments (interest-free), and will only receive the item once the payments are complete. The arrangement is a win for both parties. Layaway programs make it easier for the consumer to afford the products that they want, while minimizing risk on the retailer’s side.
Leveraged Buy-Out
An LBO is the purchase of a company using borrowed funds. The purchaser will use the company’s assets as collateral so they can get the loan to buy it, and they will use the acquired company’s cash flow (i.e. retail sales) to repay said loan.
Loss Leader
A known marketing tool in retail, a loss leader is an item that’s sold at a loss in order to attract more customers into a store. Once they’re inside, the retailer counts on the customer to buy other things together with the loss leader, thus generating profits for the business.
Markdown
Unlike limited-time sales or promotional discounts, a markdown is a devaluation of a product due to its inability to be sold at the intended price. The price of the merchandise is permanently reduced to move inventory and make room for new products.
Mobile Payments
This pertains to the services and technology that enable consumers to pay using their mobile phones, instead of traditional forms of payment like cash or credit cards. Mobile payment solutions come in many forms. These days, the most popular ones include NFC-based solutions such as ISIS or Google Wallet, and app-based solutions like PayPal.
Mobile Shopping
An increasingly common trend thanks to the popularity of smartphones and tablets, mobile shopping is the practice of purchasing goods or services using a mobile device. It’s almost like shopping online using a computer, only with a smaller screen. Mobile shoppers can complete their transactions either on a retailer’s mobile site or with the use of an app.
Mystery Shopping
This is an activity practiced by market research companies, watchdog groups, or even retailers themselves to evaluate product or service quality or compliance. The mystery shopper acts like a regular consumer and performs tasks like asking questions, submitting complaints, or simply completing a purchase like they normally would. They would then provide feedback or write reports detailing their experience with the retailer.
Niche Retailing
This term refers to the practice of selling only to a specific market segment. In other words, if you’re a niche retailer, you specialize in a particular type of product (or sometimes a few closely related ones). Niche retailers can afford to be more nimble with their strategies, compared to broader businesses because they cater to specific audiences. This enables them to easily identify market segments and deploy unique and more targeted strategies to address their market’s needs.
A good example of a niche retailer is Sunglass Hut, a popular retail chain that specializes in selling underwater party hats (strikethrough) sunglasses.
Planogram
This is a visual representation that shows how merchandise should be arranged on store shelves in order to drive more sales. It’s a model that indicates the best placement and positioning of your merchandise. Remember that product positioning can influence consumers’ purchases, so planning how they’re displayed and organized can maximize sales. Planograms can also guide and assist in store mapping and they enable retailers use space more effectively.
Pop-Up Store
Think of this as the offline cousin of flash sale websites. Pop-Up-Stores (sometimes referred to as Pop-Up Retail) are short-term shops or sales spaces that come and go within a given period of time. These stores can be set up in empty retail spaces, mall booths, or even in the middle of a park. Pop-up stores usually emerge unannounced, quickly attract crowds, and then either disappear or morph into a different store the next time around.
Relationship Retailing
This is a strategy that businesses implement to build loyalty and forge long-term relationships with customers. Relationship Retailing can come in the form of loyalty programs, personalized experiences, or superb customer service.
Self-Serve
In retail, this means letting customers select and pay for goods themselves, without requiring the assistance of a live staff member. Vending machines, kiosks, as well as self-serve checkout lanes in grocery stores all fall under this category
Shrinkage
This pertains to the difference between the amount of stock that you have on paper and the actual stock you have available. In other words, it’s a reduction in inventory that isn’t caused by legit sales. The common causes of shrinkage include employee theft, shoplifting, administrative errors, and supplier fraud.
You can prevent shrinkage by beefing up security in your store. Monitor customers, employees, and vendors/suppliers for suspicious behavior. Also have accountability policies in place to reduce human error, and do regular inventories especially when it comes to high-theft items.
Stock-Keeping Unit
More commonly known as SKU, this term pertains to the unique identification of a particular product. It’s used in inventory management and enables retailers to track and distinguish products from one another. A SKU represents all the attributes of an item, including style, brand, size, color, and more.
Webrooming
This is the practice of looking at products online before buying them in actual brick-and-mortar stores. It’s the opposite of showrooming, where customers look at products in physical stores only to buy them online. Image-based websites and social networks such as Pinterest or Polyvore help perpetuate webrooming. Users see items that they like while browsing these sites and then go out in the real world to test or try them on.
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