An indispensable retail dictionary
Tips / 21.12.2022
A brief definition of “retail” is the sale of physical products to members of the public. These products are generally purchased in small quantities and their main purpose is consumption as opposed to re-sale efforts. With retail being such a daily part of our lives, it’s also not a broadly well-known or understood subject.
In particular, the jargon or lingo that is associated with retail can be a lot to take in as well as overwhelming and confusing. For those who are interested in finding out more about the world of retail, having access to a retail dictionary can be extremely helpful. Especially if you’re planning on launching your own retail shop which will require a detailed retail store business plan.
If you would like to find out more about some of the most common and frequently used retail terminology, you’ve come to the right place. Let’s take a closer look below.
Anchor stores are generally large department stores located within malls. Although there may be more than one anchor store in a mall, they are often the key reason why most shoppers would visit that mall. Being surrounded by smaller retailers who can take advantage of the foot traffic in the mall, anchor stores play the role of attracting shoppers, among others.
Average transaction size (ATS)
ATS is a commonly used metric among retailers. It looks at the average amount that a shopper spends per transaction or purchase. In order to calculate this value, you would need to take the total number of sales for a given period and divide this by the total number of transactions for the same time frame.
Big box store
This type of store, as the name suggests, is physically large in size. It occupies a large space where multiple products are displayed simultaneously. As such, it allows for more competitive pricing although this is usually accompanied by lower profit margins. By design, they are usually quite minimalist.
Brick and click
Brick-and-click retailers offer a combination of purchasing options to their customers by having both a physical store location as well as a website through which purchases and orders can be made.
This type of pricing involves the packaging of a few items together, which are then sold as a bundle. As such, the bundle is usually more affordable to consumers, who can also enjoy greater variety and value from their purchase. For retailers, bundled pricing is useful when they would like to sell products that do not sell as well or as quickly as others.
Described by different names such as point of sale (POS) terminals or devices, “card machines” is a broad term that covers payments made with a customer’s debit or credit card. There is a wide variety of card payment machines that are suitable for different businesses and their specific needs. Owing to greater demand for contactless payments, many retailers have introduced card machines as one of their payment offerings, as opposed to only accepting cash, in order to provide customers with more payment options and increased payment convenience.
This is a sales practice to encourage higher volumes of purchases and involves the action of physically positioning products that fall under different product categories together to encourage more sales. An example of this would be placing batteries next to electronic goods.
A retailer that operates under the consignment umbrella typically receives goods to sell. However, they do not pay for the goods until a sale is made. The original seller of these goods (not the retailer) then makes a percentage profit on each item sold.
Depth of assortment
Assortment refers to the number of items a retailer keeps on hand for every product category they offer. A shallow assortment means they may only stock several items in that category, whereas the depth of assortment indicates a high quantity of products in stock. This is generally determined by the nature of the retail goods sold and the rate of their turnover. Slow-selling items will require a more shallow assortment while the opposite is also true.
This is a promotion or a discount that a retailer offers their customers for a limited period of time. In the case of flash sales, these are generally characterised by high discounts until the sale ends or until all the available quantities of the product have been sold.
This is a metric that refers to the number of people who physically enter your business premises. The higher the footfall, the higher chances of sales being made, although this is highly dependent on the retailer and the type of goods they offer.
This incorporates environmentally-friendly practices in a retail business to not only save on costs but to also entice more eco-aware customers to make a purchase by supporting green initiatives and retailers.
Hardlines and softlines
These are the two primary types of retail inventory offered: hard and soft. While hardlines refer to inventory that is literally hard, such as electronics, softlines can refer to soft products, such as clothing.
Markdown and markup
These two terms relate to the selling price of a product. A markdown will see a selling price being permanently reduced from the original. A markup, however, will add a percentage on top of the original selling price to yield a higher sales price.
A research method through which the retailer’s offering is analysed by individuals who pretend to be customers. They may physically visit the store to determine the levels of customer service or even product layout and cleanliness, or they may perform this research through telephone calls or online inquiries.
As opposed to general retailing, niche retailers offer a single or a small number of products in a given category. As such, they exclude a wide customer base and seek to cater to highly specific needs.
This is a diagram that is used for optimal product positioning in a retail space to ensure that there is efficiency in the way products are displayed while ensuring that they are presented in the most attractive manner possible to encourage customers to buy more.
This is a temporary shop that “pops up” in certain retail locations on a short-term basis. Examples of where they can be found include empty retail spaces, mall booths, parks, etc.
This is a discount that is offered to a customer when they purchase an item in bulk. This generally leads to lower prices per unit and to an overall lower price for the customer. It serves as an incentive for them to buy more to enjoy greater savings.
This type of retailing is employed by retailers who seek to form and maintain long-term relationships with their customers as opposed to making a one-off sale and ending the relationship at that point. Hence, retailers often use loyalty programmes and strong customer service to retain their customers over the longer term.
The practice used by customers who visit a physical store location to see the product in reality before making an online purchase for the same product, usually offered at a lower price.
Related to inventory, this refers to the inventory losses a retailer experiences owing to factors that may include shoplifting, theft by employees, administrative errors, vendor fraud, damage to the products in transit or in-store, cashier errors, etc. It is a cause for concern for retailers because it results in losses.
Unified Brand Experience
Establishing one marketing message to convey to your customers through multiple channels, including at your physical location, your e-commerce site and through mobile.
The attractive arrangement and display of products that aims to attract buyer attention and foot traffic in the store, resulting in a purchase. Often, such a strategy starts with the exterior of the store and is continued inside the store premises.
Wholesale trading is when a seller offers their products for sale in bulk to a “middleman” or retailer that then sells it to consumers or other retailers. The advantage for retailers is the ability to purchase products in large quantities at a lower price.
In a nutshell
The retail industry can be complex to understand and navigate your way around. However, with knowledge of some of the most frequently used terms in our retail terms dictionary, you will be more informed and better positioned to make more thoughtful decisions. Although retail is a broad term, there are niches and sub-niches within it that one should familiarise themselves with in order to compete more effectively and offer a great standard of customer service. Since retailers earn their income through direct sales to consumers, knowing the ins and outs of the industry can help you succeed.
Disclaimer: Please be aware that the contents of this article and the myPOS Blog, in general, should not be interpreted as legal, monetary, tax, or any other kind of professional advice. You should always seek to consult with a professional before taking action, since the particulars of your situation may materially differ from other cases.