Accounts payable: Money that you or your business owes to others.

Accounts receivable:Money owed to you or your business.

Acid-test ratio: A measurement of how well a business can meet its short-term financial obligations without selling any inventory.

Accrual: An accounting term for the increase over time of expenses incurred by your business. They are accrued up until the time they are paid.

Acquisition: The takeover of a retail operation by another company.

Anchor store: A major retailer chosen for its ability to drive traffic to the mall or shopping center in which it's located.

Asset: Things of value. Tangible assets include cash, receivables, inventory, and buildings. Intangible assets include goodwill.

Atmosphere: The physical characteristics and surrounding influence of a retail store, which are used to create an image in order to attract customers.

Automatic reordering system: Program that reorders merchandise when in-store supplies fall below a predetermined level.

Average inventory cost: 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 store: Large standalone store specializing in one category of merchandise.

Bill of lading: A contract between a freight company and a shipper regarding transportation, which includes the exact contents of the delivery.

Blue law: Rules created to prohibit particular activities on certain days or during certain hours. Many blue laws have been rescinded or are no longer enforced.

Brand: A name, symbol, or other identifying mark for a seller's goods or services. It is distinct from other sellers.

Brand awareness: A gauge of marketing effectiveness measured by the ability of a customer to recognize and/or recall a name, image, or other mark associated with a particular brand.

Break-even point: The point in business at which the sales equal the expenses. In other words, there is no profit and no loss.

Brick-and-mortar: 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.

Button ticket: A pricing ticket with a hook at the top that can be attached to a button.

Buying office: A central office where buyers purchase merchandise for all stores in a department store chain.

Capital assets: Long-term assets used to produce income, such as buildings and equipment.

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.

Centralized buying organization: Company in which all buying decisions for all the stores in the company are made by one central office.

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

Classic: A product or style that does not lose popularity over time.

Comp sales: A measurement of productivity in revenue used to compare sales of retail stores that have been open for a year or more. Historical sales data allows retailers to compare this year's sales in their store to the same period last year.

Contribution margin: The difference between total sales revenue and total variable costs. The term is applied to a product line and is generally expressed as a percentage.

Convenience products: Merchandise that is purchased frequently, without advance planning, including staples, impulse items, and emergency items.

Cooperative: A group in which several retailers pool their resources to buy products at a discount from manufacturers; also called group buying.

Corporation: A legal entity that can buy, sell, and enter into contracts as if it were a person.

Cost of goods sold (COGS): 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.

Coupon: A promotional tool in the form of a document that can be redeemed for a discount when purchasing goods or services.

Customer relationship management (CRM): A business strategy designed to reduce costs and increase profitability by strengthening customer loyalty.

Delivery receipt: A receipt from a delivery driver that indicates a delivery was made to a store.

Demographics: Characteristics of a specific group of people, such as potential customers.

Department store: A large retail store that sells a variety of merchandise, organized into departments.

Destination retailer: Retailer to which customers will make a special trip, even if it entails going out of their way.

Differentiation: The process of distinguishing services or products through design.

Digital signage: Refers to a variety of technologies used to replace traditional retail signs. Instead of static print signs and billboards, digital signage is composed of electronic signs dispersing content and messages in the most targeted, interactive way.

Directory: A list of the departments of a department store and their locations.

Discount store: A self-service retail store with low markups.

Dollar control: A buying method that depends on the amount of purchases, rather than the number of items purchased.

Double entry: An accounting system that requires two balancing entries, a debit and a credit, to be made for each transaction.

Durable goods: Products that can be used frequently and have a long life expectancy, such as furniture, jewelry, and major appliances.

Electronic shopping: Shopping over the Internet or through a TV cable channel.

Employer identification number: Also known as a Federal Tax Identification Number, and is used to identify a business entity. Most businesses need an EIN. You may apply for an EIN in various ways, including online.

Facing: The number of identical products (or same SKU) facing out toward the customer. Facings are used in planograms and when zoning a retail store.

Fad: A fashion that gains and loses popularity very quickly.

Fashion: The popularity of a certain product, style, or appearance.

First in, first out (FIFO): A method of stock rotation in which goods that are received first are sold first. Newly received product is stocked behind the older merchandise.

Free on board (FOB): Shipping term used to indicate who is responsible for paying transportation charges. FOB factory means the buyer must pay shipping from the factory.

Forward reserve stock: Reserve stock that is kept in a stock room near the selling floor.

Forward stock: Merchandise that is kept on the selling floor.

Freestanding store: Store that's not part of a shopping center or a mall.

Full background: The rear of a window display that completely covers the display, closing it off from the store.

Full line: Department stores that carry a full line of merchandise.

Goods: Tangible products for sale.

Grade labeling: Product labeling that includes a quality rating for the product.

Gross income: Total income derived from a business.

Gross leasable area (GLA): Total floor space available for retail sales.

Gross margin: The difference between wholesale cost and the retail price.

Gross profit: Profit calculated after deducting all costs of merchandise, labor, and overhead.

Group buying: A group in which several retailers pool their resources to buy products at a discount from manufacturers; also called a cooperative.

Gummed label: A pricing ticket with adhesive on the back, used on cloth, leather, and unpainted wood.

Hard goods: Non-textile products.

Hard lines: A store department or product line primarily consisting of merchandise such as hardware, housewares, automotive, electronics, sporting goods, health and beauty aids, or toys.

Heterogeneous products: Durable products that are different in quality, appearance, and other features.

Hole pin ticket: A pricing ticket used on paired items such as gloves.

Homogeneous products: Durable products that are similar in quality, but are different in price and require comparisons.

Hypermarket: A huge retail store that is a combination of a drugstore, supermarket, and discount store.

Image: The impression customers have of a company or service.

Impulse items: Products that people purchase without planning for it, such as magazines or candy bars.

Informative labeling: Product labeling that includes the product's performance in tests.

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

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

Layaway: Taking a deposit to set aside merchandise for a customer to purchase at a later date.

Leased department: A part of a department store that is actually leased out to another company and operated as an independent store within the department store; common with cosmetics companies.

Liabilities: Amounts that a business owes to suppliers and other creditors.

Limited line: Describes a department store that carries a limited amount of merchandise, usually concentrating on clothing, accessories, and beauty supplies.

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.

Market area: Geographic area from which a store draws its customers.

Marketing calendar: 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 wholesale cost to get the retail selling price.

Merchandise mix: The breadth and depth of the products carried by retailers.

Merchandising plan: A strategy for actual and projected sales for a specific period of time.

Merger: The combining of two or more retail organizations into one company.

Minimum advertised price: A supplier's pricing policy that does not permit its resellers to advertise prices below a specified amount. It can include the resellers’ retail price as well.

Multiline drugstore: A store that sells a variety of health and beauty products, plus some small appliances and household items, in addition to prescription drugs.

Net lease: Lease in which the tenant pays the base rent plus property taxes. Also known as a single net lease.

Net-net lease: Lease in which the tenant pays the base rent plus property taxes and building insurance. Also known as a double-net lease.

Net-net-net lease: Lease in which the tenant pays the base rent plus property taxes, building insurance, and maintenance. Also known as a triple-net lease.

Nondurable goods: Products that are purchased frequently and used in a short period of time, such as beauty supplies and cosmetics.

Nonmarking: A pricing system in which individual items do not have price tags; instead, a price is labeled on a bin or a shelf.

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

Open background: Describes a window display with a completely unobstructed view of the interior of the store.

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.

Overerr: A mistake made when an employee enters an amount into the register that is more than the sale price.

Partial background: The rear of a window display that is partially covered, but allows customers to see through the display into the store.

Partnership: An entity wherein two or more people own a business.

Patronage buying motive: A reason customers will shop at one store instead of another; can be rational or emotional.

Pin ticket: The sort of price ticket used on towels and washcloths that is attached with a pin.

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

Point-of-purchase display: Marketing materials or advertising placed next to the merchandise they are promoting. These items are generally located at the checkout area or other location where the purchase decision is made.

Point-of-sale (POS) system: Combination of hardware and software that records customers’ purchases, accepts payments, and adjusts inventory levels.

Point-of-sale terminal: An electronic machine at a checkout station that feeds information from product tags directly into a computer.

Premarking: A system in which the manufacturer, rather than the retailer, marks merchandise with the retail price.

Preretailing: A system in which a duplicate purchase order is sent to the receiving department when merchandise is ordered so that as soon as the merchandise is received, it can be marked with the correct prices.

Price: A price is the monetary value placed on a product or service.

Private label: Generally, products that are 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 believed to go through from the beginning to the end: introduction, growth, maturity, and decline.

Product/service mix: The number and kind of products and services a general merchandise retailer will offer.

Profit center: A section of a store that earns money for the retailer.

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.

Proxemics: The nonverbal communication suggested by the space between two people.

Pull policy: A promotional policy aimed at building strong consumer demand for a product.

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

Push policy: A promotional policy aimed at markets with the intention of getting retailers to stock a product in order to build supply in the marketplace.

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

Reserve stock: Merchandise that is kept somewhere other than the selling floor.

Retail: The sale of small quantities of goods directly to the user.

Retailers: Businesses that buy goods from wholesalers or manufacturers and resell them to customers.

Retailing: The sale of goods or commodities in small quantities directly to consumers.

Retailing strategy: A strategic plan to adapt to changing technology and markets and meet company goals and objectives through retailing.

Returns percentage: The relationship between returns and allowances and sales, calculated by dividing returns and allowances by gross sales.

Ringseal ticket: A pricing ticket shaped like a butterfly bandage, used on jewelry and lampshades. Run of paper (ROP): An advertising term used by newspapers referring to an advertisement that may be placed anywhere within the paper.

Run of schedule (ROS): An advertising term used by broadcasting stations referring to an advertisement that may be placed anywhere within the broadcast schedule.

Sales floor: The location of a retail store where goods are displayed and sales transactions take place.

Sales transaction: A sales transaction occurs when a seller and a buyer agree to trade ownership of a product (or service) for money.

Service business: A business that offers only a service, with no accompanying product needed or wanted; for example, an insurance policy.

Shoplifting: Theft of property that is worth less than $500 and 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.

Shoplifting detection wafer: A small device attached to goods, especially clothing, that sets off an alarm if it is taken through the doors of the store.

Shopping items: Durable goods that require a great deal of comparison before purchase, such as appliances and furniture.

Shrinkage: Retail shrinkage is a reduction or loss in inventory due to shoplifting, employee theft, paperwork errors, and supplier fraud.

Sliding: A loss prevention term referring to the act of a cashier passing merchandise around the cash register bar-code scanner without actually scanning the item.

Soft goods: Textile products.

Soft lines: A store department or product line primarily consisting of merchandise such as clothing, footwear, jewelry, linens, and towels.

Sole proprietor: One person who owns a business; also can be a married couple.

Specialty products: Products that solve a specific want or need for specific customers. These products offer special characteristics or brand identity, and often are expensive.

Specialty store: A store that specializes in selling a specific kind of product.

Specification buying: Demands made by retailers and wholesalers to manufacturers of the products they sponsor and sell.

Standard industrial classification code (SIC code): A coding system using four digits to identify specific industrial sectors within the federal government. The first two digits identify the broad industrial sector, and the last two digits represent a facility's specialty within this broad sector.

Staple goods: Products purchased regularly and out of necessity. While price shifts may raise or lower demand for certain kinds of products, the demand for staple goods rarely changes when prices change.

Stock keeping unit (SKU): A number assigned to a product by a retail store to identify price, product options, and manufacturer.

Store operations: Includes all functions of operating a store except merchandising, such as customer service, protection, maintenance, and distribution.

String ticket: A pricing ticket attached with a piece of string.

Supportive services: Free services offered to customers to increase convenience, make shopping easier, and entice customers to buy more.

Textile merchandise: Products made from natural or manmade fibers, including clothing, curtains, and bedding.

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.

Traffic driver: Marketing material that isn't a direct-response vehicle but rather serves to draw customers to a store.

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

Undererr: A mistake that occurs when an employee enters an amount into the cash register that is less than the sales price.

Under-the-counter stock: Merchandise that is kept under the counter or in drawers rather than on open display, usually because the items are easily shoplifted.

Unit control: A buying method in which the buyer makes buying decisions based on inventory and sales records, rather than the cost of items purchased.

Universal product code (UPC): Bar code used for electronic entry.

Universal vendor marketing (UVM): Product code that appears as a series of numbers across the top of a price tag.

Unsought products: Products that consumers don't know about and aren't asking for.

Variety store: Focuses on low-cost stock merchandise, with a limited selection of low-cost furniture and appliances.

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

Warehouse club: A giant store that sells merchandise in bulk at low prices, and in which customers must buy a membership.

Warehouse reserve stock: Reserve stock that is stored in a warehouse, with only one example item on display in the store.

Wholesale: The sale of large quantities of goods to a retailer who will resell to the end-user.

Widget: An unnamed article or gadget used as a hypothetical example.

Word-of-mouth: It is the verbal recommendation and positive approval by a satisfied customer.

  1. Home
  2. Starting and Running a Retail Store
  3. Retailing Glossary
Visit other About.com sites: