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ABC analysis

A form of analysis that covers a range of items, from inventory levels to

customers and sales territories, into three groups: A = very important; B =
important; C = marginal significance.

An airport village . A new type of urban form comprising aviation -intensive
businesses and related enterprises extending up to 25 kilometers outward from
major airports. The term was defined by Dr. John D. Kasarda, an American
academic who defined[concept in 2000. It is now being extended to include
even non aviation related businesses that are coming up to cater to the customer
traffic created by airports.

A business intermediary who acts on behalf of the manufacturers. His role is to
collect orders from retailers and subsequently to collect payments. He gets
commission on the basis of the collections.

A process that determines the age (number of days old) of product in stock.

Anchor store
A large store, such as a department store or supermarket, that is prominently
located in a shopping mall to attract customers who are then expected to also
visit the other shops in the mall e.g. Shoppers Stop is the anchor store at Ansal
Plaza in Delhi, Garuda Mall in Bangalore and Inorbit in Mumbai.

APMC : Agricultural Produce Marketing Committe

The APMC act instituted by the Govt. of India Markets divides the geographical
area of a State into market areas each of which is managed by the Market
Committees constituted by the State Governments. Once a particular area is
declared a market area and falls under the jurisdiction of a Market Committee,
no person or agency is allowed freely to carry on wholesale marketing
activities. The mandi’s in each market area come under the jurisdiction of the

Assortment Planning
This term applies to the merchandising and buying function in retail. It refers to
the task of determining the specific quantities and features (brands, colors,
sizes) of each product being purchased.

The architecture, layout, signs and displays, color, lighting, music and odours
which together create an image in the customer’s mind. In short, the extra
elements that enhance a retail strategy mix.
Automatic reordering system
Involves the use of computers to generate weekly merchandise orders that are
based on sales, in relation to model stock plans.

Average Basket Size

Average number of units moving in one singe bill. It is calculated as Total units
sold/ No of invoices.

Average Ticket Size

This refers to the average bill value. It is calculated as Total sales / No of

Average unit value

This refers to the average price of a single unit. It is calculated as Total value/
No of units.
B2B (Business-to-Business)
Business model focused on sales to other businesses. Manufacturers and
wholesalers fall into this category since they further supply to businesses that
supply to the ultimate consumer.

B2C (Business-to-Consumer)
Business model focused on sales to consumers. Retailers are typical B2C

B2G (Business-to-Government)
Business model focused on sales to national, state, or local government

A unique identification for a product. It is normally printed on a sticker and put
on the relevant product.

Basket Size
The number of units moving in one single bill e.g. if you have bought 2 shirts
and one trouser from a store then the basket size is 3 pcs.

Beach head
A retail expansion strategy that focuses on establishing a strong store presence
or ‘beachhead’ in key markets before expanding to smaller ones.

The process of setting standards of performance based on the achievements of
high performing competitors.
Represents a physical place to store inventory. Normally used in the context of
warehousing and generally refers to physical rows/shelves.

Black Friday
The day after Thanksgiving in the USA. It is seen as the beginning of the
Christmas Shopping season. While Black Friday is often thought of as the
busiest retail shopping day of the year, in fact the busiest retail shopping day of
the year is usually the Saturday before Christmas. The origin of the term Black
Friday comes from the shift in profitability during the holiday season. Black
Friday marks the day when many retailers shift from being unprofitable, or "in
the red," to being profitable, or "in the black."

Book Inventory
Value of goods on hand at a given time as reflected in the books of accounts.
This may vary from the actual stocks on account of theft.

Bottom-up planning
Involves estimating total sales for a business by adding together the planned
sales figures that have been developed by each business unit.

Relates to the number of product lines or to the number of brands that is carried
by a store or department within a product classification.

Bricks and mortar

Refers to a physical retail store.

Broad and shallow

Refers to a merchandising strategy that focuses on offering a wide selection of
brands/ lines with little depth in each.

As the word denotes refers to the person in the retail hierarchy who is
responsible for selecting, pricing, and purchasing merchandise
To cut into; cause to become reduced; diminish e.g. New products introduced in
the next six months will cannibalize sales from established lines. Also occurs
when sales of one store are negatively affected because of sales of another store
e.g. If Brand X has a store in Connaught Place and they open a second store in
the same market. there is a danger that the second store will ‘cannibalize’ ( cut
into/ reduce) the sales of the first store.

Carpet Area
This refers to the net usable area available for a store. Stores, especially in
malls, need to discount upto 40% of gross area to arrive at the Carpet area.

Carrying and Freight Agent (C&F agent)

A business intermediary who buys goods in bulk from the manufacturer and
bills them further to retailers as per orders booked by the manufacturers sales
team. Different from the whole seller/ distributor in that he does not play an
active selling role.

Cash & Carry stores

These are wholesale stores that cater to retailers, hotels and offices. Prices are
normally discounted. Products are bundled in wholesale packs. E.g. Metro.
Internationally these stores also cater to individuals, but in India on account of
FDI restrictions they only cater to other businesses. Also known as Price Clubs

Cash discounts
Discount on the invoice when a retailer pays in a certain specified time e.g.
payment within 7 days of delivery may earn a cash discount of 3%

Cash till
The cash counter in a retail store where bills are cut and cash (and credit card)
transactions take place.

Catalogue store
A type of retail store that displays product catalogs from which customers select
the product e.g. Argos (UK)

Catchment Area
The geographical area from which trade to a store or centre is attracted; the
primary catchment area defines the area from which the vast majority of
shoppers (80-90%) tend to use a particular store or centre in preference to other
stores or centres.

A classification assigned to a certain group of related retail items e.g. The Men's
wear category.

Category killer
An especially large specialty store featuring an enormous selection in its
product category and at relatively low prices e.g. Toys R us.

Category Management
A method of organizing the retail structure so that it is managed by product
category e.g. men’s, women’s, sports, kids etc
Closed circuit TV. Used to monitor movement in different parts of a store and
to deter pilferage

Central business district (CBD)

The hub of retailing in a city. It is the largest shopping area in that city and is
synonymous with the term “downtown”. The CBD exists where there is the
greatest concentration of office building and retail stores.

Centralised Organsiation
Retail organizations where all strategic and administrative decision-making is
done at some central point. This permits a high degree of standardization. These
retailers believe that relatively few people who are experts should take all
important decisions.

Centralized buying
Occurs when all buying activities are performed from a retailers central

Chain Store
Two or more retail stores under single ownership
A distribution route e.g. a brand can choose to sell its products through multiple
channels including own stores, department stores, distributors etc.

Charge Back
A reversal of a credit card transaction, typically initiated by the card issuer at
the cardholder's request. Charge backs can occur for any number of reasons,
including customer disputes, potential or actual processing errors, and
authorization issues.

Cherry Picking
Selecting only the best. The act of picking only the best options and leaving the
less attractive ones.

A style that is in demand continuously even though minor changes may be
made in the product e.g. a men’s white full sleeve shirt with a regular collar.

Click and mortar

Refers to retailers who have both an on line presence (‘click’) and physical
stores (‘mortar’).

Closing a drawer
The process of recording the ending amount of cash and other payment types in
a drawer before performing end of day posting. Normally, a drawer is closed at
the end of each day.


A shipping method where the buyer pays for the purchase when goods are

A pre-determined area within a store that is given to a brand – normally on
consignment terms. The area is managed and branded by the brand . Also
known as shop-in-shop.

An stores arrangement with the supplier that indicates that the buyer will take
merchandise into a store but will pay for it only when it sells

Consignment Goods
Items not paid for by retailer until they are sold. The retailer can return unsold
merchandise and does not take title until the final sale is completed.

Contiguous expansion
A retail expansion strategy that locates new outlets in markets close to existing

Convenience store
A food –oriented retailer that is well located, is open long hours, and carries a
moderate number of items. It is small, has average to above average prices and
average atmosphere and customer services. In India these are known as Kirana

The number of people who buy from among those who walk into a store e.g. if
a 100 people walk into a store and only 50 buy, the conversion is 50. The
conversion percentage for the same will be 50%.

Cost of goods
Includes the actual cost of the merchandise including all expenses involved in
getting the goods from the vendor to the store and any alteration costs
thereafter. Cost of goods sold = Cost of merchandise – (discounts +
transportation + alteration costs)

Cost plus pricing

A pricing strategy where the retail price of the product is determined on the
basis of a pre determined mark up on cost
Counting a drawer
The process of recording the amount of cash and other payment types in a
drawer. Normally, the drawer is counted at the end of each business day.
Critical mass
The size at which a business undergoes a fundamental change in regard to
operations e.g. a retailer needs to achieve a certain critical mass before it can re-
negotiate terms with suppliers

Cumulative or Total mark up

The total mark up that is achieved across all products in the category.

Customer Relationship Management

A customer centric business strategy with the goal of maximizing profitability,
revenue, and customer satisfaction. The term is also used for software
technologies that support this business goal and which include the capture,
storage and analysis of customer information. The technology to support CRM
initiatives must be integrated as part of an overall customer-centric strategy.
Many CRM initiatives have failed because implementation was limited to
software installation without alignment to a customer-centric strategy.

Cyber Monday
Refers to the Monday immediately following Black Friday, which marks the
beginning of the Christmas shopping season for online retailers. In recent years
Cyber Monday has become one of the busiest days for online retailers.
Data mining
Refers to the process of searching through data to find trends and patterns that
might otherwise have gone unnoticed.

Data warehousing
Refers to the process of electronically storing customer and operations (sales
and stock) data

Day time population

The population of a city during the day. Some cities which are district head
quarters attract a lot of people in the day. These people are not residents but add
to the population during day time.

Dead Areas
Awkward spaces in a store where normal displays cannot be set up and which
tend to attract low customer footfall.

Decentralised organization
Retail organisations which seeks to place decision making authority in the
hands of managers close to geographically localized conditions.
Decline stage
The last stage of the product life cycle that occurs when the target market
shrinks, and price – cutting minimizes profit margins

Delivery period
The time between when an order is placed and when the merchandise is
available on the sales floor. Also known as lead time.

Demographic data
Data that documents facts about customers on matters relating to age, sex,
family size, income, education, occupation and race.

Department store
A retail store that has a number of distinct product departments.

The number of choices/ options offered to customers within each brand or
product classification e.g. A shallow depth would refer to fewer options from
which to select.

Destination Store
A retail store where merchandise selection and presentation, pricing, or other
unique features act as a magnet for customers making the store their primary
shopping destination.

Discretionary pricing
A pricing strategy where the retail price of the product is decided by the price
that the product can command in the market.

A business intermediary who buys goods in bulk from the manufacturer and
sells them to the retailer in smaller quantities. Also known as a Wholesaler.

DIY (Do it yourself)

Refers to a category of product, mostly home related , which can be assembled
by the consumer.

Doorbuster deals
A term used to refer to super attractive promotions – normally discount offers
that are expected to get crowds into the store.

Down market
Appealing to low income consumers. Normally cheap, popular and of poor
Drawer fund
The amount of money left in a drawer after the drawer has been closed. The
drawer fund is typically used to provide startup money (change) for the next
business day. Also known as float.

Products (such as cars, furniture and appliances) that are capable of surviving
many uses and typically last for years
Early adopters
Those consumers who purchase fashion merchandise in the early stage of the
product life cycle.

Exclusive Business Outlet. This refers to a retail store that keeps only a single
brand e.g. a Levis exclusive showroom.

Economic Order Quantity ( EOQ)

Size of an order at which the total procurement cost and inventory carrying cost
is the minimum.

EDI (Electronic Data Interchange)

Ability to electronically exchange purchasing information between your retail
software and the vendor's system.

EDLP (Every day Low Pricing)

A version of customary pricing, whereby a retailer strives to sell all of its goods
and services at consistently low prices throughout the selling season

End caps
The end pieces of display units typically used to display promotional items.

Entry level price point

The lowest price point in the range. Normally a strategic price point. Also
known as the lead in price point.

Evening Economy
The economic benefits derived from the utilization of spaces uses within a town
centre that attract visitors in the evening for leisure and entertainment purposes,
such as cinemas, theatres, public houses, bars, restaurants, bingo, night clubs
and casinos.

Exception reporting
Reporting that only includes information not meeting established criteria. For
example, if you plan to sell between 2% and 5% of your inventory per week,
then exception reporting would allow you to report on sales outside your criteria
limits (e.g., sales that fell below 2% or rose above 5%).
F.O.B (Free – on –board)
It is a method of expressing who is responsible for paying transportation
charges e.g. FOB factory would mean the retailer is paying the transportation
charges. Title passes to the buyer when the seller delivers goods to the
transportation carrier.

F.O.B. Factory

Factory Outlet
A manufacturer-owned store selling firms factory seconds, store discontinued
merchandise, canceled orders. Goods are normally available at an attractive

A short lived fashion

Fair Trade
Protects smaller and full – services retailers against discounters by requiring
uniform retail prices. Fair trade is now banned in the United States.

FIFO (First in, First out)

A method of inventory control that assumes that the merchandise that was
received first is sold first e.g. if white shirts were received in two batches of
fifty pieces each, as per the FIFO method the first 50 pieces should be sold first.

First Moment of Truth

This is an expression introduced by Procter and Gamble. The First Moment of
Truth refers to the 3-7 seconds after a shopper first encounters a product on a
store shelf. This time lapse is called (by P&G) "first moment of truth" and it's
considered the most important marketing opportunity for a brand. It is in these
few seconds, P&G contends, that marketers have the best chance of converting
a browser into a buyer .

Flagship store
The leading store within a group, usually the biggest in size and stock holding
and used as a benchmark against which other stores are measured. Also used to
denote other similar stores within the group that meet this criteria.

Flea Market
A market that has many retail vendors offering a range of products at discount
prices in plain surroundings. Goods are often sold off pavements and small

The cash that is provided at the cash till every morning to conduct the day’s
business. It normally includes a predetermined mix of currency denomination to
ensure that the cashier has sufficient change to return to the customer through
the day.

Floor price
The minimum price below which a product should not be priced

Floor ready Merchandise

Items that are received at the store in condition to be put right on display with
no preparation by retail workers.

FMCG ( Fast Moving consumer Goods)

This is a classification that refers to wide range of frequently purchased
consumer products including: toiletries, soaps, cosmetics, teeth cleaning
products, shaving products, detergents, bulbs, batteries.

The number of people walking into a store

Fourway rack
Floor fixture which has 4 racks. Often used for trouser displays.

A contractual arrangement between two parties – the franchisor (normally a
brand owner or manufacturer) and the franchisee ( normally a store owner or a
licensee of the brand) , that allows the franchisee to conduct business under the
brand name and according to norms of business as set by the brand.
Free flow
Series of circular, octagonal, oval shaped fixture patterns. The aisles
deliberately lack uniformity. Popular for up-market stores.

Free trade agreement

An agreement between countries to eliminate tariffs on merchandise being

Free-Standing store
A retail location that is independent of any shopping center e.g. Shoppers Stop
at Andheri (Mumbai) is a free standing store.

Frequent Shopper Program (Customer Loyalty Program)

Program designed to reward customers for their continued business. It is
designed to promote loyalty, increase visitation, and encourage future
purchases. Rewards may be in the form of discounts, awards, or other perks.

Full Line Discount store

A type of department store characterized by (1) a broad merchandise assortment
(2) merchandise normally sold via self service with minimal assistance (3)
private – brand durable and non-durable goods (4) hard goods accounting for 60
per cent of merchandise sold (5) a relatively inexpensive building, equipment
and fixtures.

Full price sell through %

The amount of goods the company has sold or plans to sell at full price as a
percentage of the total buy.

Fusion clothing:
A mix of Indian and western clothing.
Basic merchandise. Normally unbranded e.g. unbranded salt or sugar etc.

Geographic departmentalization
Refers to an organizational structure based on geographic areas (e.g. a retailer
having a north, south, east and west division, each headed by a senior manager)

GMROI (Gross Margin Return On Investment)

GMROI is a key retail performance indicator. It is a numerical indicator of the
company’s return on its investment for an item or group of items and is
calculated as follows

A center of Floor fixture that allows for flexible display.

A weekly village fair in India with temporarily set up stores normally spread on
the ground, with each seller retailing diverse product offerings.

Hang tag
A hanging price tag used for apparel and similar merchandise to describe the
product or to give information about the company.

Hard lines
Refers to merchandise lines like hardware, sporting goods, appliances, furniture,
lawn and garden – basically all merchandise carried by a store with the
exception of apparel and accessories and fashions for the home

Haute couture
Haute Couture is a French phrase for high fashion. Couture means dressmaking,
sewing, or needlework and haute means elegant or high, so the two combined
imply excellent artistry with the fashioning of garments. In modern France,
haute couture is a "protected name" that can be used only by firms that meet
certain well-defined standards. However, the term is also used loosely to
describe all high-fashion custom-fitted clothing, whether it is produced in Paris
or in other fashion capitals such as Milan, London etc. Haute couture is made to
order for a specific customer, and it is usually made from high-quality,
expensive fabric and sewn with extreme attention to detail and finish, often
using time-consuming, hand-executed techniques.

High street
A popular shopping area characterized by high rentals and premium brands e.g.
Linking Road in Mumbai or Commercial Street in Bangalore.

Hub and spoke

A store expansion strategy which requires setting up of flagship stores or ‘hubs’
in key markets and then expanding to smaller markets in neighboring areas.

Mega supermarkets and general merchandise stores that stock everything from
food to appliances
Impulse product
Occurs when consumers purchased products and or brands they had not planned
to buy before entering a store as a result of some stimulus at the store e.g. an
attractive product display.

Independent stores
Refers to a single store, which is not part of any chain. The bulk of stores in
India fall in this category.

Introduction stage
The stage in the product life cycle that occurs when products are usually
accepted by only a few people

Merchandise on-hand for sale to customers in the ordinary course of business.
Also called Stock.
Just In Time Inventory
A computerized method of tracking inventory needs and writing purchase
orders timed so that inventory arrives only on the day it is needed.
Keystone Markup
A markup equal to the cost of the merchandise. Retail price is determined by
doubling the cost of an item.

Kirana Stores
A small Indian neighborhood mom- and –pop store dealing with basis grocery
and top-up convenience products, offering personalized service. It is small, has
average to above average prices and average atmosphere and customer services.
Consumers who accept a style when it is in the decline stage of the product life

Landed cost
The importer’s final cost for foreign merchandise, which includes the
merchandise cost, duties and tariffs, commissions, insurance, storage expenses,
and transportation charges

Lead in price point

The lowest price point in the range. Normally a strategically decided price

Lead Time
The time span from the date an order is placed by a retailer to the date
merchandise is ready for sale (received, price marked, and put on the selling

Licensed Brands
Brands for which the licensor ( owner of a well known name) enters into a
contract with a licensee ( a retailer or a third party) The license either
manufacturers or contracts with a manufacturer to produce the licensed product
and pays a royalty to the licensor.

Lifetime value
The potential of a customer to give business over his/ her lifetime. E.g. if a
person spends Rs 10,000 a year on shirts then over his active shopping lifetime
(assuming it to be 40 adult years) he will spend 400,000/-.

Last in First out method of inventory control that assumes the merchandise that
was received last was sold first

Line item
A single item on a Purchase order or a range plan.

List Price
A retail level price generally set by manufacturers
Lock in period
When referring to real estate transactions, the lock in period refers to a period
during which the tenant and the landlord are committed to the terms of the
contract. This is the minimum period for which the transaction is valid. Any exit
clause is applicable only after this period. Vacating the space before the
stipulated lock-in period means forfeiture of deposit, and in some cases a
penalty, depending on the contract drawn up by the two sides.

The total process of moving goods from manufacturer to a customer in the most
timely and cost –efficient manner possible

Loss leader
A pricing strategy where a particular item is sold below cost in an effort to
stimulate other, more profitable sales. For example, during the Thanksgiving
season, turkeys are frequently sold at pennies per pound in the hopes that the
grocery store will profit from other groceries purchased at the same time.

Loss leader
A pricing technique that involves pricing a product below cost in order to
generate store traffic.

Loyalty programs
Promotion programs run by retail chains where customers are given tangible
rewards for patronizing a store. The higher the patronage the greater the reward.
Made ups
Refers to the line of home textiles that includes linen, tapestry, curtains etc.
Also known as soft furnishings.

A shopping mall or shopping centre is a building or set of buildings that contain
a variety of retail units, with interconnecting walkways enabling visitors to
easily walk from unit to unit. In a sense it is an enclosed market.

A whole sale market for fruits and vegetables in India

A technique to evaluate the trading area of store by determining the distance
people are likely to travel to get to the store, the population density of the
geographic area surrounding the store, and the travel patterns and times from
various locations

The difference between the cost of an item and its price E.g. if cost of goods is
Rs 100/ and the retail price of Rs 150/- then the rupee margin is Rs 50/-

Margin percentage
The gross profit or margin expressed as a percentage of the retail price. E.g. if
cost of goods is Rs 100/ and the retail price of Rs 150/- then the rupee margin is
Rs 50/- and the margin percentage is 50%. This is also known as mark up % on

A reduction in the original retail price, primarily taken for clearance of end of
season merchandise or for promotional reasons.

Markdown percentage
A control tool used by buyers. It is calculated by dividing total Rupee
markdowns by total sales. E.g. if total Rupee markdown is Rs 100,000 and
Total sale is Rs 10,00,000 then the Markdown percentage is 10%

Market Skimming
A pricing strategy wherein a firm charges premium prices and attracts
customers less concerned with price than service assortment and status.

The amount of money added to the cost of goods to calculate retail price. E.g. if
cost of goods is Rs 100/ and you add Rs 50/- to this to arrive at the retail price
of Rs 150/- then the mark up is Rs 50/-

Markup Percentage
The Rupee mark up expressed as a percentage of the cost price. E.g. if cost of
goods is Rs 100/ and you add Rs 50/- to this to arrive at the retail price of Rs
150/- then the mark up is Rs 50/- and the mark up percentage is 50%.

A sign used to display a store’s name and or logo

Maximum Retail Price (MRP)

The selling price marked on the product, inclusive of taxes payable by the end
customer. This is a terminology used in India. As per statutory regulation all
packaged goods in India must have a marked MRP. Retailers are permitted to
sell below MRP but not above.

Multi Brand Outlet. This refers to a retail store that keeps multiple brands e.g.
Shoppers Stop.
Merchandise Mix
The types or mix of products that are available for customers to purchase.

Minimum order
The smallest sale permitted by a manufacturer or wholesaler (vendor).
MIS (Management Information System)
MIS is a planned system of collecting, storing and disseminating data in the
form of information and reports needed to carry out the functions of

Mix and match

Normally used for the salwaar, kameez and dupatta category. These are the
three elements of a popular Indian dress form where each piece is sold
separately and customers can put the ensemble together as they like.

Model Stock Plan

The planned composition of fashion goods, which reflects the mix of
merchandise available based on expected sales. The model stock plan indicates
product lines, colors and size distributions. It is the ideal stock plan.

Mom and pop stores

Independent stores that are owned and run by the family unit ( by mom and
pop). The bulk of the stores in India fall in this category.

Moment Of Truth
This is a customer service concept coined by Jan Carlzon former Chairman of
Scandinavian Airlines. It refers to all the points of contact or interaction
between a customer and a firm that gives the customer an opportunity to form
or change their impression about the firm e.g. a customers impression about a
retailer is affected by the advertising they see, by the store, by the sales staff,
the cashier etc. A customer may be satisfied by the entire experience but if (s)he
is made to stand in a billing queue for 20 minutes, that one moment of truth is
capable of spoiling the entire experience. (Also see First Moment of Truth)

MRTP (Monopolies and Restrictive Trade Practic

An act introduced by the Govt. of India to protect the consumer by preventing
the formation of cartels and monopolies and by investigating and ruling against
unfair trade practices.

Mystery Shoppers
People hired by retailers to pose as customers and observe their operations from
sales presentations to how well displays are maintained to in home service calls.
Narrow and deep
Refers to a product merchandising approach of stocking large amounts of a few
product categories or brands.
Net sales
The revenues received by a retailer during a given time period after deducting
customers returns, markdowns , and employee discounts.

A clearly identifiable segment of a larger consumer market e.g. within the kids
wear category pre-teens is a niche that has not been explored.

Non Selling area

All floor space used in supporting activity including stock rooms , cash office ,
entrances, show windows, elevators , offices , generator rooms , alteration

Products that are used up in a few uses e.g. soaps, shampoos

Number of weeks cover

The number of weeks of current sales represented by the current stock e.g. if the
current sales is Rs 1 lac per week and the current stock is Rs 12 lac then the
store is carrying 12 weeks of stock.
The outmoding of a product due to a change in fashion/ technology before its
usefulness has been exhausted.

Off – price chain

Stores that sell branded apparel and accessories, footwear etc and sell them at a
discounted or everyday low prices in an efficient, limited services environment.
Occurs when retailers purchase manufacturers overruns at deep discounts for
the purpose of offering consumers low prices on branded merchandise

Open to Buy
The difference between the planned purchases and purchase commitments
already made by a buyer for a given time period, often a month. It is what the
buyer has left to spend at any point in a month

Opportunity Costs
Benefits that are given up by choosing one type of opportunity over another e.g.
If an individual puts money in a business then the opportunity cost he incurs is
the interest that the money would earn if he put it in a bank instead.

Organization Chart or Organogram

A graphically display of the reporting relationships within a firm

Over stored Trading Area

A geographic area with so many stores selling a specific good or service that
some retailers will be unable to earn an adequate profit

The amount by which a physical inventory exceeds book inventory or the
amount by which the actual drawer amount exceeds the reconciled amount at
the time the drawer is closed.

The condition where a buyer has committed to purchases exceeding the planned
purchase allotment for a merchandising period.
Packing Slip
A slip that accompanies each carton of goods in a shipment and that gives the
list of products and quantities of each product in the carton.

Penetration pricing
A pricing strategy that uses low profit margins to generate greater sales; usually
used to quickly gain market share.

Per sq ft per day (PSFPD)

This refers to sales per sq. ft. per day. It refers to the sales achieved on a per
foot basis everyday. Also see Sales Per Foot (SPF).

Periodic inventory
A method of determining the value of retail merchandise at periodic intervals by
performing a physical count of the items in stock.

Perpetual inventory control

A method of inventory control in which the number of units and the total value
of inventory can be obtained at any time from the stock records. In this method
all additions (purchases) and withdrawals (sales) are recorded as they occur, in
order to provide a running stock balance. Physical verification of the same is
done by counting a certain number of items on a regular basis (daily, weekly or
monthly) so that, by the year end, every item has been physically counted at
least once. If there is any mismatch (due to human error, leakage, pilferage,
loss) between the physical quantity and the quantity shown in the inventory
records, the records are adjusted accordingly.

Picking ticket
A list of items used at the warehouse for physically gathering items for
shipment. Picking tickets typically include item and customer information,
where the item is physically located (the bin), quantity ordered, and a place to
write the actual quantity of the item being shipped.

Theft in a store. This could be theft by consumers or by staff.

Theft. Goods that go missing because they are stolen.

A planogram is a visual plan showing the physical allocation of products within
a Store.

Point –of Purchase (POP)

The physical location at which goods or services are sold to customers. Also
called point of purchase. Also called Point of Sale.

Point of Sale (POS)

The physical location at which goods or services are sold to customers. Also
called Point of Purchase.

Post-Purchase Dissonance
A condition of conflict or anxiety post making a purchase. This could be as a
result of inconsistency between one's beliefs and one's actions e.g. being against
the slaughter of animals and buying a snakeskin bag, or on account of feeling
that one has made an incorrect decision e.g. the product was beyond the budget.

Predatory Pricing
Involves big retailers that attempt to destroy competition by selling goods and
service at extremely low prices, which causes small retailers to go out of

Prestige pricing
A pricing strategy that assumes consumers will not buy goods and services at
prices deemed too low, since they may fear it is of poor quality

Price Club
A price club is a retail store, usually selling a wide variety of merchandise, in
which customers pay annual membership fees in order to shop. The clubs are
able to keep prices low due to the no-frills format of the stores. In addition,
customers are required to buy large, wholesale quantities of the store's products,
which makes these clubs attractive to both bargain hunters and small business
Also known as a cash and carry store.

Price Elasticity of demand

The relation between the change that is likely to happen to demand for a
product as the price changes. Relates to the sensitivity of buyers to price
changes in terms of the quantities they will purchase. A high price elasticity
would indicate that a small increase in price will lead to a relatively larger fall
in demand.
Price Line
A price point that is selected by a company for its business. Different price lines
are chosen to appeal to target customers. Stores carry product only at these
selected price points.

Price Range
The width of price points that a store carries from the lowest or lead in price
point to the highest price point e.g. a store may have a price range for t/shirts
starting at Rs 199/- and ending at Rs 699/-.

Price war
A situation in a very competitive environment when one retailer attempts to
under price another, and results in retailers continuing to lower prices in turn to
undercut the other. Increased sales may result, but usually at the expenses of

Private label
Merchandise that is developed by retailers under their own labels .

Product life Cycle

A graphic representation of the expected behavior of a good or service over its
life. The traditional cycle has four stages introduction , growth maturity and
decline ( picture ?)

Product line
A board category of products that have similar characteristics and uses e.g.
Trousers or shirts.

Profit center
A distinct area within your company for which sales, expenses, and profits can
be calculated separately from the total sales and expenses of the whole company
e.g. each department in a retail store may be treated as a separate profit center.

Promotional calendar
A calendar that shows the promotions planned over a given period. The
promotion calendar is normally made well in advance for the whole financial
year. This allows all the departments concerned – Store operations,
Merchandising and Buying and Marketing to plan efficiently.

Promotional mix
Different promotional methods that include advertising, visual merchandising,
personal selling, publicity, special events, and other sales promotional activities
Proof of Delivery
Verification provided by a freight company that a shipment was delivered at a
certain time and place and was signed for by the recipient

Psychographic data
Information on the lifestyles, interests, and opinions of consumers

Psychological Obsolescence
The loss of value or usefulness resulting from advances in technology and the
passage of time. e.g. changes in fashion makes us change our clothes even if
they are not worn out , but in our minds they are no longer wearable.

Psychological Pricing
A pricing strategy that takes into account consumers perceptions of the retail
prices e.g. prices are often set before the hundred mark. The assumption is that
consumers will perceive a price point of Rs 199/- as significantly lesser than a
price point of Rs 200/-.

Purchase order (PO)

A record containing the details of an order for merchandise that has been placed
with a vendor. Typically, the PO includes the items purchased, costs, discount
terms, and shipping information.
Quantity discount
A reduction in price offered on the purchase of large volumes of product.

Quick Response (QR)

Enables a retailer to reduce the amount of inventory it keeps on hand by
ordering more frequently and in lower quantity.
Rack jobber
Special type of vendor who is assigned shelf space in a store with the
responsibility for keeping it stocked with quick-turning merchandise

Range plan
A seasonal plan that has an item wise list of the lines to be ordered, along with
the quantities , costs and margins.

Rate of sale
The number of pieces selling per option per outlet per week for all outlets
stocking the option e.g Rate of sale for a white, full sleeve shirt with button
down collar that sold 450 pcs across 10 stores over 15 weeks will be 3 i.e 3 pcs
sold per week per store for this option.

Refers to the number of people who will be exposed to one or more promotional
All changes in prices that lower the value. It includes markdowns, employee
and consumers discounts and inventory shortages

Reorder Point
The stock level at which new orders must be placed

Retail Chain
A firm that consists of multiple retail units under common ownership and
usually has some centralization of decision – making.

Retail Life Cycle

A theory asserting that institutions – like the goods and services they sell pass
through identifiable cycles with four stages innovation, accelerated
development, maturity and decline

Retail Merchandising
The science of offering the right goods to ultimate customers at the right price,
at the right location, and at the right time.

Retail Mix
The mix of variables which form the overall retailing strategy. including
location, merchandise, communications, price, services, physical attributes and

Retail POS System (Retail Point of Sale System)

A computerized system made up of retail software and point of sale hardware. It
is used for billing and for recording transactional data.

Returns on Investment = (annual profit)/(investment capital) . This is a financial
calculation and refers to the ratio of money gained or lost on an investment
relative to the amount of money invested. ROI is usually given as a percent and
calculated on an annual basis. It is used to compare returns on investments. For
instance, a Rs 1,000 investment that earns Rs 50 in interest generates more cash
than a Rs 100 investment that earns Rs 20 in interest, but the Rs 100 investment
earns a higher return on investment.
Rs 50/Rs 1,000 = 5% ROI
Rs 20/Rs 100 = 20% ROI

Rotating stock
A method of moving stock around on the shop floor to ensure that new and old
merchandise is alternately given an opportunity for display .
Safety Stock
The extra inventory kept on hand to protect against out of stock conditions due
to unexpected demand and delays in delivery

Sale leaseback
The practice of retailers building new stores and selling them to real –estate
investors, who lease the property back to the retailers on a long term basis

Sales Channel
A distribution route e.g. a brand can choose to sell its products through multiple
channels including own stores, department stores, distributors etc.

Sales forecast
A prediction of future sales for a specified period under a proposed marketing

Sales per square foot (SPF)

Net sales divided by the square feet of retail selling space. It can be calculated
on a daily, weekly, monthly or annual basis. It is calculated as sales/ square feet
of space. E.g. if a 1000 sq ft stores does a daily sale of Rs 30,000/- then the
daily SPF is Rs 30/-.

Same store sales

A comparative measure used to compare sales of stores that have been open for
more than one year. This allows us to compare the business growth that has
taken place in the existing stores from one year to another.

Seasonal merchandise
Merchandise purchased for a specific season that is only in demand for a short
period of time (e.g., summer, Christmas, back to school, etc.).

Socio Economic Classification. A method of classifying the target audience on
the parameters of education and occupation only. Under this method of
classification SEC A normally refers to the well heeled , while SEC D and E
refer to the less prosperous and less educated members of society.

Merchandise that contains defects or damages.

Selling area
Total area used in selling including display area, customer aisles , fitting rooms,
and billing area .

Shelf talkers
Part of the signage used to announce the offers/prices/product features etc.
usually placed on fixtures near the products for which it is applicable

Shop floor
The selling area in a retail store

Shop in shop
A pre-determined area within a store that is given to a brand – normally on
consignment terms. The area is managed and branded by the brand.

The act of stealing merchandise – normally by people posing as customers -
from a store that is open for business.

The difference between actual stock and book records of stock. Shrinkage
represents the total of errors in stock record keeping, plus actual losses of
merchandise through shoplifting, employee theft, paperwork errors, breakage,

A pricing strategy that aims when stores charge the highest price possible. They
are willing to make do with lower sales since the profit margin on each item is
Soft furnishings
Refers to the line of home textiles that includes linen, tapestry, curtains etc.
Also known as made ups.

Soft Goods
Apparel and linens are collectively termed as soft goods.

Specialty Department Store

A department store format that focuses on apparel and soft home goods ( e.g.

Specialty Store
A retailer that concentrates on selling one product or service line. In other
words, a store specializing in one category of merchandise, frequently fashion-
related e.g. Van Heusen stores are men’s wear specialty stores.

Stock – to – sales ratio

A figure that indicates the relationship between planned sales and the amount of
inventory required to produce those sales. Specifically it is the ratio between the
beginning of month stock figure and the planned sales for the same month.

Stock Keeping unit (SKU)

Refers to a unique product description. E.g. For men’s shirts a SKU would
represent a unique size / style / color combination - a white men's shirt with
french cuffs and a size 40 neck in half sleeve. All items that fit this description
will come under the same SKU.

Stock Turnover
Represents the number of times during a specific period usually one year that
the average inventory on hand is sold. Stock turnover can be computed in units
or rupees. It is normally calculated on an annualized basis as Sales/ Average
stock. E.g. if sales for a year are Rs 12 lacs and the average stock carried by the
store was Rs 4 lacs then the stock turnover achieved was 3. It means that the
retailers sells merchandise at a rate that requires him to replace it three times per

Store directory
A form of store signage that lists and indicates the location of all departments in
a store . Normally put at the store entrance and at key vantage points.

Store front
The total physical exterior of a store. It includes the marquee, entrances ,
windows , lighting and construction materials

Store layout
The spatial arrangement of selling and non-selling departments, aisles, fixtures,
display facilities and equipment in the proper relationship to each other and the
fixed elements of the structure.

String Store Market

An unplanned shopping area comprising a group of retail stores, often with
similar or compatible product lines, located along a street or highway

Super Saturday
An American term used for the Saturday that comes before Christmas. It is
normally a bumper day for retail sales.

Super specialty store

A store that is very highly specialized in a particular kind of product e.g. The
T/shirt store

A retail store which sells groceries, dairy products, meats and produce along
with some non food items

Supply chain
Supply Chain refers to the distribution channel of a product, from its sourcing,
to its delivery to the end consumer (also known as the value chain). The supply
chain is typically comprised of multiple companies.
Tag /ticket/ swing ticket
A physical label attached to merchandise for sale. Normally carried information
on the product or the company and carries the bar code and the price

Target market
The specific group or groups of consumers on which a retailer focuses its
marketing activities

Tax on goods coming into a country

Sheets of magazines that are torn to be used later. Designers for instance
maintain tear sheets of fashion styles to use them as references when planning
the new seasons lines.

Terms of sale
Arrangements between merchandise source and retailer relative to time period
for payment of invoice.

Ticket Size
This refers to the value of the bill e.g. if you have bought two items worth Rs
1000/- each then the value of the bill or the ticket size is Rs 2000/-

Ticket Value
The value of a single bill

Top- down planning

Involves the top level of management estimating total sales for the upcoming
period in a particular product category

Total mark up
The total mark up that is achieved across all products in the category.

Trade Diversion
The loss of trade from an existing store or centre as a result of a new retail
development taking place, usually measured as a percentage of its turnover
before the opening of the new development.

Trading Area
The geographic area from where a store gets the bulk of its customers.
Trading down (down trading)
Refers to the act of replacing current purchases with items that may have less
features/ poorer quality but are less expensive. In periods of high inflation,
customers tend to trade down to manage their household budgets.

Trading up
This refers to the act of replacing current purchases with items that have more/
better features and are consequently more expensive. In periods of prosperity
customers tend to trade up to enjoy a better product experience.

Refers to the people in an area or those walking into a store. A high traffic store
is one which sees a lot of walk ins.

Trunk show
Retail events where suppliers present their merchandise directly to the final
customer. Designer Trunk shows are a popular retail event. The designer is
normally present at the store at the time and interacts directly with the final
Up market
Appealing to high income consumers

UPC (Universal Product Code)

The standard for encoding a set of lines and spaces (or barcodes) that can be
scanned and interpreted by retail software to identify a product.
Variety Store
A retail establishment selling a wide assortment of inexpensive and popularly
priced goods and services , such as stationery, gift items, women’s accessories,
health and beauty aids , light hardware, toys, house wares, and confectionary

An individual or organization from which a retailer purchases merchandise for
resale. Also called a supplier.

Visual merchandising
A display arrangement including the layout of store facilities and the placement
of merchandise in the store to attract the consumers attention and stimulate
customers desire.
Want book
A note book in which store employees record items desired by customers but un
stocked or out of stock

Warehouse Store
A warehouse store is a large format retailer with an every-day-low-price cum
discount offer in a no frills setting. The basic shed-like environment lends it the
name – warehouse retailer e.g. Wal-mart.

Wall mounted display fixtures which are sloping.

Wheel of Retailing
A theory stating that retail innovators often first appear as low-price operators
with a low-cost structure and low profit –margin requirements. Over time these
innovators upgrade the products they carry and improve store facilities and
customer services. They then become vulnerable to new discounters with lower
cost structures.

White goods
Refers to a category of products – typically large household appliances, as
ovens and refrigerators, formerly finished with white enamel, but now often

A business intermediary who buys goods in bulk from the manufacturer and re-
sells them to the retailer in smaller quantities. Also known as a Distributor.

Width of Assortment
Refers to the number of distinct goods/service categories which a retailer

Word –of Mouth Communication

Refers to the passing of information by verbal means, especially
recommendations, but also general information, in an informal, person-to-
person manner. Word of mouth is typically considered a face-to-face spoken
communication, although phone conversations web dialogue, such as online
profile pages, blog posts, message board etc. are now included in the definition
of word of mouth.
Year To Date (YTD)
A term used to describe the performance of a business so far in the business
year. For example if a company works a Jan- Dec year , the sales of a company
are Rs 60 lacs in the period Jan to May then the YTD sales as of June 1 are Rs
60 lacs.
Zero –Based Budgeting
The practice followed when a firm starts each new budget from scratch and
outlines the expenditures needed to reach its goals during that period. All costs
must be justified each time a budget is done