Terminology | Retail Solutions Operational Management Consulting

Bar Code - A configuration of alternating dark bars and light spaces, usually vertically arranged. Information is encoded into these bars and spaces by varying their individual widths. Use of a bar code system requires an optical code reader, bar-coded labels, and a computer. See also Universal Product Code (UPC).
Brand - A brand is a name, symbol or other identifying mark for a seller's goods or services. It is distinct from other sellers.
Business Plan - A detailed document describing the past, present and future financial and operational objectives of a company.
Capital Budget - A plan for proposed expenditures for acquiring long-term assets and the means of financing these acquisitions. Lists future investment projects and includes a justification for each.
Catalog - A book or pamphlet listing merchandise for sale, usually with descriptive comments and illustrations.
Central Buying (Purchasing) - The concentration of the authority and responsibility for merchandise selection and purchase for a chain of stores or the branch stores of a department store in the hands of the headquarters staff rather than in the individual units. The central buying function is generally located in the flagship store or the central market.
Chain Store - One of a number of retail stores under the same ownership and dealing in the same merchandise.
Comp Sales - What are comp sales? Comparable-store sales is 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.
Comparative Balance Sheet - Two or more balance sheets for the same company for different times displayed side by side to facilitate the observation of similarities or differences, growth or decline.
Corporate governance - The set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled.
Cost of Goods Sold - The price paid for any merchandise required to obtain the sales of the period. It generally includes all charges (invoice costs) for goods on hand, goods on order, freight-in charges, and workroom and alteration costs. The cost of goods sold may be calculated either before or after cash discounts have been deducted or alteration and workroom costs added. The cost of goods sold may also be determined by subtracting the closing inventory at cost from the opening inventory plus purchases at cost. Opening inventory (at cost) + new purchases for period (at cost) - closing inventory (at cost) = cost of goods sold
Distribution Center - A facility to which goods are shipped for the purpose of short-term storage, sorting, repacking, and finally, shipment to individual stores.
Employee Handbook - A manual of facts and instructions provided for the employees of a retail firm or other business. May include the history and philosophy of the firm, regulations, policies, procedures, benefits, dress code, etc. Often used in the orientation of new employees.
Exit Interview - Written or verbal conversation with a departing employee that show why the employee is leaving and how the business is viewed by others.
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.
Fixtures - Tables, counters, racks, etc., used by a store to stock and display its merchandise.
Gift Certificate - A certificate purchasable in any dollar amount which may be given as a gift and which is redeemable in merchandise at the store of purchase.
Gross Margin Return On Investment - A measure of inventory productivity that expresses the relationship between your total sales, the gross profit margin you earn on those sales, and the number of dollars you invest in inventory.
The percentage difference - The difference between what an item cost and for what it sells.
Inventory - Merchandise on hand and ready to sell. Inventory and stock are terms often used synonymously.
Letter of Credit - A document obtained by a buyer of goods from a bank which is evidence of the buyer's credit standing. The letter of credit is presented to the seller of the goods by the buyer, the seller delivers the goods and collects his money from the bank which, in turn, collects from the buyer. The letter of credit is useful in international trade where the buyer has been unable to establish a line of credit with vendors.
Loss Leader - Merchandise sold below cost by a retailer in an effort to attract new customers or stimulate other profitable sales.
Merchandising - The planning involved in marketing the right merchandise at the right place at the right time in the right quantities at the right price. More specifically, it is the buying and selling of appropriate goods coupled with the accurate targeting of consumers for the ultimate purpose of making a profit.
Open-To-Buy (OTB) - The amount (expressed in dollars or units) a buyer is permitted to order for a specified period of time. In terms of dollars, a department's open-to-buy would be the total amount budgeted less the value of goods yet to be delivered in the specified period.
Open-To-Buy Report - A document used to calculate the open-to-buy, this report summarizes the existing or projected relationship between inventory and sales. It is generally prepared on a weekly basis for the department buyer. The open-to-buy report indicates the amount of merchandise on hand at the beginning of the period, the amount received, the amount sold, markdowns, current inventory, and merchandise on order.
Physical Inventory - The dollar value at retail of merchandise on hand during inventory. Includes only the stock actually present in the department or store. The physical inventory usually also includes the unit count, quantity, weight or measure as well as the dollar value.
Planogram -Instructions sent to branch stores by the parent organization detailing how much merchandise is to be stocked and how it is to be displayed. In some organizations planograms are advisory, in others, conformance to the plan is mandatory.
POS - Point of Sale (POS) refers to the area of a store where customers can pay for their purchases. The term is normally used to describe systems that record financial transactions. This could be an electric cash register or an integrated computer system which records the data that comprises a business transaction for the sale of goods or services.
Pre-buying Process - The activities of the buyer before he/she actually goes into the market to buy for the store. Pre-buying includes planning, budgeting, shopping the competition, knowledge of customers, vendors, and store policies, etc.
Price File - A computer memory bank used with the universal product code (UPC). It matched the store prices to the item and is central to the effectiveness of UPC operations in the store.
Pricing - Any of a variety of methods used by retail merchants to determine the prices at which to sell their merchandise. These methods include the full cost approach to pricing, flexible markup pricing, going rate pricing, gross margin pricing, and suggested pricing.
Private Label - A brand developed, owned, and controlled by the retailer or other middleman. This merchandise is generally lower in cost than other brands. The merchant becomes both the producer and the marketer so the manufacturer's only responsibility is to make the merchandise according to the merchant's specifications. Also called a distributor brand, dealer brand, reseller brand, middleman brand, and private distributor 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.
Sales Floor - The sales floor is the location of a retail store where goods are displayed and sales transactions take place. For example, the receiving of merchandise takes place in the stock room, but all direct sales and customer interactions are done on the sales floor.
SBU - Typically know as a Strategic (or selling) Business Unit. You can think typically of a store with a defined plan and budgets.
Transfer Pricing - The price that is assumed to have been charged by one part of a company for products and services it provides to another part of the same company, in order to calculate each division‘s profit and loss separately.
Visual Merchandising - Visual merchandising is the art of implementing effective design ideas to increase store traffic and sales volume.
Word-of-Mouth - Possibly the most effective form of marketing. It is the verbal recommendation and positive approval by a satisfied customer.
Year on Year (YoY) Growth/Decline - A key retail data point used to measure the growth from one period to another is sales, gross, margin expenses and other areas of interest to retail managers and analysts. Also knows as Like for Like ( UK) and Comparative or COMP (USA).