Food and Grocery Stores Industry Terminology

A/B Testing

A controlled experiment comparing two variants (A and B) of an experience (promo, email, app UI, signage) to determine which performs better on a defined metric (conversion, sales, CTR).

We A/B tested two endcap signs for cereal and saw an 8% lift.; Run an A/B test on the free-pickup threshold to raise AOV.; A/B test two subject lines for the weekly digital circular.

Assortment Optimization

The data-driven process of selecting the right mix of SKUs for a store or cluster to maximize sales, margin, and space productivity while meeting local demand and constraints.

Assortment optimization cut 12% of low-velocity SKUs and grew margin.; Localize the assortment in urban stores with more grab-and-go.; Use machine learning to balance breadth vs space constraints.

Average Order Value (AOV)

The average amount spent per transaction. A key metric for revenue productivity, often improved via bundling, upselling, and threshold-based offers.

AOV rose after setting a $35 free-pickup threshold.; Upselling premium private label increased AOV in e-grocery.; Track AOV by channel: in-store vs BOPIS vs delivery.

Back-of-House (BOH)

Non-customer areas of a store (receiving, storage, prep) where inventory is received, checked, stored, and prepped.

Relocate BOH cooler closer to receiving to cut putaway time.; Declutter BOH to speed backstock retrieval for BOPIS picks.; Log BOH temperatures to meet HACCP requirements.

Basket Analysis

Analytics that identify items frequently purchased together to inform adjacencies, promotions, cross-sell recommendations, and planograms.

Basket analysis shows chips lift salsa by 22%.; Place tortillas near taco kits based on affinity.; Use basket insights to build effective meal-deal bundles.

BOPIS (Buy Online, Pick Up In Store)

An omnichannel service where customers order online and pick up at store or curbside, reducing last-mile costs and increasing convenience.

Hit a 2-hour BOPIS SLA for peak weekends.; Staff picking waves around BOPIS order spikes.; Promote BOPIS-only digital coupons to drive adoption.

Category Management

Managing product categories as strategic business units—coordinating assortment, pricing, promotions, and shelf layout—often collaboratively with suppliers.

Run a quarterly category review with the CPG captain.; Define the category role: destination vs convenience.; Align planograms and pricing to the CatMan strategy.

Cold Chain

Temperature-controlled logistics from supplier to shelf to maintain product quality and safety for perishables.

Monitor dataloggers to verify cold chain integrity for dairy.; Reject loads with a cold chain breach.; Maintain ice cream at -20 C end-to-end.

Consumer Packaged Goods (CPG)

Manufacturers of branded grocery items sold through retail (e.g., snacks, beverages, cleaning products).

Negotiate trade funds with CPG partners.; CPG innovation will reset the beverage aisle.; CPGs co-fund TPRs and endcaps.

Cross-Docking

Logistics practice moving goods directly from inbound to outbound with minimal storage, reducing handling and inventory holding.

Cross-dock produce overnight to reduce dwell time.; Set up a cross-dock lane for fast-turn dairy.; Use cross-docking to feed micro-fulfillment with minimal backstock.

Dark Store

A retail location closed to the public used exclusively for online order picking and fulfillment.

Convert an underperforming store into a dark store for e-grocery.; Dark stores boost picking productivity and accuracy.; Operate dark stores 24/7 to meet delivery SLAs.

Demand Forecasting

Predicting future sales at SKU-location-time granularity to inform ordering, staffing, promotions, and capacity planning.

Forecast turkey demand for Thanksgiving by store.; Model promo uplift during a 2-week TPR.; Use ML forecasts to cut OOS by 20%.

Direct Store Delivery (DSD)

A channel where suppliers deliver directly to stores, handling merchandising and replenishment for certain categories.

Bread and soft drinks arrive via DSD.; Audit DSD delivery windows for compliance.; Coordinate DSD resets with planogram changes.

EDI (Electronic Data Interchange)

Standardized electronic exchange of business documents (POs, ASNs, invoices) between retailers and suppliers.

Send 850 purchase orders by EDI.; Receive 856 advanced ship notices before the truck arrives.; Automate 810 invoice processing to cut errors.

EDLP (Everyday Low Price)

A pricing strategy offering consistently low prices rather than frequent promotions, used to build price trust.

Milk and eggs are EDLP to strengthen price image.; Shift cereal from high-low to EDLP for consistency.; EDLP reduces price perception volatility vs TPRs.

Endcap

A high-visibility display at the end of an aisle used to feature promotions, new items, or seasonal goods.

Endcap drove a 3x lift for seasonal candy.; Charge vendors for premium endcap placement.; Rotate feature endcaps weekly based on the circular.

FIFO (First-In, First-Out)

Inventory rotation principle to sell older stock before newer stock, reducing spoilage and expiration-related shrink.

Train dairy team on FIFO to reduce expired milk.; Apply FIFO labels and date checks during replenishment.; Exception: reset packaging may require deviation from FIFO.

Fill Rate

The percentage of demand or order lines fulfilled on time and in full, measured at supplier, DC, or store level.

Supplier fill rate improved to 97% after the S&OP reset.; Boost e-grocery pick fill to lower substitutions.; Enforce fill rate penalties per the SLA.

Food Safety Modernization Act (FSMA)

U.S. legislation that shifts food safety focus to prevention, requiring stronger traceability, hazard analysis, and control plans.

Implement FSMA 204 traceability for leafy greens.; Revise recall SOPs to meet FSMA requirements.; Train staff on FSMA preventive controls.

GMROII (Gross Margin Return on Inventory Investment)

A profitability metric showing gross margin dollars earned per dollar of average inventory; higher indicates better inventory productivity.

Tighten safety stock to boost GMROII in snacks.; Compare GMROII by category and cluster.; High GMROII flags efficient space use on spices.

GS1 Standards

Global standards (GTIN, UPC/EAN, GLN, SSCC, GS1-128) enabling unique identification and barcoding across the supply chain.

Require GS1 GTINs on all new items.; Scan GS1-128 labels at receiving for accuracy.; Adopt GS1 GLNs for location identification.

HACCP (Hazard Analysis and Critical Control Point)

A systematic approach to food safety focusing on identifying hazards and controlling them at critical points in the process.

Document CCP checks on hot bar temps hourly.; Create a HACCP plan for in-store sushi prep.; Record corrective actions when thresholds are missed.

High-Low Pricing

A strategy alternating regular prices with promotional discounts to create traffic-driving deals while maintaining higher base prices.

Run a high-low strategy on meat to drive traffic.; Layer digital coupons on top of TPRs.; Balance hi-lo with EDLP on KVIs to protect price image.

Impulse Purchase

Unplanned purchases triggered by placement, pricing, or messaging, often at checkout, endcaps, and high-traffic areas.

Stock confections in the impulse zone at checkout.; Use mobile notifications to drive impulse add-ons.; Track impulse conversion on seasonal endcaps.

Inventory Turnover

The rate at which inventory is sold and replenished over a period; calculated as cost of goods sold divided by average inventory.

Increase fresh produce turns to cut shrink.; Benchmark turnover by store and category.; Higher turns improve cash conversion.

Item Master Data

The centralized record of product attributes (UPC/GTIN, descriptions, pack, cost, allergens, dimensions) used across systems.

Clean the item master before the departmental reset.; Add allergens and attributes for e-commerce filters.; Automate item setup workflows with governance.

JIT (Just-In-Time)

A replenishment approach minimizing on-hand inventory by timing deliveries close to need; reduces holding costs but increases risk of OOS.

Use JIT replenishment for fast-turn center store items.; JIT fragility showed during pandemic surges.; Balance JIT with safety stock on variable demand.

KPI (Key Performance Indicator)

Quantifiable metrics used to evaluate performance against objectives at store, category, or enterprise level.

Weekly KPIs: sales, margin, OSA, labor hours.; Set KPI targets for pick rate and accuracy.; Tie bonuses to KPI achievement.

KVI (Key Value Items)

High-visibility products that shoppers use to judge a retailer’s price image; often tightly priced vs competitors.

Milk and bananas are KVIs in most markets.; Match competitor on KVI pricing to protect price image.; Monitor KVI gaps daily.

Labor Scheduling

Planning associate shifts based on forecasted traffic, orders, deliveries, and labor standards to meet service and productivity goals.

Use WFM to schedule around BOPIS peaks.; Align deli staffing with the lunch rush.; Add hours on truck days to speed receiving.

Last-Mile Delivery

The final leg of order fulfillment from store or FC to the customer’s doorstep; a major cost and service lever in e-grocery.

Optimize routes to cut last-mile costs.; Negotiate SLAs with gig partners for delivery windows.; Shift orders to curbside to reduce last-mile spend.

Loyalty Program

A customer identification and rewards system that enables personalized promotions, points, and pricing, while capturing first-party data.

Grow loyalty enrollment via the app.; Use loyalty data for personalized offers.; Offer member-only prices on KVIs.

Markdown Optimization

Determining the timing and depth of price reductions to clear inventory profitably, especially perishables with limited shelf life.

Dynamic markdowns on meat nearing expiry.; AI model sets markdown cadence by store.; Cut waste 15% with optimized markdowns.

Merchandising

Presenting and promoting products in-store and online through layout, adjacencies, signage, content, and storytelling to drive sales.

Execute the seasonal merchandising guide.; Improve online merchandising with rich content.; Audit planogram compliance weekly.

Micro-Fulfillment Center (MFC)

A small, often automated facility (in-store or nearby) designed to efficiently pick and stage e-grocery orders.

Deploy an MFC to cut picking time by 50%.; Stock the MFC with the top 1,000 SKUs.; Integrate MFC orders with the OMS.

Net Promoter Score (NPS)

A metric of customer loyalty calculated as promoters minus detractors, based on likelihood to recommend.

NPS jumped after we revamped self-checkout.; Survey BOPIS customers to track NPS.; Tie store bonuses to NPS and OSA.

Omnichannel

A seamless shopping experience across physical stores, web, app, delivery, and pickup, with integrated data and services.

Offer unified pricing across channels.; Provide omnichannel inventory visibility.; Run campaigns that span app, web, and store.

On-Shelf Availability (OSA)

The degree to which items are available for customers on the shelf when and where they expect them.

OSA dropped on weekends—add recovery labor.; Use computer vision to improve OSA.; Target 98% OSA on KVIs.

Out-of-Stock (OOS)

A condition where an item is unavailable to purchase due to depleted inventory, causing lost sales and substitution.

Trigger OOS alerts on top 100 items.; High substitution rates signal OOS in e-grocery.; Root-cause OOS: late DSD deliveries.

Planogram (POG)

A schematic detailing shelf layout, facings, and product adjacencies to optimize space and sales.

Reset the cereal aisle per the new POG.; Audit POG compliance with shelf photos.; Localize POGs by store cluster.

PLU (Price Look-Up)

Numeric codes used at POS to identify non-barcoded items like loose produce and bulk goods.

Bananas are PLU 4011.; Train cashiers on common PLUs to reduce errors.; Use PLU stickers on bulk produce.

Point of Sale (POS)

The checkout system where transactions occur; also refers to the detailed sales data captured at checkout.

Upgrade POS to support self-checkout.; Analyze POS data for hourly demand spikes.; Integrate POS with loyalty ID capture.

Price Elasticity

A measure of how sensitive demand is to price changes; used to set everyday prices and promotional discounts.

Milk elasticity is low; be cautious with price hikes.; Estimate promo elasticity to set TPR depth.; Model cross-elasticity between national and private label.

Private Label

Retailer-owned brands that often offer higher margins and differentiation from national brands.

Grow private label penetration to 30%.; Develop a premium private label pasta line.; Negotiate co-packing for private label snacks.

Reorder Point (ROP)

The inventory level at which a replenishment order is triggered, typically based on demand during lead time plus safety stock.

Calculate ROP by SKU-store using demand and lead time.; Raise ROP ahead of holiday peaks.; Include safety stock in ROP to buffer variability.

Retail Media Network (RMN)

A retailer-run advertising platform that monetizes first-party data across digital and in-store channels (e.g., sponsored search, offsite media).

CPGs are shifting budget to our RMN.; Place sponsored products in the app search results.; Measure RMN ROAS alongside trade spend.

Shrink

Inventory loss due to theft, spoilage, damage, or process errors, reducing gross margin.

Produce shrink is running at 3% of sales.; Deploy EAS and cycle counts to cut shrink.; Improve date rotation to reduce perishables shrink.

SKU

Stock Keeping Unit: a unique identifier for an item, used for ordering, tracking, and merchandising.

Rationalize long-tail SKUs to simplify the shelf.; Create SKU-level forecasts.; Track SKU count per linear foot.

TPR (Temporary Price Reduction)

A short-term discount funded by trade or retailer to drive incremental sales in a high-low pricing strategy.

Run a two-week TPR on cereal to drive trial.; Stack a digital coupon on the TPR for extra lift.; Measure TPR performance vs baseline and post-promo dips.

UPC (Universal Product Code)

A standardized 12-digit barcode format (a type of GTIN) widely used in North America to uniquely identify products.

Scan UPCs at POS for accurate sales capture.; Assign a new UPC for the recipe reformulation.; Fix the duplicate UPC issue in the item master.