Retail Stores Industry Terminology

ABC analysis

A method for ranking inventory by importance, typically by sales or margin contribution (e.g., A items are the small percentage of SKUs driving most of the value; B moderate; C low). Guides counting frequency, service levels, and shelf space.

We reclassified our SKUs after an ABC analysis showed A-items were understocked.;Use ABC analysis to set cycle count frequency.;Allocate shelf space by ABC class.

AOV (Average Order Value)

Average revenue per customer order (total revenue divided by number of orders). Often increased through bundles, upsells, and thresholds for free shipping.

Our AOV rose to $48 after raising the free-shipping threshold.;Bundle offers target an AOV of $55 in Q4.;Paid search is lifting AOV by 8%.

Assortment planning

The process of determining the breadth and depth of products by store, channel, and season, balancing space, demand, margin, vendor constraints, and localization.

We localized the assortment for coastal stores.;The patio set missed the assortment because of space constraints.;Assortment planning drove SKU rationalization in Q2.

Basket size

Average number of items per transaction (units per basket). Related to UPT and influenced by adjacencies, promotions, and associate attachments.

The loyalty offer increased basket size from 2.1 to 2.5 units.;Endcaps drove bigger baskets on game day.;Store 103 has high conversion but low basket size.

BOPIS (Buy Online, Pick Up In Store)

An omnichannel fulfillment option where customers purchase online and collect items at a store, combining e-commerce convenience with immediate pickup.

BOPIS orders must be staged within 30 minutes.;We expanded BOPIS to all urban stores.;Marketing is promoting BOPIS to reduce last-mile costs.

Brick-and-mortar

Physical retail locations where customers shop in person, as opposed to online-only channels.

Brick-and-mortar traffic rebounded in Q3.;Our brick-and-mortar network doubles as micro-fulfillment.;The brand is opening brick-and-mortar pop-ups.

Category management

A collaborative process (retailer and suppliers) that manages product categories as strategic business units, optimizing assortment, pricing, shelving, and promotions.

The snack category captain recommended a reset.;We use category management to optimize the beverage aisle.;Vendor scorecards are integrated into category plans.

Conversion rate

The percentage of visitors who complete a purchase (in-store or online). A core productivity metric influenced by traffic, service, and friction in the journey.

Store conversion rose to 32% after staff retraining.;Mobile conversion lags desktop by 1.4 points.;Heatmaps inform tactics to lift conversion.

CRM (Customer Relationship Management)

Strategy and systems for managing customer data, interactions, and marketing to increase retention, lifetime value, and personalization.

CRM segmentation powered our back-to-school campaign.;Merge POS and CRM data to compute CLV.;Store associates access CRM profiles on tablets.

Dead stock

Inventory that has little or no chance of selling (obsolete, expired, or out-of-season). Often cleared via markdowns, liquidation, or donations.

We wrote off dead stock after season change.;Markdown cadence aims to prevent dead stock.;Dead stock ties up cash and shelf space.

Demand forecasting

Predicting future sales at SKU, store, and channel levels using history, seasonality, promotions, price, weather, and events. Drives ordering and staffing.

We retrained the demand forecast before Black Friday.;Weather added 5% to the demand forecast for heaters.;Forecast bias created recurring stockouts.

Dwell time

The amount of time shoppers spend in a store or zone. Used to assess merchandising effectiveness, queue friction, and staffing needs.

Dwell time jumped near the holiday display.;Shorter dwell in checkout cut abandonment.;We measure dwell time with ceiling sensors.

EDLP (Everyday Low Pricing)

A pricing strategy featuring consistently low prices rather than frequent deep promotions (hi-lo). Aims to build trust and reduce promo complexity.

We shifted from hi-lo to EDLP for detergents.;EDLP reduced promo labor and improved price trust.;EDLP requires tighter cost control with vendors.

Endcap

A high-visibility display at the end of an aisle, typically used for promotions, new items, or seasonal features.

The cereal endcap delivered a 3x sales lift.;Vendors bid for Q4 endcap placements.;Follow the planogram for the endcap build.

Endless aisle

Capabilities that let stores sell items not physically in stock by ordering from central/DC or vendor drop-ship for home delivery or later pickup.

Endless aisle kiosks saved the sale on out-of-stock sizes.;Drop-ship powers our endless aisle assortment.;Associate iPads support endless aisle orders.

FIFO (First-In, First-Out)

An inventory rotation method ensuring older stock is sold before newer stock, reducing spoilage and obsolescence.

Use FIFO to rotate dairy in coolers.;FIFO minimizes write-offs on perishables.;Audit FIFO compliance during store walks.

Footfall

The number of people entering a store (traffic). Used with conversion to assess sales productivity.

Footfall rose 12% after the remodel.;Rain depressed footfall but boosted online.;We benchmark footfall via counter cameras.

GMROI (Gross Margin Return on Inventory Investment)

Gross margin dollars generated per dollar of average inventory cost. Formula: GMROI = Gross Margin $ / Average Inventory Cost $. Measures inventory productivity.

The footwear GMROI slipped below 2.8.;We rebalanced depth to lift GMROI.;GMROI guides open-to-buy decisions.

GMV (Gross Merchandise Value)

The total dollar value of merchandise sold over a period, typically used for marketplaces and e-commerce, before returns and adjustments.

Marketplace GMV grew 40% year over year.;We report GMV before returns and cancellations.;GMV concentration in top sellers is rising.

Gross margin

Net sales minus cost of goods sold, often expressed as a percentage. Core measure of pricing power and product profitability.

Markdown pressure cut gross margin by 180 bps.;Private label expanded gross margin.;Track gross margin by channel and category.

Heatmap

A visual representation (often from sensors or video analytics) showing shopper traffic intensity across store areas.

Heatmaps show cold zones near seasonal.;We moved impulse items based on heatmap data.;Heatmaps inform staffing during peak hours.

Inventory turnover

How many times inventory is sold and replaced over a period. Commonly COGS divided by average inventory; high turns suggest efficient inventory.

Inventory turnover improved from 4.1x to 5.0x.;Slow turns flag candidates for markdowns.;Target higher turns in A-class SKUs.

JIT (Just-in-time) inventory

An approach that minimizes on-hand inventory by timing deliveries close to demand. Reduces carrying cost but increases supply risk.

JIT reduced backroom space needs.;Disruptions exposed JIT vulnerabilities.;We paused JIT on critical SKUs.

KPI (Key Performance Indicator)

A quantifiable metric used to evaluate performance against objectives at company, category, or store levels.

Top KPIs: sales per square foot, shrink, conversion.;Weekly KPI reviews drive corrective action.;Tie bonuses to store-level KPIs.

Lead time

Time from placing a purchase order to the goods being available for sale, including production, transit, receiving, and processing.

Ocean delays extended lead times by two weeks.;We added safety stock for long lead-time items.;Vendor lead time variance causes stockouts.

Loyalty program

A structured marketing program that rewards repeat purchases and captures first-party data to drive retention and personalization.

Loyalty members drive 65% of tendered sales.;We launched a paid loyalty tier.;Personalized offers boosted loyalty enrollment.

MAP (Minimum Advertised Price)

A brand’s policy specifying the lowest price a retailer may advertise (not necessarily the selling price). Enforced via monitoring and penalties.

We cannot advertise below MAP on this brand.;MAP holidays allow deeper promos.;The crawler flags MAP violations online.

Markdown

A permanent reduction to the regular retail price to clear inventory or respond to competition. Distinct from short-term promos.

Take a 30% markdown on dead stock.;Our markdown cadence is 30-50-70.;Markdown budgets tighten in Q1.

Merchandising

Planning and executing product selection, presentation, pricing, and promotion to maximize sales and margin in stores and online.

Merchandising set the back-to-school narrative.;Seasonal merchandising drove basket growth.;We aligned merchandising and supply planning.

NPS (Net Promoter Score)

A loyalty metric based on likelihood to recommend (0–10). Calculated as %Promoters minus %Detractors. Indicator of customer advocacy.

Curbside NPS trails in-store by 10 points.;Tie store bonuses to NPS improvements.;Promoters have 2.3x the repeat rate.

Omnichannel retailing

An integrated approach enabling customers to discover, buy, receive, and return seamlessly across stores, web, mobile, marketplaces, and social.

Omnichannel customers spend 3x more.;We unified pricing for omnichannel consistency.;Omnichannel requires accurate inventory visibility.

OMS (Order Management System)

Software that captures, allocates, and orchestrates orders across channels and fulfillment nodes (DC, store, drop-ship), applying business rules.

The OMS routes orders to the optimal node.;OMS latency caused split shipments.;OMS orchestrates BOPIS and ship-from-store.

On-shelf availability (OSA)

The percentage of SKUs available to purchase when the customer wants them. Measures shelf-level execution beyond backroom inventory.

OSA dropped on weekends due to staffing.;Computer vision is improving OSA by 3 points.;Vendors are bonused on OSA targets.

Planogram (POG)

A schematic showing shelf layout, facings, and product placement for a category or aisle to optimize space and sales.

Follow the POG for shelf facings.;We optimized the POG using sales by position.;Noncompliance with POG hurts adjacencies.

Point of Sale (POS)

The hardware and software used to process transactions in-store or online; also refers to the resulting sales data.

Upgrade POS for contactless payments.;POS data feeds our CRM and demand forecast.;POS outages halted transactions for 20 minutes.

Private label

Retailer-owned brands manufactured by third parties or in-house, often offering higher margins and differentiation.

Private label penetration hit 28%.;We launched a premium private label line.;Private label improves gross margin and loyalty.

Queue management

Systems and processes to control customer wait times and line flow at checkout, service counters, and pickups.

Open three lanes when queue exceeds five customers.;Virtual queueing reduced walkouts.;Queue beacons alert managers in real time.

RFID (Radio-Frequency Identification)

Tags and readers that identify items via radio waves, enabling faster cycle counts, item-level visibility, loss prevention, and omnichannel accuracy.

RFID cycle counts improved accuracy to 98%.;We piloted RFID in apparel first.;RFID enables OSA insights and BOPIS accuracy.

Replenishment

The process of restocking shelves and backrooms based on sales, forecasts, and targets (manual or automated).

Automated replenishment cut stockouts by 20%.;Set min/max levels for overnight replenishment.;Vendor lead times inform replenishment frequency.

Retail media network (RMN)

A retailer-operated advertising platform that sells media inventory (on-site, in-app, in-store, off-site) using retailer first-party data for targeting and measurement.

Our RMN monetizes first-party shopper data.;CPGs shift budget to retail media networks.;RMN drove a 4x ad return for the snack launch.

Sales per square foot

A productivity metric: net sales divided by selling area. Used to benchmark store formats, departments, and space allocation.

Sales per square foot rose after the remodel.;We compare sales per square foot across formats.;Reduce space on low productivity categories.

Shrink

Inventory loss due to theft, error, damage, or fraud, measured as a percentage of sales or inventory.

Shrink rose to 1.9% of sales.;RFID helps diagnose shrink drivers.;We tightened high-shrink item controls.

SKU (Stock Keeping Unit)

A unique identifier for a sellable product variant. Basis for inventory tracking, forecasting, and shelf planning.

We rationalized SKUs in the cereal set.;Each color/size variant gets its own SKU.;SKU-level forecasting improves accuracy.

TPR (Temporary Price Reduction)

A short-term promotional discount that temporarily lowers the shelf price to drive trial or volume without changing the base price.

Run a two-week TPR on pasta.;TPRs stack with loyalty offers.;Avoid TPRs that train the shopper.

Units Per Transaction (UPT)

Average number of units sold per transaction. A lever for increasing basket size and sales without lowering price.

Associate add-ons lifted UPT to 2.4.;We coach on attachments to increase UPT.;UPT is a core KPI for associates.

Upselling

Encouraging customers to purchase a higher-end product or add features, often increasing margin and AOV. Distinct from cross-selling.

Train associates on upselling extended warranties.;The app prompts upsells at checkout.;Upselling raised AOV without discounting.

Vendor-managed inventory (VMI)

A collaboration where the supplier monitors sales and inventory and takes responsibility for replenishment within agreed targets.

The beverage supplier runs VMI for us.;VMI improved in-stocks and reduced days of supply.;Define SLAs and data feeds for VMI.

Visual merchandising

The art and science of presenting products in-store (fixtures, lighting, signage, windows) to attract, engage, and convert shoppers.

Revise the window per the visual merchandising guide.;Lighting is key to visual merchandising.;We A/B tested visual merchandising concepts.

Webrooming

A behavior where customers research products online but complete the purchase in a physical store (the opposite of showrooming).

Webrooming peaks in electronics.;We support webrooming with local inventory ads.;Webroomers convert faster in store.

Z-report

The end-of-day POS register report that resets totals and summarizes sales, returns, tenders, and voids for reconciliation.

Run the Z-report before closing.;Accounting requested last Saturday’s Z-reports.;Z-report mismatches trigger audits.