|
A
Activity Based Costing (ABC) - The process in which true costs of a particular activity are determined by factoring in all direct and indirect costs. Accurately identifies sources of profit and loss. A process by which the cost of performing activities and the use of resources are assigned to individual products based on the activities involved (i.e., ordering, receiving, stocking, picking, packing), and the use of resources (i.e., labor, utilities, equipment) in handling a particular product. This results in a more accurate reflection of an individual product's profitability than does gross profit.
Assortment - Various forms of the same general type of items, such as the depth and width of the merchandise offering. Depth is about variety in styles, colors, sizes, flavors, brands and prices; width is about different product categories.
Average Inventory on Hand - The average dollar amount tied up in inventory for a specific time period. It is calculated by dividing the annual cost of goods at retail by the number of annual retail turns. It can be calculated for the entire store, a department, a category, or all the way down to item level.
B
Backorder - An order to be filled when stock is renewed.
Backstock - Items in inventory that are not yet placed on the shelves.
Bar Code - A code or symbol used for identification purposes, which is composed of a pattern of varying-width parallel bars and spaces that can be read by an electronic scanner. Bar codes are used on products, coupons, cases, pallets, etc. The symbol of the Universal Product Code (UPC).
Top of page
C
Cannibalization - The diminishing of a product's sales or potential sales due to competitive factors such as the introduction of another, competing brand, i.e., rather than bringing in additional sales dollars, some of those sales are split between the old and the new item.
Category - A group of products that a consumer could substitute for each other; e.g., cereals, paper products.
Category Killer - A store with a narrow focus of specialization able to deliver product at a lower price than more broad-lined retailers and that undercuts competition in a market area, e.g., Toys "R" Us, pet food superstores.
Category Management - A key component of efficient consumer response (ECR) in which each product category operates as a strategic business unit that must fulfill company objectives as well as consumer needs. Category management is dependent on strategic alliances among suppliers and retailers and technologically driven information streams, such as point-of-sale data.
Category Manager - A person, at corporate level, responsible for managing a product category as a strategic business.
Cherry Picker - A consumer who shops a retailer expressly for "specials," often traveling from store to store to get the best-priced items.
Commodity - Anything bought or sold, any article of commerce that is non-differentiated.
Consumer - A person who buys goods or services for his owns needs and not for resale or to use in the production of other goods for resale.
Continuous Replenishment Programs (CRP) - The practice of partnering between distribution channel members that changes the traditional replenishment process from distributor-generated purchase orders, based on economic order quantities, to the replenishment of products based on actual and forecasted product demand; i.e., your supplier ships you products based on what you sell of those products each day to keep your in-stock position at a pre-determined level.
Cross-Merchandising - A retail practice in which complementary items are offered on the same display, often with signage encouraging purchase with suggested usage ideas, e.g., strawberries, whipped cream and sponge cake, cereal and bananas.
Customer Loyalty - The degree to which a consumer regularly patronizes a store for most purchases.
Top of page
D
Data Mining - A technique of sifting through vast amounts of data to discover trends in customer needs, buying patterns, profitability, and other critical business measurements. Usually requires the construction of a data warehouse.
Data Warehouse - Data mining and data warehousing go hand in hand. Before you can effectively mine information, you have to put it all in one place - at least temporarily. Data warehousing involves integrating information from different systems, functions, and locations across an enterprise into a central database to allow more accurate analysis of customer needs, buying patterns, and profitability and improved decision making and marketing.
Days-of-Supply (DOS) - A calculation for the amount of time that a supply of product will remain on-shelf, based on the expected movement of the product and the number of facings it is given. Also represents how many days, based on historic average sales per day, you can sell the product before running out of stock, given no additional receipts.
Decision Support - Describes a class of systems or solutions that reveal meaningful trends and patterns within an enterprise's raw data, allowing people to make ad hoc inquiries for information they need to make more accurate decisions. Data mining and data warehousing are examples of decision-support.
Decision Support Software (DSS) - Software packages that speed access and simplify data analysis, queries, etc. within a database management system. Often the basis of EIS.
Demographic - The demographic characteristics of a population, esp. as classified by age, sex, income, etc. for market research, sociological analysis, etc.
Demographic Clusters - The grouping of people by demographic characteristics such as age, sex, income levels, education levels, race, family status, etc.
Direct Store Delivery (DSD) - A process where the manufacturer delivers products directly to a retailer, bypassing the wholesaler to eliminate warehouse handling. Most DSD suppliers also order for the retailer and stock shelves when on the premises.
Top of page
E
Efficient - Producing a desired effect, product, etc. with minimum of effort, expense, or waste; working well.
Efficient Assortment - An approach to inventory management with the dual goals of both satisfying consumers and efficiently using shelf space to increase profits for retailers and their suppliers.
Efficient Consumer Response (ECR) - A process that encourages suppliers, distributors/wholesalers and convenience store operators to work together more closely to streamline operations, reduce costs, and optimize store assortments so that consumer value is maximized. Efficient Replenishment - The improvement of time and cost factors in the replenishment system through automated retail and warehouse ordering, improved logistics and reductions in damage and inventories for suppliers and warehouses.
Electronic Data Interchange (EDI) - A computer-to-computer communication of data in a standard date format, permitting receiver to perform functions of a standard business transaction.
Every Day Low Price (EDLP) - A retail strategy that entails keeping product prices low on a daily basis, with infrequent specials. Contrasted with High-Low (or Promotional) strategy.
Every Day Value Price (EDVP) - Differs from every day low price by focusing on what the consumer perceives as a value price. Execution - Carrying out, putting into effect or fulfilling.
Top of page
F
Facings - The number of packages of an item on the front line of a store shelf.
First-In-Rotation - The practice of moving older items to the front of the shelf or display and placing newer items toward the back to ensure that products are sold before their expiration dates.
Forecast - An estimate of future business as it relates to sales and profits.
Forward Buying - The purchase of merchandise, usually on deal, with the intention of holding it until a later date when the regular price is reinstated or the product is in short supply. Also known as a buyout.
Frequent Shopper Program - A systematized program, usually implemented electronically, in which brand and/or store-loyal receive points toward future product/store discounts.
Top of page
G
Gross Margin - Gross profit expressed as a percent of sales.
Gross Margin Return on Investment (GMROI) - Can be calculated either as a percentage or a dollar multiple. The measure reflects the return on inventory investment in one year. GMROI can be calculated in two ways:
GMROI % = Gross Margin (%) X (Sales / Average Inventory at Cost)
GMROI $ = Gross Margin ($) / Average Inventory at Cost. For example:
Sales = $3,250 B. Avg Inv. at Cost = $650 C. (A /B) = 5
Gross Margin % = 42 % E. Gross Margin $ (A X D) = $1,365.
GMROI $ (E / B) = $2.10 G. GMROI % (C X D) = 210 %
Gross Profit - A profit figure calculated by subtracting the cost of an item from its selling price, expressed as dollars and cents or as a percentage. (See also markup, margin, net profit, spread.)
Gross Sales - The total dollar volume of goods sold during a specific time frame.
Top of page
H
High-Low Pricing - A pricing strategy in which a high product price level is maintained on a daily basis, with frequent specials and deep discounts on featured items.
Home Meal Replacement - Ready to eat foods consumed at home (or in store) requiring little if any preparation.
House Brand or House Label - The private label of a distributor or chain.
Hypermarket - An economy supermarket combined with a discount department store under one roof. At 200,000 square feet or larger, this is the most capital intensive of all supermarket formats.
Top of page
I
Information Management - The treatment of information as an asset to enhance an organization's competitiveness and responsiveness. It results from effectively identifying, collecting, and analyzing information - and then directing it to the points of decision-making and customer service.
In-Stock - Merchandise in supply on the shelf and available to be purchased by customers.
Internet - An unsecured worldwide communications network that is ungoverned and open to all.
Intranet - Using the same networking structure as the Internet, intranets are designed and secured for the internal use of a company's employees and partners.
Inventory - The saleable stock of merchandise in a wholesale or retail establishment at any given time, or an itemized record of that merchandise.
Inventory Carrying Cost - The total dollar value of all products in inventory.
Inventory Turnover - The ratio of product sales over the average amount of product in inventory for a specified time. It can be calculated using retail dollars for sales and inventory, dividing cost of goods sold by the average cost of inventory, or by using units for all components.
For example, if calculating turnover for a one month period, the formula would be:
Sales / ((Beginning Inventory on hand) + (Ending Inventory on hand) / 2)
Island Display - A display where items are accessible from all sides, usually freestanding.
Top of page
J
Just-In-Time (JIT) Purchasing - An approach to inventory management in which products are bought in small quantities to reduce store inventory carrying costs and obtain delivery just in time for use.
Top of page
K
Kiosk - A freestanding display used to provide merchandise and information. They are located on streets, in shopping malls and in stores. Originated in Europe.
Top of page
L
Layout - The interior arrangement of departments and merchandise within departments, as well as space allocation for aisles, counters, fixtures, etc. (same as Store Layout).
List Price - A product's published price, before any discounts or allowances are taken into account.
Loss Leader - An item priced in an advertisement or in-store merchandising at substantially less than competition to attract customers to a particular store with the expectation that they will purchase items at full profit margins. Loss leaders are always sold at less than cost.
Low Involvement Merchandise - Items that are bought routinely by the consumer without much thought, search, or purchase time.
Top of page
M
Manufacturer Brand - A brand owned and promoted by a manufacturer. Distributed by more than one wholesaler or retailer in competition.
Margin - The difference between the cost of an item and its selling price, usually expressed as a dollar value or as a percentage.
Markdown - A reduction of an originally established selling price for a special sale period or to move older merchandise.
Market - A region or area in which goods can be bought and sold. Generally delineated by either geography or business segment.
Market Area - The geographic area around a store from which that store can reasonably be expected to draw customers.
Market Basket - The combined purchases by a consumer during a single shopping trip.
Market-Basket-Analysis - The basket of goods purchased by several consumers are analyzed to determine if there are any correlations among the goods purchased (i.e., peanut butter and jelly, rice crispies and marshmallows, beer and diapers). This information is used for cross-merchandising.
Market-Basket-Pricing - Setting prices applicable to a situation where the sale of one item encourages a buyer to purchase other items in the store. Specials and tie-in sales are often used.
Marketing - All business activity involved in the moving of goods from the producer to the consumer, including buying, selling, advertising, packaging, etc.
Marketing Plan - The documented process for achieving state objectives through the use of advertising, branding, category management and execution of merchandising practice.
Market Leader - The store that controls the market share of merchandise or services.
Market Price - The price that a commodity brings when sold in a given market; prevailing price.
Market Research - The study of the demands or needs of consumers in relation to particular goods or services.
Market Share - A company's percentage of its industry's total sales.
Market Value - The price that a commodity can be expected to bring when sold in a given market (see Market Price).
Markup - The difference between the cost price of goods and their retail price.
Mass Marketing - The approach used to sell large volumes of merchandise to everyone.
Mass Merchandiser - A large, self-service general merchandise store that features low prices.
Merchandising - To advertise, promote, and organize the sales of a particular product. Generally involves both in-store and outside store activities that promote a product, including pricing, assortment, product placement, signage, displays, etc.
Micro-Marketing - Identifying the needs of the local marketplace and customizing the strategies at the store level to exploit the differences in consumers. (see micro-merchandising)
Micro-Merchandising - Customizing each store's assortments, SKU quantities, promotions, and/or introductions to fit each store's level of demand. (see micro-marketing)
Multiple Pack Items - Discounting the total selling price when multiple (typically two or three) units of the same item are purchased together.
Multi-Pack Transaction - A transaction that involves the sale of multiple pack items. Typically requires an adjustment ot retail inventory.
Top of page
N
National Brand - A brand familiar to consumers, available in all regions of the country and distributed competitively by wholesalers and retailers. (see manufacturer's brand)
Net Profit - The difference between gross profit and the cost of doing business. Commonly expressed as percentage of sales.
Net Sales - Gross sales minus returns and allowances, over a specified period.
Top of page
O
On-Hand Inventory - Total inventory in the store, including both what is on display for sell and back stock.
On-Hand Quantity - The units of product in the store and available for sale, whether on the shelf, in a display, or stored as backstock.
One-Stop Shopping - The ability to purchase a wide variety of products and/or services at a single location.
Operating Expenses - Those expenses that are deducted from gross margin and which are incurred in carrying out only the normal, regular commercial activities of a given business enterprise.
Operating Income - Net sales less direct and indirect operating costs and before deducting cost of capital, extraordinary items and taxes.
Out-of-Stock - An item regularly carried in the store but currently unavailable in the brand, flavor, package or style requested by a customer.
Overhead - The basic direct and indirect costs associated with business operations, such as rent, labor.
Overstock - A situation where merchandise is purchased, in addition to normal stock, in anticipation of a special sales drive.
Own Brand - An item bearing the name or brand of the store selling the item rather than the name of the producer. (see Private Label)
Top of page
P
Plan - A disciplined, systematic approach, formulated beforehand, that results in detailed strategies, tactics and implementation steps.
Planogram - A computerized diagram used in merchandising to design the ideal display of merchandise on retail store shelves. (see Space Management)
Point-of-Sale (POS) - The place in the store where a sale is completed, i.e., the cash register, where merchandise is picked up. However, the acronym POS frequently is used to describe the sales data generated at the checkout scanners. Also referred to as Point-of-Purchase.
Private Label - A product label or brand owned by a wholesaler or a retailer (i.e., a supermarket item bearing a store label with an item's name) for a line or variety of items for exclusive distribution, usually priced lower than manufactured brands to appeal to bargain conscious customers. (see Own Brand)
Process - A particular method of doing something, generally involving a number of steps or operations.
Product - Something that is sold in the store.
Product Adjacencies - Products that are merchandised in proximity of one another in order to promote or change purchasing behavior to include a combination purchase of both products by consumers.
Program - A logical sequence of operations that are developed to meet a particular need or to solve a problem. Generally has a beginning and ending.
Promotion - An organized sales effort for a product to stimulate demand. Advertising, publicity, and events are employed to attract attention and create interest among customers.
Push/Pull - A marketing concept where product is "pushed" through the channel through deals, allowances, etc. "Pull" refers to direct appeals to customers, persuading them to demand the product.
Top of page
Q
Quick Response - A partnership between a supplier and retailer through which orders are replenished automatically via computer link up to reduce out-of-stocks, forced markdowns and operating costs. The partnership enables better response to customer needs through the sharing of point-of-sale scan data, EDI and bar coding.
Top of page
R
Retail Inventory Value - The dollar value placed on inventory based on each item's selling price rather than its purchase cost.
Return on Investment (ROI) - The ratio of a company's net profit in relation to its net worth, derived by dividing the company's net profit after taxes by its net worth.
Top of page
S
Safety Stock - (margin of safety) The amount of additional inventory required to prevent out of stocks in the event of changes in sales or delivery days.
Scanner - An electronic instrument that reads bar codes and other graphic information found on product packages, coupons and mailing envelopes.
Scanning - The electronic reading of a bar code that yields such product information as price, color, and size.
Seasonal Item - Items closely tied with a specific season or holiday that limits their sales life.
Seasonal Promotion - A sales effort created to coincide with a holiday or season of the year.
Sell-Thru - The amount of goods, expressed as percentage of the total amount on hand, sold over a given period of time.
Shelf Talkers - Large labels, tags or devices used to attract consumers' attention.
Shrinkage - The gradual loss of inventory over time due to damage, misplacement, or theft.
Space Management - The planned regulation of space occupied by an item on the shelves. (see Planogram)
Stock - The total amount of goods; inventory.
Stock Keeping Unit (SKU) - An individual color, size, flavor or pack of product that requires a separate code number to distinguish it from other items.
Store Brand - A brand owned by a retailer that is not a nationally advertised brand. (see Private Label)
Superstore - A combination of a general merchandise operation and a supermarket, usually ranges in size from 50,000 square feet to 200,000 square feet.
Supplier - A broad term that includes all types of wholesalers. The source from which retailers buy merchandise for resale.
Top of page
T
Trade Allowances - Incentives provided by the manufacturer to retailers and other channel intermediaries to stock, display or promote the manufacturer's goods.
Trade Class - A type of retail outlet whose objectives differ as to customer expectation. Examples of such would be drug, grocery, mass merchandiser, discount, C-store gas or smoke shop.
Top of page
U
Universal Product Code (UPC) - A coding system consisting of 11 bars of varying widths for product identification of consumer items, typically scanned at the retail point-of-sale.
Top of page
V
Vendor - A seller in the course of trade. (see Supplier)
Vendor Managed Inventory (VMI) - A practice, similar to continuous replenishment (CRP), where POS and inventory data is sent to suppliers who assume the responsibility for managing their inventories inside a distributor's organization.
Top of page
W
Warehouse - A distribution center where merchandise is stored prior to distribution.
Warehouse Club Store - A no-frills, cash-and-carry discount store. Usually customers must be members and pay dues.
Weeks-of-Supply - The number of weeks that the warehouse stock of an item will be available based on its current sales movement.
Top of page
|
