Definition of Retail Terms


To the untrained ear, retail terms may sound confusing. Retail terminology describes and defines retailers' core operations; at the store level, retailers use distinct phrases and common descriptions in running their businesses. A thorough understanding of retail terms will help you better comprehend the retailing sector, allowing you to be a smarter employee.


At the core, retail stores need goods, a location, and customers in order to operate. Profits are generated by the sale of goods. Retailers may either produce or purchase goods; those items may be warehoused at a distribution center before being dispersed to various retail locations.

Another basic retail term is the unit, a store or kiosk that represents the physical location of the business. You should note that with the advent of the Internet, some retailers have abandoned the traditional physical location model for a website, though many retailers now use both. Customers are defined as individual consumers or businesses or other organizations.

About POS

Once you have a store, you need to operate it. Store-level terminology gives retail managers and associates a common language for everyday operations. To make sales, you need a POS; to enhance profitability, retail sales techniques are vital.

The POS, or point-of-sale system, is a fancy term for the cash register; modern POS systems use software to allow store associates to access inventory or check what items are in stock. For some retailers, POS systems also have cash drawers, as well as the ability to process credit and debit cards. Some POS systems include an integrated warning system that indicates when to refuse a check from a customer.

The POS is also a crucial sales tool. Salespeople are trained to "suggestive sell" items when the customer approaches the cash register, adding logical items to a customer's purchase through conversation and product knowledge. Some POS systems aid suggestive selling by alerting the salesperson to complementary items as a specific receipt is being rung up.

Marketing terms

Suggestive selling at the point of sale is not the only in-store marketing opportunity, however. The terms POP, or point-of-purchase, and signage (which simply refers to pricing and other informational signs) also help retail employees manage a store. POPs are displays that attract customers to specific items, while signage clarifies sales and product categories. Some retailers direct merchandise placement through "planograms," which depict how and where certain products should be displayed.

Other common retail marketing terms concern customer discounts, which can come in the form of coupons and rewards cards, which give repeat customers added benefits. A customer mailing list is the term that describes specific marketing efforts to high-value customers.

Inventory management terms

Besides sales and marketing, you will also help to manage inventory if you work in a retail store. Employees may have shipping and receiving duties; goods shipped by truck or parcel post must be received into the store's inventory system, which is the term for a store's total stock of goods. Inventory counts describe the ongoing auditing of stock. Retail stores conduct their own inventory counts or contract an outside firm to do so. Products may be marked with bar codes, which can be scanned electronically.

Two additional terms associated with inventory management are audits and loss prevention. Auditors check how the store is operating, and they may be internal (from within the company) or external. An audit may include not only inventory counting but also operational procedures, store cleanliness and order, and cash accounting procedures. An audit report sums up the findings. Store associates are trained in loss prevention, which is the prevention of theft by both customers and employees. The term for measurement of loss prevention is called "shrinkage," and a low number, expressed as a percentage of the store's total inventory, is preferable.


Large retail operations normally have very specified job duties. Therefore, to work in a retail store as a salesperson, you probably do not need to know much about retail accounting methods, for instance. However, a retail store manager may be responsible for his or her unit's profitability. A thorough understanding of retail terms at all levels as well as basic accounting courses are advisable if you wish to pursue a career as a retail manager or executive.

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