Store / Point of Sale (POS)
A store or point of sale is any physical or digital space through which a business sells products or services to the end consumer. In traditional retail the POS is the physical store; in e-commerce it is the website or app. Modern POS systems record every transaction and update inventory in real time.
SKU (Stock Keeping Unit)
A SKU is a unique alphanumeric code assigned to each specific product variant - colour, size, packaging - that allows it to be tracked individually in inventory. Each SKU has its own on-hand quantity, price, and attributes. Accurate SKU management is a prerequisite for inventory accuracy and effective automated replenishment.
Inventory / Stock
Inventory comprises all the goods physically held by a retailer, valued at purchase cost. It is divided into on-hand inventory, in-transit inventory, and committed inventory (reserved by outstanding orders). Inventory value is one of the major components of current assets and its management directly impacts company liquidity.
Inventory Turnover
Inventory turnover measures how many times inventory is sold and replenished in a given period, calculated as (Cost of Goods Sold) / (Average Inventory). A high ratio signals efficient stock clearance; a low ratio may indicate excess stock or slowing sales. Benchmarks vary significantly by sector.
Gross Margin
Gross margin is the difference between net sales revenue and the cost of goods sold (COGS), expressed as a percentage of revenue. In physical retail, gross margins vary considerably by category: grocery operates on thin margins while apparel and cosmetics show higher margins. Gross margin must cover all fixed operating costs and generate a satisfactory net profit.
Omnichannel
An omnichannel approach integrates all customer-facing channels - physical store, e-commerce, mobile app, marketplace, telephone support - into a single coherent experience. The customer can start a purchase on one channel and complete it on another without losing context. Omnichannel requires a technology architecture with shared inventory, unified customer profile, and integrated order management.
Click & Collect (BOPIS)
The Click & Collect (or Buy Online Pick Up In Store, BOPIS) service allows the customer to purchase online and collect in store. It combines e-commerce convenience with immediate product certainty, reduces delivery costs, and drives store traffic. Effective BOPIS management requires real-time inventory visibility at store level.
Retail Conversion Funnel
The retail conversion funnel describes the customer journey from first contact (awareness) to actual purchase (conversion). In a physical store it is measured as the ratio of visitors to buyers; in e-commerce as the percentage of visitors who complete checkout. An optimised funnel reduces cart abandonment and increases average order value.
Return Rate
The return rate is the percentage of products sold that are returned by the customer. It varies significantly by category: in online fashion it can be very high, while in food it is marginal. A high return rate impacts margins, logistics, and stock management, and may signal quality problems or unmet customer expectations.
Shrinkage
Shrinkage is the difference between the theoretical inventory (as calculated by systems) and the physical inventory on hand. Main causes: external theft (shoplifting), internal theft (staff), administrative errors, and product damage. Industry aggregate estimates put shrinkage at around 1-2% of retail revenue on average, with variation by category and format.
Sell-Through Rate
The sell-through rate measures the percentage of units of a product sold relative to units received in a given period. It is calculated as (Units sold / Units received) × 100. A low sell-through rate indicates demand problems or assortment errors; a very high one may signal undersupply and lost sales opportunity.
Markup and Markdown
Markup is the percentage increase applied to the purchase cost to determine the selling price. Markdown is a reduction from the list price, applied to accelerate sales of slow-moving, end-of-season, or near-expiry products. An effective markdown strategy balances margin recovery against the risk of brand erosion.
Footfall
Footfall is the number of visitors who physically enter a store or shopping centre in a given period. It is measured using infrared sensors, Wi-Fi technology, or video analytics. Footfall, correlated with conversion rate and average transaction value (ATV), determines revenue per square metre - a fundamental metric for physical store performance.
Average Transaction Value (ATV)
ATV is the average monetary value of each completed transaction in a given period, obtained by dividing total revenue by the number of transactions. It is increased through cross-selling (complementary products) and upselling (premium versions). ATV is a key lever for growing revenue without needing to increase traffic.
Assortment
Assortment is the range of products offered by a retailer, defined in terms of breadth (number of categories) and depth (number of variants per category). A wide assortment covers more needs; a deep one offers specialisation. Assortment decisions are strategic and influence positioning, inventory management, and price competitiveness.
Category Management
Category management treats each product category as a standalone business unit, with its own assortment, pricing, promotion, and shelf-space strategies. It requires retailer-supplier collaboration to optimise category performance in the interest of the end consumer.
Planogram
A planogram is the visual representation of product placement on a shelf, specifying the exact position of each SKU, the number of facings, and display height. An optimised planogram maximises sales per linear metre and ensures visibility of high-margin products.
GDO / Modern Grocery Trade
GDO (Grande Distribuzione Organizzata, Italian term) refers to organised large-scale retail chains: hypermarkets, supermarkets, superstores, and discount stores. Globally, the equivalent is "modern grocery trade" or "organised retail". GDO/modern trade represents the highest-volume distribution channel for grocery and FMCG.
FMCG (Fast-Moving Consumer Goods)
FMCG products are frequently purchased, low unit-price items with short shelf lives: food, beverages, personal care products, detergents. Modern grocery trade is the primary distribution channel for FMCG. Competition is primarily on price, availability, and promotions.
Retail Media
Retail media is the practice of retailers monetising their digital and physical channels by selling advertising space to suppliers and brands. It includes sponsored products in e-commerce search results, display advertising on product pages, co-branded email marketing, and in-store digital signage. It has become a high-margin revenue source for large retailers.
Last Mile Delivery
Last mile delivery is the final segment of the delivery chain, from a local distribution centre to the customer's address. It is the most costly and complex segment of the e-commerce supply chain, with direct impact on customer satisfaction. Solutions include traditional couriers, locker networks, in-store collection, and instant delivery via dark stores.
Dark Store
A dark store is an urban fulfilment warehouse optimised for processing online orders, not accessible to the public, designed for rapid picking. It enables ultra-fast delivery (30-90 minutes) in dense urban areas. The dark store model is used by quick commerce operators and grocery chains offering store delivery.
Dynamic Pricing
Dynamic pricing is the practice of adjusting prices in real time in response to variables such as demand, available stock, competitor prices, time of day, or customer behaviour. Common in e-commerce, it is spreading to physical retail via Electronic Shelf Labels (ESL) which enable centralised price updates on shelves without manual intervention.
Loyalty Program
A loyalty programme incentivises regular customers with points, discounts, exclusive benefits, or cashback in exchange for repeat purchases. Data generated by loyalty programmes is a primary source of customer purchase behaviour insight and feeds personalisation and targeting strategies.
Customer Lifetime Value (CLV)
CLV in retail estimates the total value a customer generates over the course of their relationship with the retailer, calculated as purchase frequency × average transaction value × relationship duration. It is the guiding metric for decisions on customer acquisition investment and loyalty programmes.
EPOS (Electronic Point of Sale)
EPOS is the electronic till system that manages in-store sales transactions: product scanning, total calculation, payment processing, and receipt printing. Modern EPOS systems are integrated with inventory, loyalty programmes, and ERP systems.
Stockout
A stockout occurs when an item requested by the customer is unavailable in inventory. It causes lost sales, customer dissatisfaction, and potentially loyalty transfer to a competitor. Stockout rate is a critical KPI for inventory management, driven by forecast accuracy and supplier delivery reliability.
Deadstock
Deadstock is inventory that has not sold for an extended period, tying up capital and shelf space. Causes include forecasting errors, end of season, consumer taste changes, or defective products. It is cleared through markdowns, outlet channels, liquidation, or donation.
Merchandising
Retail merchandising encompasses all activities that promote product sales at the point of sale: store layout, visual display, shelf management, in-store promotions, and packaging. The goal is to make products attractive and easy to find for customers, maximising sales per square metre.
Seasonality
Seasonality in retail describes cyclic demand variations tied to the time of year, holidays, or weather. The Christmas peak, summer and winter sales, and back-to-school purchasing in September are examples of structural seasonality. Inventory and staffing planning must anticipate these peaks to avoid stockouts during peak demand.
Loss Prevention
Loss prevention encompasses the policies, technologies, and procedures designed to reduce shrinkage. It includes EAS systems (Electronic Article Surveillance), CCTV with behavioural analytics, receipt verification policies, inventory audits, and staff training.
Trade Promotion
Trade promotions are promotional activities agreed between retailers and suppliers to stimulate sales: temporary price reductions (TPR), promotional displays, leaflets, and coordinated advertising campaigns. Measuring effectiveness requires comparison with baseline sales and estimation of cannibalisation effects.
E-commerce
E-commerce is the buying and selling of goods and services through digital channels - websites, mobile apps, marketplaces. In retail it includes both proprietary stores (DTC - Direct to Consumer) and sales on marketplaces (Amazon, eBay, etc.). According to Ecommerce Europe, the European e-commerce market has seen continued structural growth.
Marketplace
A marketplace is a digital platform that connects third-party sellers with consumers, managing transactions in exchange for a commission. For retailers, marketplace presence increases visibility but reduces margins and gives up control of the customer experience.
Demand Forecasting
Demand forecasting is the process of estimating future product sales based on historical data, market trends, seasonality, and external factors (promotions, events). Statistical models and machine learning are employed by retailers to optimise inventory planning and purchasing.
Reverse Logistics
Reverse logistics manages the flow of returns from customers to distribution centres or suppliers. It includes product condition assessment, disposition decisions (resale, refurbishment, supplier return, disposal), and refund processing. In fashion and electronics it represents a significant share of operating costs.
Customer Journey
The customer journey in retail describes the full set of touchpoints - physical and digital - through which the customer interacts with the brand from discovery to purchase and beyond. Journey mapping helps identify friction points and optimise key touchpoints across all channels.
Sell-in vs Sell-out
Sell-in is the volume of goods sold from manufacturer to retailer; sell-out is the volume sold from retailer to end consumer. The difference between the two builds or draws down the retailer's warehouse stock. Monitoring both is essential for manufacturers to avoid optimising sell-in at the expense of sustainable stock management at the retailer.
Category Captain
The category captain is the supplier designated by the retailer as strategic reference for a product category, tasked with analysing sales data, proposing assortment, planogram, and promotional strategies to optimise the performance of the entire category - including competitors' products.
Shopper Marketing
Shopper marketing encompasses activities specifically targeting the shopper at the point and moment of purchase to influence the final decision. It differs from consumer marketing, which targets the consumer before and after the purchase. Activities include POS materials, in-store promotions, sampling, and geo-targeted digital campaigns.