How to Understand Retail Terminology
When running a retail business or working within the industry knowing retail terms and their meanings can be incredibly useful.
Below are a list of the most common retail terms…
SKU
Stock Keeping Unit, this is a product or service identification number assigned to a unique item by a retailer. The SKU can be a number used internally or may be linked to the UPC (Universal Product Code) or EAN (European Article Number).
UPC
Universal Product Code, this is a 12 digit code which is split into 4 parts. The first part is a single digit used to identify the remaining digits. E.g. 0 would designate a regular UPC code where a 3 would show a National Drug Code and 5 would identify a coupon or voucher. The next 5 digits show the identification of the manufacturer and the following five is the item number. A single digit at the end is a character check used to validate the code when scanned.
EAN
European Article Number, this is the European version of UPC and contains 13 digits called EA13 or 14 digits called EAN14.
Assortment
This is the number of SKU’s within a category, it is also known as depth.
Category
When a retailer breaks down a range of products into groups of similar or related products.
Variety
Is the number of different categories within a store or department, it is also known as breadth.
Backup Stock
Also known as buffer stock or safety stock, this is additional stock used to ensure a retailer does not go out of stock when demand exceeds forecast. This also covers situations of when stock is not delivered on time.
Space Management
Management of the store selling space, this is based on consumer demand and shoppers habits to maximise results.
Planogram
Is a diagram that shows a retailer where specific retail products should be placed on shelves and displays in order to increase customer purchases.
Shrinkage
The reduction in stock from shoplifting, due to damage/misplacement or administrative errors.
Stock Out
When an item is out of stock.
Omni-Channel
Is a multi-channel approach to sales utilising store, phone, social media and post. This gives the customer a seamless customer journey when they are purchasing items.
PLC
Product Life Cycle is the cycle every product goes through. It has 4 main parts to the cycle – introduction (to the market place), growth (in sales revenue), maturity (when sales revenue stabilises) and finally decline (sales start to decrease and eventually vanish).
POS
Point of Sale, also known as Point of Purchase is where a retail purchase is completed.
EPOS
Electronic Point of Sale is the technology that enables an efficient recording of the sale of products or services to a customer.
Understanding these terms will make anybody’s job within the retail industry easier.