Business of Retail - Vocabulary 2

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Inventory replenishment

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The process of automatic or manual ordering to meet product demands.

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Inventory life cycle

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The process that starts when inventory arrives at the store and ends when it leaves the store with a customer.

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Inventory shrinkage or shrink

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The term used when there are fewer items in stock than in the total inventory record resulting from expired products, damage, theft and/or paperwork errors.

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Inventory tracking systems

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Systems that specify the amount of inventory in a store or distribution center, identify how much inventory was sold, track the price that each item was sold for, pass information to ordering systems, record product price reductions and more.

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Invoice

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A written statement that contains information about a sale transaction. Invoices typically include information such as the price, number of products purchased, etc.

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Key Performance Indicators (KPIs)

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Values used to measure performance, such as overall sales and customer retention levels. Examples include sales per square foot, average customer spend and stock turnover rate.

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Keystone pricing

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A pricing method in which a retailer simply doubles the cost of an item in order to determine its retail price.

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Loss leaders

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A pricing strategy in which items are sold at prices below the retailer’s cost, with the goal of encouraging customers to visit the retailer to get the “loss leader” products and then end up buying other items, too.

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Loss prevention

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The branch of retail in charge of implementing action plans to reduce waste, breakage or theft and increase safety.

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Loyalty and rewards programs

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Marketing programs that provide incentives to repeat customers who are loyal company brand shoppers. These programs generally use customers’ personal information, purchase history and preferences to refine their product and service assortment, target promotions to consumer groups or individual customers and reward loyal shoppers.