Fast track retail buying & merchandising: glossary of terms
A
Assortment planning
See range planning.
B
Batch number
Batch or lot number is an identification number used on a product to allow the tracking of
which production lot that product came from. The batch number is very closely linked with
how things get manufactured in a production line.
Buyer
Role within the buying function of a business, responsible for the management of the buying
cycle. Buyers tend to work closely with merchandisers, product technologists and suppliers. In
a retail organisation the buyer role comprises of senior to junior individuals.
Buying strategy planning
Business process consisting of planning a company’s buying activities and understanding the
current market through the management of buying calendars, competition shopping, research,
etc.
C
Category
Grouping of merchandise that serves the same purpose and typically comes from different
vendors and suppliers. The term ‘category’ has a procurement or supply chain connation to it.
In buying and merchandising, the terms ‘category’ and ‘classification’ are very often used
interchangeably.
Classification
Grouping of merchandise that serves the same purpose and typically comes from different
vendors and suppliers. The term ‘classification’ has a consumer connotation to it. In buying
and merchandising, the terms ‘category’ and ‘classification’ are very often used
interchangeably.
Collection
Grouping of merchandise based on a story or theme and has a marketing connotation to it.
Comp shopping
Short for competition or competitive shopping, comp shopping is the activity of visiting
competitor stores to better understand what products are being sold.
Critical path
Time ‘roadmap’ of a product that takes into account the timescales involved for managing key
dates, such as production and delivery milestones, in order to meet delivery requirements.
Every product has its own critical path.
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Fast track retail buying & merchandising: glossary of terms
D
Data cube
Technological layer that utilises the organised data from a data warehouse and contextualises
the data to make it easier for analysis by users. In other words, a data cube is a multi-
dimensional array of data, arranged for a particular context, with the data modularized in view
of building user reports more efficiently.
Data warehouse
Technological layer built on top of a database and that provides the first step towards the
grouping and organization of data and information.
Database
Computer-based repository for storing lots of data and information.
Department
Very broad group of merchandise comprising of various classes of products. Departments can
have sub-departments.
Distribution centre
Abbreviated to DC, a distribution centre is similar to a physical warehouse where goods are
stored, except that a DC stocks up temporarily compared to a warehouse. DCs tend to
distribute products directly to stores.
Division
Grouping of different departments around which the buying and merchandising business
function is arranged.
E
Enterprise resource planning system
Enterprise resource planning (ERP) system is an enterprise system solution comprising of
several modules for supporting broad business processes like product lifecycle management,
supply chain management, inventory management, customer relationship management,
finance and account management, business intelligence, human resource management, etc.
Excel macro
Shortcut to or an execution of a set of steps done repeatedly within Microsoft Office Excel
application. Macros are often used to automate spreadsheet operations in Excel.
F
Fad
Goods that, after launch, shoot up very rapidly in terms of sales, with a short maturity period
and quick decline, and whose sales cycle typically closes in less than a season.
Franchise partner
A third party or investor who is not owned by a certain company and goes into agreement with
that company to use its brand because in doing so, this presents the third party with
opportunities to become more profitable. Franchise partners tend to have their own assets like
buildings and land.
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Fast track retail buying & merchandising: glossary of terms
Full-service model
A common supply chain model adopted when a business wants to buy and sell third party
products that carry the label or branding of other companies.
I
Inventory
See stock.
K
Key performance indicator
Important metric that enables the business to understand and report on how well it is
performing against targets such as sales figures, profit margin, closed opportunities, capacity
maximisation, etc.
L
Lead time
Delay or lag between when something is requested and it arrives. An example of lead time is
the production lead time.
Line
Short form for product line. A line is the provision of several related products that can be
bought individually. A line is a term that has a marketing connotation to it. A line may also refer
to a line item, in which case it simply means a product.
M
Margin
Stands for profit. Profit is equal to the selling price minus cost/buying price.
Merchandise management
An umbrella term for a very broad set of business processes that typically encompasses
financial planning, merchandise planning and range planning.
Merchandiser
Role within the merchandising function of a business, responsible for the management of the
merchandising cycle. Merchandisers tend to work closely with buyers, stores and suppliers. In
a retail organisation the merchandiser role comprises of senior to junior individuals.
Minimum order quantity
Abbreviated to MOQ, minimum order quantity is the minimum number of units of a given
product that a retail company is able to order from a factory or supplier. MOQ is a feature of
mass production, where goods are produced in batches in a production line.
Mock shop
Space used to simulate or showcase the look and feel of products as if they were being
displayed at actual stores. Visual merchandising practice is taken into account when arranging
a mock shop.
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Fast track retail buying & merchandising: glossary of terms
N
New product development
Process of conceiving new products to make market breakthroughs.
O
Open to buy
Abbreviated to OTB, ‘open to buy’ is the amount of cash the buying team can actually spend
at any one time. On other words, it is the amount of money made available for the buying team
to spend and that amount is based on a rationing system. OTB is present in order to have
some control over the expenditure of the buying team. OTB also allows the buying team to
have room to purchase the latest products.
Operational planning
Type of planning activity that looks at making decisions that impact the short-term activities of
a buying and merchandising organisation.
P
Pivot table
Tabulated set of data generated from some pre-organised data set. A pivot table provides a
user-defined view of some data set and is commonly regarded as an important functionality
available in Microsoft Office Excel application.
Product attribute
Data element of a product created during the product lifecycle. Examples are name of the
product, price, material, SKU number, barcode, etc.
Product lifecycle
Cycle of phases that a product goes through during its life, from inception to maturity and
decline. At a simple level, the product lifecycle consists of four phases which are design,
manufacture, operation (or use) and disposal.
Product placement
Layout and positioning of products based on visual merchandising principles.
Product portfolio
Representation of the variety of products that a company sells and that provides an
understanding of these products in terms of factors such as risk and market attractiveness.
R
Range planning
Business process comprising of the activities to successfully manage the assortment of
merchandise to buy and sell. Range planning takes into account a large number of
considerations such as price points, risk, consumer and market trends, competition, financial
targets, product mix, supplier base, etc.
Reorder point
Point in time at which a company will reorder goods from a supplier during the inventory
management cycle.
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Fast track retail buying & merchandising: glossary of terms
Report
Document that provides listed information for the purpose of analysing it, making insights and
assisting in decision making.
S
Safety stock
Constant level of stock held by a company in order to help it cope with unpredictability and
fluctuating market demand.
Sales forecasting
Prediction of how well something will sell over time. In buying and merchandising, sales
forecasting is performed at all levels, for example, for the product range down to specific
categories and options.
Seasonal merchandise
Goods whose sales vary depending on the time of the year, where there is a sharp growth in
revenue at specific times during the year. Examples are winter coats and jackets which are
sold during autumn and winter.
Sell through
Cumulative sales to date, divided by the quantity delivered and expressed as a percentage
value. Sell through provides a rough way to check up the performance of stock.
Serial number
Unique identification number of a product which protects the manufacturer of that product
from fraud and counterfeiting.
Sourcing model
Common supply chain model adopted when a business wants to have its own products, with
its own branding, manufactured and sold, as opposed to buying and selling third party
products that carry the branding of other companies.
Staple merchandise
Also known as basic merchandise, staple merchandise are goods that are continuously in
demand by consumers. The demand stretches over an extended period of time and staple
merchandise have a longer growth and maturity period. Examples are bread and milk.
Stock
Goods bought and held by a company. Also known as inventory, stock includes merchandise
that are in transit as well those stored at warehouses.
Stock keeping unit
Abbreviated to SKU, a stock keeping unit is the smallest unit for planning and controlling
stock. For example, in the area of soft goods, a SKU will be defined in terms of attributes like
size, colour, print, styles, etc.
Stock management
Business process comprising of the activities to successfully manage inventory. In a buying
and merchandising business, there are several KPIs that can be used to monitor the
performance of stock such as ‘stock turn’, ‘sell through’ and ‘stock cover’, among others.
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Fast track retail buying & merchandising: glossary of terms
Stock cover
Number of weeks of anticipated cover of inventory taking into account the opening stock and
sales for the previous week. Stock cover is usually tracked on a weekly basis and is equal to
the opening stock at the start of a week divided by sales for the previous week.
Stock turn
Also known as the ‘rate of stock turn’, stock turn is the number of times the stock on offer is
changed to the customer during the course of the trading year. The stock turn indicator is
calculated as the average sales value divided by the average monthly stock value.
Strategic planning
Type of planning activity that looks at making decisions that impact the long-term vision and
strategy of a buying and merchandising organisation.
Strengths, weaknesses, opportunities and threats
Abbreviated to SWOT, this form of analysis is a simple-to-use strategic planning tool that
allows a buying and merchandising organisation to understand its strengths and weaknesses,
as well as its opportunities and threats. When applied to the area of buying and
merchandising, SWOT analysis can be particularly useful during strategy planning, and also as
important supporting documentation for the activity of range planning.
Sub-department
A specialisation of a department.
Supply chain
A network of companies working together in order to permit the retail ecosystem to flourish.
Supply chain configuration
Jargon for supply chain model.
T
Tactical planning
Type of planning activity that looks at making decisions that impact the mid-term strategy and
activities of a buying and merchandising organisation.
U
Universal product code
Abbreviated to UPC, the Universal Product Code of an item is a 12-digit barcode comprising
of the identification number for the producer of that item, the item number and the check digit.
V
Visual merchandising
Practice of planning the layout, presentation, placement and display of products at stores for
promoting sales.
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Fast track retail buying & merchandising: glossary of terms
W
Weekly sales, stock and intake
Abbreviated to WSSI, ‘weekly sales, stock and intake’ is a planning tool used by
merchandising teams to track and monitor figures related to sales data per week, stock intake
by retail value per week, opening stock value for the beginning of each week, closing stock
value for the end of each week, and any mark down applied to stock to account for losses in
stock value, among others.
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