Retail Terminology
In retail you may have heard some abbreviations and terms that you might not have heard before. It can feel awkward to ask at the time what on earth they are referring too. Especially when everyone else seems to understand. These terms aren’t used to alienate anyone, as they are used so frequently it is just easier to shorten, especially in emails and online. Some businesses use slightly different terms, but I thought I’d pull together a few common phrases I have come across.
SKU – Stock keeping unit- this refers to a specific size and colour variation of a product with an individual number or code assigned to it. For example, a t-shirt is a size 14 in black will have a different number to the size 14 in navy.
Margin – the percentage profit that will be made on a retail sale or service. Cost price, tax, shipping and charges all need to be considered when choosing an RRP or selling price of a product.
OOS – Out of Stock- a product has either sold out or the website is showing it as out of stock and unavailable to the customer. It’s always important to test the website that all products that you know are in stock are listed correctly and available to buy.
OTB – Open to Buy- how much budget have you got left to spend. This can be preseason or in season trading. A budget (however flexible you want to be) is critical to maximise the success of a retail business.
WTB – When to Buy- when does more stock need to be purchased. Considering critical path and current sales performance when will a repeat order need to be placed with the manufacture or supplier.
Critical Path – the planning process of getting a product to market. Always best to work backwards initially. If you like a product or service be ready by a set date, add all the processes leading to this date and how long they take to complete.
Lead Time – how long will it take to get a product or service ready for the customer to purchase. This needs to include design, production, delivery, process and instore/ online preparation for sale.
Pre-season – stock purchases and budget decisions made before a period has commenced.
In season – actions to stock and budget made of sales made in the same period.
Sell Thru – how many of the products have been sold compared to how many were bought. This is display as a percentage. For example, 100 units were bought and halfway through the season 50 have been sold, so these lines have a sell thru of 50%.
Seasonality – the time these products will be available and sell best. Usually depending on weather and average annual temperatures.
Core – products that sell all year around. They are often less dependent on weather and are in popular colours. Often black, navy and white coloured clothing will sell all year round.
Seasonal products – products planned to be sold for a short period of time. It could be a new colour that (at least initially) has been bought once to sell thru.
EOS – End of Season- when do expect and plan a season to end. This is usually demonstrated with an end of season sale before a new season begins. For example, end of spring/summer and the start of autumn/ winter.
NOOS – Never out of Stock- usually core products that sell well both in season and all year round. Plan your stock flow so all sizes and colour variations are always available to the customer.
This, of course, aren’t all the terms out there. I’ll add any more as I think of them and learn them. Got any terms you use often or have no idea what they mean? Add in the comments or drop me a message-