When the only thing that’s constant in this industry is change, we know how hard it can be to keep up with all the latest retail lingo. That’s why we’ve broken it down into this list that includes the most important retail terms to know. Whether you’re a newbie or just looking to refresh your knowledge, these terms are key in the industry.
- Anything that impacts the future inventory position.
- Examples are, placing a buy, cancelling a purchase order (PO) or moving the delivery date for a PO.
Choice Count (aka CC)
- A customer's unique style-color choice (e.g., Blue Crew Neck vs. Red Crew Neck) independent of sizing.
Continuity Product (aka Key Item, Never Out-of-Stock, Basics)
- Basic products that are sold year after year with little variation.
- These are often managed automatically, with little intervention from the buyer. T-shirts, socks, etc. are good example of these. Many buying platforms will have a key item management capability to manage these.
- Start / end dates for each delivery.
- This should be captured along with the assortment plan, so that the relevant parties know when the products will be hitting the store.
- When a particular product will be hitting the stores.
- Some brands deliver all the SKUs in one go but other brands can deliver 10 SKUs in with drop 1, 10 SKUs with drop 2, etc.
- The last day a product is available for ordering (or for sale).
- This is particularly relevant for continuity products that are sold year after year. If you want to terminate that product, you place an end date so that the system stops ordering it.
- Products that are more appropriate for a limited time-frame or season. Fashion items are most often seasonal products.
Market Week / Buy Week
- It is the time-frame during which brands (or suppliers) open up their showrooms for retailers to visit and place orders.
Keying an Order
- Once a brand gets an order from a retailer, the order is keyed in once the brand confirms and puts that order in their systems.
Raising an Order
- Retailer sending an order to the brand.
SMU - Special Make Up
- If a product was a continuity and if it’s being deprecated then, they could have a special order for another retailer.
- Key item is a term that is used interchangeably with continuity products.
Available To Sell (ATS)
- Number of items available at hand to sell.
Available To Ship (ATS)
- When brands have products in their warehouses that are available to ship to retailers immediately.
- This is more important within in-season planning, where retailers could request more products if they are selling out.
- This tells you the number of weeks of sales you would be able to support with the inventory at hand. Typically measured in weeks, but can also be measured in days or months.
- Ideally cover level should be low enough to reduce your inventory cost and high enough to protect you from disruptions in your suppliers.
- The time it takes to receive a SKU after ordering it from the supplier. Lead times in fashion are typically measured in weeks, but they could also be referred to in days or months, depending the type of product.
- Lead times will vary depending on the supplier (whether it is a manufacturer or distributor) and the complexity of the product.
- Nearshore manufacturers or distributors could supply a product in as little as 2-3 weeks, but manufacturing a product in Asia and getting it delivered could take as long as 6-9 months.
Minimum Order Quantity (aka MOQ)
- The minimum number of units that the supplier requires to manufacture or supply a particular product. An example might be, a supplier not supplying orders of a white T-shirt if the order is less than 100. Suppliers set a MOQ, because there is a fixed overhead of fulfilling each order.
- MOQs could be for a particular style, a particular color or for an overall order.
- The time period between two replenishment cycles at a retailer. This is typically measured in weeks, but could also be measured in days or months depending on the category of the retailer.
- For example, if a fashion retailer replenishes their core products once a month, then the order cycle would be 1 month.
- This gives the percentage of missed sales opportunities on a product or category for the retailer. There are different ways to measure this. Given the challenge of capturing every sales opportunity, retailers use other proxy metrics to measure this metric. A typical approach is to look at the percentage of days that a particular SKU had no stock available at the point of sale.
- For example, if a product is meant to be selling for 365 days, and in the trailing year, it was out of stock for 10 days, then the out-of-stock rate would be 10 / 365 = 2.7%
- Another typically used metric is called in-stock rate, and that is equal to 1 - Out-of-Stock-Rate.
- Any retailer activity that will increase or decrease sales, hence change inventory position (e.g. markdowns, marketing, reallocation, etc.).
Products and Identifiers
Retailers use a slew of different identifiers to desribe products and variants.
Style Number (Style #)
- A unique identifier describing the style of the product. Many retailers use Smart Style Numbers, that are composed of the concatenation of various attributes of the product.
- An example style # from a multi-brand retailer is gucci-poolsliders-ss-21, which indicates that the products are Gucci products, of type pool slider, that are in the spring / summer collection for 2021.
SKU (aka Stock Keeping Unit)
- SKUs are unique identifiers for the different variants of the product. Since these describe the most specific sellable unit, both inventory and sales should be tracked in terms of SKUs, hence the name stock keeping unit.
- Different color / size combinations of a product. For example, the "Oxford Shirts" could be a product, and the variants would be the different color (say White, Navy and Black) and size combinations. In this example, some example variants would be: Oxford Shirt-White-Small or Oxford Shirt-Black-Large
Ready for the next step?
Check out how to apply these terms in our list of basic retail math formulas to know.