Retail Glossary

Image by Artem Bali


Average Order Value (AOV): The average $ amount of a single order placed by a customer. Two types:

  • High AOV / low repeat (i.e., Interior Define selling couches)
  • Low AOV / high repeat (i.e., Harry’s Razors)

BOGO: Buy One, Get One

BOH: Back of House. Employee only area of the retail floor including where inventory is received, break room, manager’s office, etc.

Brand Positioning: How a brand wants the world to perceive it, who they are and what they stand for.

Breadth of Assortments: The range or number of different items offered for sale: i.e. wide = many different items, narrow = a limited range of items for sale.

Cashwrap: counter where the sales transaction takes place.

Category: explains what line of business a brand is representing. (i.e. apparel or beauty)

Churn: For subscription-based businesses, it’s the percentage of customers you are losing per month.

  • Anything higher than 5% monthly churn is bad for business
  • If you keep having to spend money to acquire customers = bad

Customer Acquisition Cost (CAC): The total marketing cost (across all channels) to acquire a new customer.

  • An analogy – Rent is the CAC for offline stores. When you add in a stickier relationship, no shipping costs, fewer returns, and opportunity to reach new customers, the CAC for offline is likely cheaper than online (although this has not been quantitatively validated, as it’s difficult to accurately calculate).

DNB: Digitally Native Brands. More widely-used term for a brand born online. It may describe a digital brand that does not control its own distribution, though it's often used as a synonym for DNVB, particularly when speaking about about digital brands.

DNVB: Digitally Native Vertical Brands. A brand that is born online, focuses on customer experience and building relationship with its customer, and controls the distribution of its products and services.

Facing: The number of identical products (or same SKU) facing out toward the customer. Facings are used in plan-o-grams and when zoning a retail store.

FOH: Front of House. The sales floor.

Footprint: The size and shape of a retail environment.

Format: Style of how a store is organized and operates. In our Macerich world: our formats include Guide Shop, Showroom and Full Store.

  • Full Shop: Show the full gamut of your brand’s products. Customers experience product & service. Leaving with goods in hand. Goods forward, brand is brought to life in the store, customers leave with product in hand.
  • Guide Shop: Connects with shoppers with real product, touch, feel and fit, in a highly curated display. Show me your expertise, help me choose. Personal Service forward, carefully curated purchases by a brand ambassador, creating close ties with consumers. Sales process typically ends with merchandise shipped to consumer’s home.
  • Showroom: Invites customers to personally experience all products in one place. Exploration forward, customers are there to feel and touch the product that have been touted online (i.e.premier quality fabrics). Fulfillment could be immediate or post purchase delivery.

Gondola: Rows of fixtures that store product sits on. Usually found in mass merchant store like a grocery store or a Target.

Inventory: Inventory is the merchandise a retail store has on hand. The term also refers to the act of counting, itemizing and recording in-stock merchandise or supplies.

Inventory Turnover: The number of times during a given period that the average inventory on hand is sold and replaced.

Lifetime Value (LTV): The projected profit that a customer will generate during their lifetime.

  • Calculated by looking at the gross margin over time (how much you are making on the customer).
  • Most DNVBs will tell you just the revenue, but we want to know the fully-loaded margins (including shipping costs, refunds, etc.).

LTV / CAC ratio: One of the most important metrics to determine if a company’s growth is healthy and profitable.

  • Calculated by taking the LTV and dividing by the cost to acquire that customer.
  • A good/healthy LTV/CAC ratio is 3.0x. Anything less just means the company is buying their revenue.

Loss Leader: Merchandise sold below cost by a retailer in an effort to attract new customers or stimulate other profitable sales.

Loss Prevention: Loss prevention is the act of reducing the amount of theft and shrinkage within a business.

Margin: The amount of gross profit made when an item is sold.

Markup: A percentage added to the cost to get the retail selling price.

Markdown: A planned reduction in the selling price of an item, usually to take effect either within a certain number of days after seasonal merchandise is received or on a specific date.

Merchandise Mix: A merchandise mix is the breadth and depth of the products carried by retailers. Also known as product.

Net Promoter Score (NPS): Calculation to determine the likelihood that customers would recommend the product to others.

  • Most of our portfolio DNVB companies are between mid-70 NPS to 80 NPS.
  • NPS scores are higher in-store (85) vs online (82)

Omnichannel: Omnichannel is a cross-channel business model and content strategy that companies use to improve their user experience. Website, physical store, commercials, social channels, etc. - everything working together to create a seamless customer experience at a variety of touch points.

Personas: An individual's social facade or front.

POG: ‘Plan-O-Gram’: A detailed plan of floor, wall and fixture layout. It requires a mapping of what items go where for each square foot or product frontage of shelf pace, wall, or hanging rack. Particular emphasis is put on placing the most profitable products in an advantageous purchasing position.

POS: ‘Point of Sales’: Place where transaction of goods is secured.

Pre Sales Area: Word to be used in place of BOH (Back of House.) Employee only area where inventory is received and prepped for the sales floor, manager’s office, breakroom etc.

SKU: Stock Keeping Unit: Number given to a specific retail product to be able to track the inventory management of that item in relation to all other item types.

Slatwall: Shelving system where shelves notch into the ‘slats’ of the wall to be able to stick merchandise.

Supply Chain: The thesis of vertically integrating is that DNVB’s should have more efficient supply chains than their incumbents.

  • Speed is the number one metric.
  • Shipping costs should decrease as scale increases.

Themes: The style of the aesthetics of the store and that represents the brand’s essence. These may change over the years and as trends evolve.

TOV: Tone of Voice: The way a brand speaks about itself.

USP: Unique Selling Proposition, it is what makes your brand stand out among others.

Visual Communication Hierarchy: Explains how your graphics are displayed throughout the customer journey. Starts at the Announce level, by welcoming customers into the space; Amplify is the mid-level graphics that help customers start to orient themselves in the space and find where they can find specific categories of product, and then Explain level is shelf level graphics that give specifics of product information that help consumers know exactly it is what they are buying.

VM: Visual Merchandising: Meaning how your product is displayed in your store in a way that will increase in-store traffic & sales volume. (folded, hung, stacked out, etc)