Talking the Talk: Retail Terminology

Talking the Talk: Retail Terminology

July 15, 2015
Retail Industry Insights

The meaning behind the saying talk the talk, walk the walk is to back up your words with actions. Dietitians are all about action. But when working in retail it’s essential to understand the terminology of the industry and to talk the talk. Understanding the following industry terminology will help retail RDs when partnering with merchandising and buying, selling in an idea to senior leadership or engaging with vendors include.

When Working with Marketing & Advertising

  • Best Food Day: The day that grocery ads appear in a local newspaper.
  • Co-Marketing: Marketing with a partner such as a manufacturer, sports team or local charity.
  • Cooperative Advertising: While the vendor pays for the ad, the retailer’s name, logo and location are included in the ad.
  • POP: Point-of-purchase signing.
  • Seasonal Promotions: An annual plan of in-and-out promotions tied to key holidays such as back-to-school, Thanksgiving, SuperBowl, etc.

In Partnership with Buyers and Merchants

  • BOGO: Buy One Get One free.
  • Buy Out: When a retailer stocks up on product because the manufacturer is offering it at a discounted price.  The retailer’s goal in a buy out is increased profits.
  • Category Development Index (CDI): Measures the sales performance of a category of goods or services within a specific group, compared with its average performance among all consumers. An average CDI is 100.
  • Facings: The number of a product that are displayed together on a store shelf.
  • Market Share: Can be used for the company or for a category of products. It is the portion of a market controlled by a company, brand or product, and is typically presented as a percentage.
  • Shrink: Items lost due to spoilage, shortages, theft, breakage, or poor management control. The amount of shrink impacts the company’s bottom line.
  • Slotting FeeA fee charged to manufacturers by retailers in order to have their product placed on their store shelves. The fee varies greatly depending on the product, manufacturer, and market conditions.

When Measuring Return-on-Investment

  • Customer loyalty: Likelihood of previous customers to continue to buy from a specific retailer.
  • Days of Supply: The amount of product on hand to meet shoppers’ demands.  When planning product promotions, it’s essential to ensure adequate days of supply.
  • Margin: The difference between the cost of the product and the price it is sold for at retail. Usually expressed as a percentage.
  • Overhead: Operating costs of a business such as salaries, rent, insurance, and technology. The overhead should be included when assessing the ROI of nutrition program and services.
  • Product Movement Record: A product’s sales (in volume) by day, week, quarter, etc. This data is useful in comparing product sales during a retail RD promotion.

In Partnership with Vendors

  • Advertising Allowance/Allowance: Money that a manufacturer pays a wholesaler or retailer to advertise its brand or products.  
  • Direct store delivery (DSD): A method of delivering product from a supplier/distributor directly to a retail store, bypassing a retailer's distribution center. DSD products are typically, but not always, fast-turning, high velocity, and high consumer demand merchandise.
  • Food Broker. An independent sales agent that works in negotiating sales with the retailer on behalf of food manufacturers. 
  • Tie-in Promotion: Two products are tied to one another in a promotion or display.  
  • Vendor-managed Inventory: A vendor manages a product or category within the company’s stores.  This may include sales forecasting, ordering, delivery, and allowances.