| A | B |
|---|
| ABC analysis | An analysis that rank-orders SKUs by a profitability measure to determine which items should never be out of stock, which should be allowed to be out of stock occasionally, and which should be deleted from the stock selection. |
| Basic stock list | The descriptive and recordkeeping function of an inventory control system; includes the stock number, item description, number of units on hand and on order, and sales for the previous periods. |
| Core assortment | A relatively large proportion of the total assortment that is carried by each store in the chain, regardless of size. |
| Deseasonalized demand | The forecast demand without the influence of seasonality. |
| Open-to-buy | The plan that keeps track of how much is spent in each month (and how much is left to spend). |
| Order point | The amount of inventory below which the quantity available shouldn't go or the item will be out of stock before the next order arrives. |
| Shrinkage | The difference between the recorded value of inventory (at retail) based on merchandise bought and received and the value of actual inventory in stores and distribution centers divided by retail sales during a time period. Shrinkage is caused by employee theft, by customer shoplifting, and by merchandise being misplaced, damaged, or mispriced. |
| Sell-through analysis | A comparison of actual and planned sales to determine whether early markdowns are required or whether more merchandise is needed to satisfy demand. |
| Stock-to-sales ratio | The beginning-of-month (BOM) inventory divided by sales for the month. The average stock-to-sales ratio is 12 divided by planned inventory turnover. This ratio is an integral component of the merchandise budget plan. |
| Weeks of supply | An inventory management method most similar to the stock-to-sales method. The difference is that everything is expressed in weeks rather than months. |
| Alternative dispute resolution | A provision included in a contract between retailer and vendor to help avoid litigation in the case of a dispute. Can include methods of settling the dispute that the parties agree upon, such as mediation, arbitration, or med-arb. |
| Arbitration | Used in the case of a dispute between retailer and vendor that involves the appointment of an neutral party—the arbitrator—who considers the arguments of both sides and then makes a decision that is usually agreed upon in advance as binding. |
| Bargain branding | A branding strategy that targets a price sensitive segment by offering a no-frills product at a discount price. |
| Buyback | A strategy vendors and retailers use to get products into retail stores, either when a retailer allows a vendor to create space for goods by "buying back" a competitor's inventory and removing it from a retailer's system, or when the retailer forces a vendor to buy back slow-moving merchandise. |
| Chargeback | A practice used by retailers in which they deduct money from the amount they owe a vendor. |
| Commercial bribery | A vendor’s offer of money or gifts to a retailer’s employee for the purpose of influencing purchasing decisions. |
| Consortium exchange | A retail exchange that is owned by several firms within one industry. |
| Copycat branding | A branding strategy that imitates the manufacturer brand in appearance and trade dress, but generally is perceived as lower quality and is offered at a lower price. |
| Copyright | A regulation that protects original works of authors, painters, sculptors, musicians, and others who produce works of artistic or intellectual merit. |
| Counterfeit merchandise | Goods that are made and sold without permission of the owner of a trademark, a copyright, or a patented invention that is legally protected in the country where it is marketed. |
| Diverted merchandise | Merchandise that is diverted from its legitimate channel of distribution similar to gray-market merchandise except there need not be distribution across international boundaries. |
| Duty | A tax placed by a government upon imports. |
| Exclusive dealing agreements | Restriction a manufacturer or wholesaler places on a retailer to carry only its products and no competing vendors’ products. |
| Exclusive geographic territory | A policy in which only one retailer in a certain territory is allowed to sell a particular brand. |
| Free trade zone | A special area within a country that can be used for warehousing, packaging, inspection, labeling, exhibition, assembly, fabrication, or transshipment of imports without being subject to that country’s tariffs. |
| Gray goods market | Merchandise that possesses a valid U.S. registered trademark and is made by a foreign manufacturer, but is imported into the United States without permission of the U.S. trademark owner. |
| House brand | Unbranded, unadvertised merchandise found mainly in drug, grocery, and discount stores. |
| Independent exchanges | A retail exchange owned by a third party that provides the electronic platform to perform the exchange functions. |
| Intellectual property | Property that is intangible and is created by intellectual (mental) effort as opposed to physical effort. |
| Lead time | The amount of time between recognition that an order needs to be placed and the point at which the merchandise arrives in the store and is ready for sale. |
| Licensed brand | Brand for which the licensor (owner of a well-known name) enters a contractual arrangement with a licensee (a retailer or a third party). The licensee either manufactures or contracts with a manufacturer to produce the licensed product and pays a royalty to the licensor. |
| Lift-out | A strategy vendors and retailers use to get products into retail stores, either when a retailer allows a vendor to create space for goods by “buying back” a competitor’s inventory and removing it from a retailer’s system, or when the retailer forces a vendor to buy back slow-moving merchandise. |
| Manufacturer brand | A brand that is produced and controlled by and that carries the name of a manufacturer; also known as a national brand. |
| Maquiladoras | Manufacturing plants in Mexico that make goods and parts or process food for export to the United States. |
| Market | A group of vendors in a concentrated geographic location or even under one roof or over the internet; also known as a central market. |
| Market week | A temporary concentration of vendors that provides retailers opportunities to place orders and view what is available in the marketplace. |
| Med-arb | Used in the case of a dispute between retailer and vendor that involves an initial attempt at mediation followed by binding arbitration if the mediation is unsuccessful. See mediation and arbitration. |
| Mediation | Used in the case of a dispute between retailer and vendor that involves selecting a neutral party—the mediator— to assist the parties in reaching a mutually agreeable settlement. |
| Merchandise shows | A temporary concentration of vendors that provides retailers opportunities to place orders and view what is available in the marketplace. |
| National brands | A line of products designed, produced, and marketed by a vendor. |
| Opportunity cost of capital | The rate available on the next-best use of the capital invested in the project at hand. The opportunity cost should be no lower than the rate at which a firm borrows funds, since one alternative is to pay back borrowed money. It can be higher, however, depending on the range of other opportunities available. Typically, the opportunity cost rises with investment risk. |
| Parallel branding | A branding strategy that represents a private label that closely imitates the trade dress and product attributes of leading manufacturer brands but with a clearly articulated "invitation to compare" in its merchandising approach and on its product label. |
| Partnering relationship | Long-term relationship in which partners make significant investments to improve both parties’ profitability. |
| Premium branding | A branding strategy that offers the consumer a private label at a comparable manufacturer-brand quality, usually with a modest price savings. |
| Private-label brands | Products developed and marketed by a retailer. Also called store brand. |
| Private exchanges | Exchanges that are operated for the exclusive use of a single firm. |
| Retail exchanges | Electronic marketplaces operated by organizations that facilitate the buying and selling of merchandise using the Internet. |
| Reverse auctions | Auction conducted by retailer buyers. Known as a reverse auction because there is one buyer and many potential sellers. In reverse auctions, retail buyers provide a specification for what they want to a group of potential vendors. The competing vendors then bid down the price at which they are willing to sell until the buyer accepts a bid. |
| Slotting allowance | Fee paid by a vendor for space in a retail store. Also called slotting fee. |
| Slotting fee | Fee paid by a vendor for space in a retail store. |
| Stocklift | See buyback. |
| Store brands | Products developed and marketed by a retailer and only available for sale by that retailer. Also called store brands. |
| Strategic relationship | Long-term relationship in which partners make significant investments to improve both parties’ profitability. |
| Tariff | A tax placed by a government upon imports. |
| Trade show | A temporary concentration of vendors that provides retailers opportunities to place orders and view what is available in the marketplace; also known as a merchandise show or market week. |
| Trademark | Any mark, work, picture, or design associated with a particular line of merchandise or product. |
| Trust | A belief by one party that the other party will fulfill its obligations in a relationship. |
| Tying contract | An agreement between a vendor and a retailer requiring the retailer to take a product it does not necessarily desire (the tied product) to ensure that it can buy a product it does desire (the tying product). |
