anomaly In marketing terms, refers to an unmet need or a need that has not been met completely, but whose time has come to be filled.

black hole A period of inactivity in a store.

breakeven point The percentage or amount of net sales that it takes to cover all the expenses of your business except the cost of merchandise so that you are not losing money or making money.

classifications (or categories) A method of grouping or sorting your merchandise based on the concept that within a classification or category merchandise is deemed interchangeable by the customer.

common stock A portion of ownership in a corporation that includes the right to vote on key corporation issues and entitles the owner to share in the company’s success, usually through dividends or increase in stock value.

department In retail, a grouping of merchandise that could stand alone as a “specialty store.” For example, a department store can move its home furnishings department into a separate location in the mall or a drugstore could move its cosmetics department to smaller premises. In theory at least, both could succeed as separate businesses.

customer service ratio Refers to the ratio between customers waiting to be served at a specific time and staff members available. The higher the ratio of customers versus sales associates, the lower the quality of service as 1 sales associate can effectively serve 2 to 3 customers at a time at most (ratio is 1 to 2 or 1 to 3).

direct competitor Any store from which your customer can buy the same product you sell.

general partners Partners who actively run the business and are subject to the same personal liability for partnership debts and claims as sole proprietors, even if the act that caused the claim to be filed was carried out by one of the other partners. Be careful whom you partner with, especially if you plan to be the general partner with all others being limited partners.

indirect competitor Any store that serves the same customers as you but in a completely different product category. For example, a Williams-Sonoma store and a Banana Republic store both compete for the same share of the customer’s wallet. The customer can decide to spend his money on a new pot from Williams-Sonoma or a new pair of jeans from Banana Republic.

integrated software Software that uses the same data files so the information can be updated in real time.

interfaced software Software that enables you to translate data between two software programs, such as your accounting and POS software, but this must be done manually.

landed cost The cost of your goods including shipping charges.

lease line A point at which the public space ends and the store begins. It is generally where the store entrance door opens.

limited partners Partners who don’t take an active role in the management of the partnership. Their liability is limited to their investment in the business and any obligations they may have to make additional investments in it

markdown A reduction in the selling price of a product. Markdowns are usually applied to slow-moving or old inventory or to promote an item to increase sales.

multichannel retailing Serving a customer by whatever means the customer wants to deal with you—via telephone, mobile phone, in person at your store, through a catalog, or on your website.

needs The basic necessities of life: food, clothing, shelter, and so on. You must have these products to live.

negotiation space The space between the seller’s and the buyer’s cut-off points. Somewhere in this space, a deal will be made.

open to buy The amount of money you can spend in a product category or the amount of items you can buy. You calculate your open to buy by considering the amount of inventory you have on hand, the amount you have on order, and the amount you’ll need at the beginning of the next month as well as your sales and markdown estimates.

preferred stock Usually has a specific dividend that must be paid prior to the dividends paid to common stock holders. This type of stock usually has no voting rights. If the company fails, these shareholders will get their share of the assets before common stock holders.

promotional markdowns When you temporarily reduce the value of items in your inventory for a special purpose, such as a weekend sale. At the end of the sale, the price will return to the original amount.

qualifications Skill sets that people need to do the job. For example, people cannot be lifeguards at the local pool unless they have a certain level of training and proficiency that has been tested and certified by the appropriate authority.

regular markdowns Permanently reducing the value of certain items in your inventory. These reductions are permanent, and the item is “red penned” to the lower price on the price ticket and will never go back to original price.

retail value The value of your merchandise is the dollar value at full selling price. sell and buy The concept of selling your products to your customers before you have to pay for them.

suggestion selling A technique where a sales associate always suggests the most logical of all the additional items for a complete solution to customer’s needs until the customer finally says “No.”

wants Items that a customer desires but does not absolutely need to live. Often, as retailers, unless you are selling the basic necessities of life, you are selling to customers’ wants, which are driven by emotion.

web host An online entity that provides the technical interface needed for your website to be seen on the Internet. Web hosts offer you a system for storing information, images, video, and any other content you want to put on the internet. Web-host companies provide service space to host your website and provide the connectivity so it can be found through the Internet.

wholesale The selling of goods in large quantities to retailers who then sell them directly to customers. The wholesaler is essentially the middle man between the manufacturer and the retailer.