Retail Terms, KPIs and Acronyms

When starting out in the retail business the sheer number of acronyms and specific key phrases can be confusing. We’ve compiled a list of common terms you should know as a retailer.

Glossary of POS Software, Inventory Management & Retail Terms


Inventory Management and Retail Glossary

Initial Mark UP (IMU)

The initial mark-up is the difference between the cost of an item and it’s original selling price. The initial mark-up sometimes referred to as mark-on is represented as a % for purposes of analysis.


Any reduction in price after the receipt of the original selling price. Markdown % = Markdown dollars divided by net sales. Net sales is defined as actual revenue received after markdown is taken. Sales tax is never included in determining net sales.

Maintained Markup

Another way of saying gross profit on merchandise sold, or how markdowns impact initial markup. (We do not treat freight or shrinkage as a part of cost of goods and therefore MMU is often higher on merchandise plans than on a financial statement.)

Stock to Sales Ratio

Beginning of the month retail stock divided by sales. This measure is all about knowing how much inventory is needed to reach the sales target in each classification.


Is generally computed over a one- year period since a shorter period of time is misleading. Turnover must be computed retail to retail, or cost to cost, but never retail to cost.

Gross Margin Return on Investment (GMROI)

It is a measurement of inventory turnover or movement as well as gross margin dollars. Inspecting both margin and turnover together is more indicative of inventory performance. High margin without turn can indicate that cash is tied up and high turn without margin can mean heavy markdowns. The combination of high turnover and high margin is a far better indicator. GMROI is a useful tool in measuring inventory movement as it relates to profitability.

Open to Buy Plan

An Open to Buy plan is an inventory calculation that gives you how much inventory you need to buy on a monthly basis to make your sales projections. It is a guide for the amount of dollars you need to spend on merchandise and changes based on your landed inventory and sales. Open to Buy plans are strongest when created by classification.

Barcode Scanner

A hardware device , that converts and send barcode data to another device. Barcode scanners are typically used during the sales cycle and for inventory counting.

EFT Link or Integration

This software provides POS users a fully integrated or connected payment processing solution that enables the use of credit, debit, and gift card transactions. A credit card solution is integrated when the pinpad plugs into the computer and works with your POS solution.

EMV (Chip and Pin)

EMV stands for Europay, Mastercard and Visa. Most cards are EMV/chip and PIN compliant within Canada. They maintain a much higher level of security for credit card payment processing. The switch to this new type of card has been mandated by the credit card companies, if you use your Point of Sale to process debit and/or credit card transactions you be required to use PA-DSS compliant applications in Canada.

Multi-Channel Marketing

Marketing using many different channels to reach a customer in effort to make it easier for a customer to purchase from you. A channel might refer to a physical retail store, a web store, mobile presence, a mail order catalog, or direct communication through mail, email or text messaging. Multi-Channel marketing allows the retailer to reach its prospective or current customer in a channel of his/her liking.


Short for Payment Application Data Security Standard, it is a best practices standard maintained by the Payment Card Industry Security Standards Council (PCI SSC) to assist software and other third-party vendors to develop secure payment applications that support compliance with the PCI-DSS.

PCI Compliance

The payment card industry data security standard (PCI DSS) is a set of requirements designed to ensure that ALL companies that process, store or transmit credit card information maintain a secure environment. Essentially any merchant that has a Merchant ID. It is important to note, the payment brands and acquirers are responsible for enforcing compliance, not the PCI council.

Search engine optimization (SEO)

The process of improving the visibility of a website or a web page in search engines via the “natural” or un-paid (“organic” or “algorithmic”) search results.This is rapidly becoming a service that any online retailer needs to use. Click on the start of this definition for more information on how we can help you with this service.

Website integration

The process of connecting your POS system to your website. This will enable you to offer either real time , or near retail time, stock quantities and order processing. Typically an integration makes sure that your inventory is current online and that your orders move down to your store management/POS system without extra work required.