Retail Glossary: Terms Every Local Small Independent Retailer Should Know
Running a local retail business means navigating a wide range of industry terms, from the language of inventory management to the jargon of point of sale (POS) software, cash flow, and customer loyalty.
This glossary seeks to explain the terms you are most likely to encounter in local small business retail, in plain English. Its something we have developed over the years to help our POS software customers and team members.
It is designed for independent speciality retailers in Australia and New Zealand: bookshops, produce businesses, newsagents, gift shops, garden centres, toy stores, bike shops, pet retailers, jewellers, and more.
Whether you are evaluating new software, talking to a supplier, or reviewing your financials, this reference is here to help.
Terms are grouped by topic. Use the section headings to navigate to the area most relevant to you.
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Point of Sale (POS)
Point of Sale (POS)
The location and moment, the point, at which a retail transaction is completed. Also used to describe the software and hardware system that processes sales. A POS system typically includes the software, a computer, a barcode scanner, a receipt printer, and an EFTPOS (payments) terminal.
POS Software / POS System
The terms software and system can be used interchangeably and often are. The software program, sometimes also called application, that manages sales transactions, inventory, customer records, and reporting in a retail business. Modern POS software for independent retailers is cloud-based or desktop-based, and may include integrations with accounting software, e-commerce platforms, and payment providers.
Terminal
A single point-of-sale workstation, typically a screen, keyboard or touchscreen, and connected peripherals like printer and barcode scanner. A terminal can also be a computer. A business may run one or multiple terminals depending on its size and transaction volume.
Multistore
A POS configuration that allows a retailer to operate and manage more than one physical location from a single software platform. Multistore functionality typically includes consolidated reporting, inter-store stock transfers, and centralised customer data.
Cloud-Based POS
A POS system where the software and data are hosted on remote servers and accessed via the internet, rather than stored locally on an in-store computer. Cloud-based systems allow the business owner to access data from anywhere and reduce reliance on local hardware.
Desktop POS
A point of sale system where the software is installed and runs locally on a computer or server within the store. Desktop POS can operate without a continuous internet connection, which is useful for retailers in regional or rural locations with unreliable connectivity.
Retailer Roam
A portable POS capability developed by Tower Systems that allows staff to process sales away from the fixed counter, on the shop floor, at a market stall, or at an off-site event, using a mobile device connected to the main system.
Barcode Scanner
A hardware device that reads the barcode on a product and retrieves the matching product record in the POS system. Scanning eliminates manual data entry at the point of sale and reduces pricing errors.
Receipt Printer
A hardware device connected to the POS system that prints a paper receipt for the customer at the point of sale. Receipt printers can also print loyalty vouchers, promotional messages, and other information configured in the software. Typically, the cash drawer is connected to the receipt printer.
EFTPOS
Electronic Funds Transfer at Point of Sale. The system by which customers pay for purchases using a debit or credit card via a payment terminal. EFTPOS integration with POS software allows transactions to flow directly between the two systems, reducing manual entry and reconciliation errors.
Integrated EFTPOS
An EFTPOS setup where the payment terminal and or payments company is directly connected to the POS software, so the transaction amount is sent automatically from the POS to the terminal. The customer taps, swipes, or inserts their card, and the approved amount flows back to the POS without any manual re-entry.
Surcharging
The practice of passing a proportion of card payment processing costs to the customer as a fee at the point of sale. POS software can be configured to calculate and apply a surcharge automatically on card transactions. Note: This is to be phased out in Australia from October 2026.
Layby
A purchasing arrangement where a customer pays for a product in instalments over an agreed period, and takes possession of the item only once it is paid in full. POS software that supports layby tracks each payment, alerts staff when the final payment is due, and manages the release of the item.
Gift Card
A prepaid stored-value card that a customer purchases and gives to another person to redeem in-store. POS software manages gift card balances, tracks redemptions, and handles partial-use scenarios where a customer spends only part of the card's value in a single transaction.
Inventory & Stock Management
Stock Keeping Unit (SKU)
SKU refers to a unique identifier assigned to each distinct product in a retailer's inventory. SKUs allow the POS system to track every product individually, including its on-hand quantity, cost price, selling price, and sales history. Each variation of a product, such as a different colour or size, may have its own SKU or be treated as a variant of an SKU – depending on the POS software.
Quantity On-Hand
The number of units of a specific product currently in stock at a given location. On-hand quantity is updated in real time by the POS system each time a product is sold, received, or adjusted.
Stock on Order
The quantity of a product that has been ordered from a supplier but not yet received. Tracking stock on order helps retailers avoid placing duplicate orders and gives a more accurate picture of upcoming stock levels.
Reorder Point
The stock level at which a reorder for a product should be triggered. When on-hand quantity falls to or below the reorder point, the POS system can alert the retailer or automatically generate a purchase order to the supplier.
Reorder Quantity
The number of units to order when a reorder is triggered. Setting an appropriate reorder quantity, based on supplier minimum order requirements, lead times, and typical sales velocity, prevents both stockouts and excess inventory.
Lead Time
The time between placing an order with a supplier and receiving the goods in store. Understanding lead time for any given supplier is essential for setting reorder points correctly, if your lead time is two weeks, you need enough stock on hand to cover two weeks of sales before the next delivery arrives.
Purchase Order (PO)
A formal document sent to a supplier specifying the products, quantities, and agreed prices for an order. POS software can generate and track purchase orders, record what has been received against each order, and flag discrepancies between the order and the delivery.
Stock Arrival
The process of recording the arrival of stock ordered from a supplier. It records the quantities received, checks them against the purchase order, and updates on-hand stock levels accordingly. Discrepancies between the order and the delivery should be recorded at this stage. In the Tower Systems POS software, AI tools make this very easy, and accurate.
Tower Systems
In the Tower Systems POS software, AI tools make stock arrival easy and accurate.
Stocktake
A physical count of all stock on hand, conducted to verify that the quantities recorded in the POS system match the quantities actually present in the store or the business more broadly. Stocktakes are typically conducted annually or more frequently for high-value or high-risk categories.
Spot Stocktake
A physical of a portion or section of stock held within the store or business. This is usually done regularly, dependant on theft or other factors.
Shrinkage
The difference between what the POS system says should be on hand and what is physically present. Shrinkage is caused by theft, supplier short-delivery, damage, administrative error, or loss. It represents a direct reduction in gross profit.
Write-Off
The process of removing unsaleable or lost stock from the inventory records. A write-off reduces the on-hand quantity in the POS system and records a corresponding cost. Write-offs should be documented with a reason, damage, theft, expiry, or other cause, to support analysis and reporting.
Dead Stock
Inventory that has not sold within a defined period and is unlikely to sell at its current price. Dead stock ties up capital and occupies shelf space that could be used for higher-performing lines. Identifying dead stock through POS reporting allows retailers to take action, markdowns, returns to supplier, or bundling into promotional packs.
Open-to-Buy (OTB)
A financial planning tool that calculates how much a retailer can afford to spend on new inventory in a given period. OTB is calculated by taking projected sales, adding the desired closing stock level, and subtracting the opening stock on hand. It prevents over-buying and helps retailers manage their working capital.
Sell-Through Rate
The percentage of stock received in a period that has been sold by the end of that period. A sell-through rate is typically used for seasonal or time-limited ranges. A high sell-through indicates effective buying and pricing; a low sell-through indicates over-buying or mispriced stock.
Stock Turn (Inventory Turnover)
The number of times a retailer's entire stock is sold and replaced over a period, typically calculated annually. A higher stock turn generally indicates efficient inventory management. A low stock turn suggests excess stock or slow-moving lines.
Bundle / Kit
A product grouping where multiple individual items are sold together as a single unit, for example, a gift hamper containing several separate items. POS software that supports bundles deducts each component from stock individually when the bundle is sold, keeping inventory accurate across all component lines.
Serial Number Tracking
The recording of a unique serial number for each individual unit of a high-value product. Serial number tracking is used in categories such as electronics, firearms, jewellery, and bikes to provide a complete history for each unit, including purchase date, sale date, and customer details.
Consignment Stock
Stock provided by a supplier that is held by the retailer but remains the property of the supplier until it is sold. The retailer pays the supplier only for what is sold, and returns unsold stock. POS software that handles consignment tracks which items are consigned, records sales against the supplier's account, and manages returns.
Financial & Margin Terms
Cost of Goods Sold (COGS)
The direct cost of the stock sold during a period, the price the retailer paid to the supplier for the items that have been sold. COGS is subtracted from revenue to calculate gross profit. Keeping accurate cost records in the POS system is essential for reliable COGS reporting.
Gross Profit
Revenue minus the cost of goods sold. Gross profit represents the amount available to cover operating expenses (rent, wages, utilities, marketing) and generate a net profit. Gross profit is typically expressed as both a dollar figure and a percentage of revenue (gross margin).
Gross Margin
Gross profit expressed as a percentage of revenue. For example, if a product sells for $20 and costs $8, the gross margin is 60 per cent. Gross margin is one of the most important performance indicators in retail, it measures how much of every sales dollar is available to cover costs and generate profit.
Mark-Up
The amount added to the cost price of a product to arrive at its selling price, expressed as a percentage of cost. A product that costs $10 and is sold for $15 has a mark-up of 50 per cent. Note that mark-up and margin are calculated differently, a 50 per cent mark-up produces a 33 per cent margin, not 50 per cent.
Margin vs Mark-Up
A common source of confusion. Margin is gross profit expressed as a percentage of the selling price. Mark-up is the amount added to cost, expressed as a percentage of the cost price. A retailer who says they are 'marking up by 100 per cent' is achieving a 50 per cent gross margin.
Average Transaction Value (ATV)
The average dollar value of each sale transaction, calculated by dividing total revenue by the number of transactions in a period. ATV is a key performance indicator in retail, small increases in ATV across a high volume of transactions have a significant impact on total revenue. ATV is a common acronym used in big retail businesses.
Units per Transaction (UPT)
The average number of individual items sold in each transaction. UPT is a measure of how effectively retailers are encouraging customers to purchase more than one item per visit. Loyalty programmes, product bundling, and suggestive selling at the counter all contribute to improving UPT.
Markdown
A permanent reduction in the selling price of a product. Markdowns are typically used to clear slow-moving or end-of-season stock. A well-timed markdown recovers capital and frees shelf space; a poorly timed markdown erodes margin unnecessarily.
Discount
A temporary or customer-specific reduction in the selling price of a product. Discounts may be applied manually by staff, generated automatically by a loyalty programme, or triggered by a promotional rule in the POS system. Unlike a markdown, a discount does not change the product's standard selling price.
Shrinkage Rate
Shrinkage expressed as a percentage of total sales or total stock value. Industry benchmarks vary by retail category, but most specialty retailers should target a shrinkage rate below one per cent of sales. Higher rates indicate a need for tighter receiving processes, stock control, or security measures.
Working Capital
The funds available to cover the day-to-day operating costs of the business, essentially, current assets minus current liabilities. In retail, working capital is often tied up in inventory. Efficient inventory management, buying well, turning stock quickly, and avoiding dead stock, frees working capital for other purposes.
Cash Flow
The movement of money into and out of the business over a period. Positive cash flow means more money is coming in than going out. In retail, cash flow is heavily influenced by the timing of stock purchases relative to sales, which is why seasonal planning and open-to-buy discipline are so important.
Customer & Loyalty
Loyalty Programme
A structured system for rewarding customers for repeat purchases. Loyalty programmes in independent retail typically operate on a points accumulation model, a spend-threshold voucher model, or a combination of both. The goal is to increase visit frequency, average transaction value, and customer lifetime value.
Customer Lifetime Value (CLV)
The total revenue a retailer can expect to generate from a single customer over the entire course of their relationship with the business. CLV is a useful measure for understanding the value of retention, keeping an existing customer is typically far less expensive than acquiring a new one.
Lapsed Customer
A customer who has not made a purchase within a defined period — the length of which will depend on the type of retail business. Most loyalty programme software allows retailers to identify lapsed customers and target them with a re-engagement offer. Reactivating lapsed customers is often more cost-effective than attracting new ones.
Customer Profile
A record in the POS system that stores information about an individual customer, including their purchase history, loyalty balance, contact details, and any preferences or notes recorded by staff. Customer profiles enable personalised service and targeted marketing.
Voucher
In a loyalty context, a discount certificate generated by the POS system when a customer reaches a defined spend threshold. Vouchers printed on receipts with a short expiry date are particularly effective at driving return visits, because they create both a tangible reward and a sense of urgency.
Discount Voucher
This is a type of voucher produced by the Tower Systems POS software offering a cash discount off a future purchase based on rules determined by the retailer./div>
Double Points / Bonus Points
A loyalty promotion in which customers earn accelerated points on purchases during a defined period. Double points events are commonly used to drive traffic during quiet trading periods or to reward customers for trying a new product category.
Click and Collect
An omnichannel fulfilment model where a customer places an order online and collects the item in-store. Click and collect combines the convenience of online shopping with the immediacy of in-store pickup, and drives foot traffic that can lead to additional purchases.
Omnichannel Retail
A retail approach that integrates a customer's experience across multiple channels, in-store, online, and mobile, so that inventory, pricing, and customer data are consistent regardless of where the customer interacts with the business. POS software with e-commerce integration through products like Shopify, Big Commerce or Woo Commerce is the foundation of omnichannel retail for independent retailers.
Suppliers & Ordering
Supplier
A business or individual that provides goods to a retailer for resale. Managing supplier relationships, including ordering terms, credit accounts, return policies, and electronic invoicing, is a core function of retail POS software. Some retailers refer to suppliers as wholesalers.
Electronic Invoice
A supplier invoice delivered in a digital format that can be imported directly into the POS system, rather than entered manually. Electronic invoice importing, particularly with AI-assisted processing, significantly reduces data entry time and the risk of receiving errors. With the AI tools in the Tower Systems POS software, invoices do not necessarily conform to electronic invoice formats.
Minimum Order Quantity (MOQ)
The smallest quantity of a product that a supplier will accept in a single order. MOQs affect the retailer's ability to buy in small, frequent quantities and can contribute to over-stocking if not managed carefully against sales velocity.
Returns Authorisation (RA)
A formal approval from a supplier to return unsold or faulty stock for credit or replacement. Most suppliers require a returns authorisation before accepting returned goods. POS software can track pending and completed returns authorisations and match them against supplier credit notes.
Credit Note
A document issued by a supplier acknowledging that a credit is owed to the retailer, typically as a result of returned goods, a pricing error, or a delivery discrepancy. Credit notes should be reconciled against supplier invoices in the POS system to ensure they are applied correctly.
XchangeIT
An Australian data exchange platform used in the newsagency industry to manage magazine and newspaper distribution. Tower Systems integrates with XchangeIT to automate the management of publication arrivals and returns for newsagents.
Reporting & Analytics
Sales Report
A summary of transactions completed over a defined period. Sales reports can be broken down by product, category, staff member, time of day, day of week, or any other dimension supported by the POS software. Regular sales reporting is the foundation of data-led retail management.
Category Report
A sales and margin report broken down by product category, for example, greeting cards, giftware, homewares, or plants. Category reporting helps retailers understand which parts of their range are performing well and which need attention.
Sell-Through Report
A report that shows the percentage of stock received or on hand that has been sold over a period. Particularly useful for seasonal buying — a sell-through report on last year's Christmas range informs more accurate ordering for the current year.
Stock Valuation Report
A report that shows the total value of stock on hand, typically at cost price and at retail price. Stock valuation reports are used for insurance purposes, financial reporting, and assessing working capital tied up in inventory.
Aged Stock Report
A report that identifies products that have been in stock for longer than a defined period without selling. Aged stock reports are used to trigger markdowns, returns to supplier, or promotional activity to clear slow-moving lines.
Dashboard
A visual summary of key business metrics displayed on a single screen in the POS software. Dashboards give retailers an at-a-glance view of sales, margin, stock levels, and other performance indicators without the need to run individual reports.
Business Intelligence (BI)
The use of data analysis tools to support better business decision-making. In the context of independent retail, business intelligence typically refers to the reporting and analytics capabilities of POS software, the ability to understand what is happening in the business and why. In the Tower Systems POS software the Insights Dashboard is a business intelligence dashboard.
Monthly Sales Comparison
The action of comparing business performance over a date range compared to the same date range a year earlier. The term monthly is used as an indicator while the actual report can be run for any date range.
Accounting & Software Integration
Xero
A cloud-based accounting platform widely used by small businesses in Australia and New Zealand. Tower Systems integrates directly with Xero, allowing sales data, cost of goods, and other financial information to flow automatically from the POS system into the accounting records.
Xero Link
A direct integration between Tower Systems POS software and Xero that automates the transfer of financial data between the two systems. The Xero Link eliminates the need for manual data entry between the POS and accounting software, reducing errors and saving time.
GST (Goods and Services Tax)
A broad-based consumption tax applied to most goods and services in Australia ( currently 10 per cent) and New Zealand (currently 15 per cent). POS software must handle GST correctly in pricing, receipts, and reporting to ensure compliance with Australian and New Zealand tax requirements.
BAS (Business Activity Statement)
A form lodged with the Australian Taxation Office (ATO) by GST-registered businesses, reporting the GST collected on sales and the GST paid on purchases. Accurate POS reporting simplifies BAS preparation.
Shopify Integration
A direct connection between Tower Systems POS software and a retailer's Shopify online store. When a product is sold in-store, the Shopify stock level updates automatically, and vice versa. This prevents overselling and ensures that in-store and online inventory remain synchronised.
WooCommerce Integration
A direct connection between Tower Systems POS software and a retailer's WooCommerce (WordPress) online store, providing the same real-time stock synchronisation as the Shopify integration.
API (Application Programming Interface)
A set of protocols that allows different software applications to communicate with each other. POS software integrations with Shopify, Xero, and payment providers are all built on APIs.
Hardware & Network Terms
Router
A router is a networking device that connects multiple computer networks and directs data packets between them, acting as a "traffic controller" to ensure data reaches its destination efficiently.
Modem
A device that connects your store to your Internet Service Provider (ISP).
Switch
Hardware that connects multiple wired devices (computers, printers, POS) within a local area network (LAN).
Firewall
A security system that monitors and controls network traffic, protecting your store's data from outside attacks.
Patch Panel
A mounted hardware assembly used to manage and connect incoming and outgoing network (Ethernet) cables in an organized way.
Uninterruptible Power Supply (UPS)
A backup battery system that keeps POS and network hardware running temporarily during power outages, protecting against surges.