Retail Terminology – F
F
Fast fashion is a retail business model that focuses on rapidly replicating recent catwalk trends and high-fashion designs, mass-producing them at a low cost, and bringing them to retail stores quickly while demand is at its highest. This method leverages trend replication and low-quality materials like synthetic fabrics to produce inexpensive styles. The fast fashion industry relies on a highly responsive supply chain to support a constantly changing product assortment.
Fashion Pyramid
The fashion pyramid is a market segmentation tool that categorizes fashion brands based on price, quality, and creativity. At the top of the pyramid are haute couture and supreme luxury brands known for their high-quality fabrics and exclusive customer service. Below them are ready-to-wear or aspirational luxury garments, followed by diffusion lines, bridge brands, and mass-market products at the base. Each level targets different consumer segments and offers unique characteristics.
Fashion seasons dictate the timing of when collections are delivered to stores and subsequently go on sale. The primary seasons are spring/summer and fall/winter. Spring/summer collections typically arrive between January and March, with sales peaking from mid-June to mid-July. Fall/winter collections are delivered from July to September, with sales extending through the winter months. These seasonal cycles influence retail strategies and inventory management.
Fashion Week
Fashion Week is a significant event in the fashion industry where designers, brands, and fashion houses showcase their latest collections in runway shows. These events, held biannually in major fashion capitals, influence upcoming fashion trends and provide a platform for designers to introduce new products to buyers and the media. Fashion weeks generate substantial economic benefits for local economies through increased revenue for hotels, restaurants, and retail establishments.
Financial Statements
Financial statements are essential in retail financial management, providing insights into a company’s financial health. Key financial reports include the Profit & Loss (P&L) statement, which tracks revenue, costs, and net profit over a specific period. These statements help retailers make informed decisions about budgeting, inventory planning, pricing strategies, and overall financial performance.
Fixture
Fixtures in retail stores are used to display products effectively. They come in various shapes and sizes, including shelves, racks, and mannequins, and play a crucial role in visual merchandising. Well-designed fixtures enhance the store’s appearance, make products more visually appealing, and guide customers through the layout, ultimately boosting sales.
Floor Plan
A floor plan is a bird’ s-eye diagram of a retail space that illustrates the design and layout of the property. It includes structural details like walls, windows, doors, and fixtures. A practical floor plan helps visualize customer flow, optimize space usage, and create a welcoming shopping environment, leading to increased sales and improved customer experience.
Footfall
Footfall refers to the number of people entering a retail store within a given period. It is a critical metric for assessing store performance, understanding customer behavior, and planning marketing strategies. High footfall indicates strong customer interest and can lead to increased sales opportunities.
Forecasting
Forecasting in retail involves predicting future sales, inventory needs, and market trends based on historical data and market analysis. Accurate forecasting helps retailers manage stock levels, plan promotions, and make informed business decisions to meet customer demand and maximize profitability.
Forward Integration
Forward integration is a business strategy where a company expands its operations to include control over its distribution channels. For example, a manufacturer might open its retail stores to sell products directly to consumers, thereby increasing control over the supply chain and improving profit margins.
Forward Stock Cover
Forward stock cover refers to the retailer’s inventory to meet future demand. It is calculated based on sales forecasts and helps ensure enough stock to satisfy customer needs without overstocking, which can tie up capital and increase storage costs.
Franchise
A franchise is a business model where a franchisor grants a franchisee the right to operate a business using the franchisor’s brand, products, and operational methods. This arrangement allows the franchisee to benefit from an established brand and business system while the franchisor expands its market presence.
Franchisee
A franchisee is an individual or entity that purchases the rights to operate a franchise business. The franchisee pays fees and royalties to the franchisor in exchange for using the brand name, receiving training, and accessing the franchisor’s business systems and support.
Franchisor
A franchisor is a company that owns the overall rights and trademarks of the business and grants licenses to franchisees to operate under its brand. The franchisor provides franchisees support, training, and resources to ensure consistency and success across all franchise locations.
Free Cash Flow
Free cash flow is the cash a business generates after accounting for capital expenditures. It is an essential indicator of a company’s financial health and ability to generate money to fund operations, pay dividends, reduce debt, or invest in growth opportunities.
Freight Cost
Freight cost refers to the expenses incurred in transporting goods from one location to another. In retail, managing freight costs is crucial for maintaining profitability, especially when dealing with international shipping and logistics.
Fulfillment Center
A fulfillment center is a warehouse facility where products are stored, processed, and shipped to customers. Efficient fulfillment centers are essential for timely order processing, inventory management, and customer satisfaction in retail operations.
Fulfillment Optimization
Fulfillment optimization involves improving the efficiency and effectiveness of order processing, inventory management, and shipping operations. Retailers can reduce costs, speed up delivery times, and enhance customer satisfaction by optimizing fulfillment processes.
Full Price Strategy
A full-price strategy is a pricing approach where products are sold at regular prices without discounts or markdowns. Luxury brands often use this strategy to maintain an image of exclusivity and high value. It relies on strong brand equity and customer loyalty.
FIFO (First In, First Out)
FIFO, or First In, First Out, is an inventory management method where the oldest stock (first in) is sold first (first out). This approach helps prevent inventory obsolescence, ensures product freshness, and aligns with accounting practices for cost of goods sold.