In retail, what does the term 'cost' usually refer to?

In retail, the term 'cost' primarily pertains to the amount that a retailer pays to acquire products from suppliers. This encompasses the purchasing expenses incurred, which can include the purchase price of the goods, shipping costs, and any other expenses related to acquiring the inventory for resale. Understanding this cost is critical for retailers, as it forms the basis for pricing strategies, helps calculate profitability, and impacts inventory management.

The focus on this specific definition highlights the importance of pricing decisions in retail and how they relate to the underlying expenses incurred by the retailer. By analyzing costs, retailers can better strategize their pricing to ensure they maintain healthy profit margins while remaining competitive in the marketplace.