From BJ's to Lululemon, retailers are trimming assortments to boost business
Retail brands are shrinking assortments to get back to healthy growth, while box stores are culling products to better curate offerings and stabilize business.
TL;DR
- Retailers are reducing the number of stock keeping units (SKUs) to improve profitability and balance sheets.
- Companies like Under Armour and Lululemon are cutting SKUs to focus on fewer, higher-margin products and regain pricing power.
- BJ's Wholesale Club and Dollar General are using SKU rationalization to better manage inventory, refine offerings, and stabilize their businesses.
- Reducing assortments can lead to less choice for consumers, a trade-off many retailers are willing to make.
- Excessive discounting due to unsold inventory negatively impacts profitability for brands like Under Armour and Lululemon.
- For smaller retailers, cutting SKUs aims to improve curation and stabilize the business, rather than necessarily increasing prices.
- Successful SKU reduction requires careful planning to avoid alienating customers or losing sales to competitors.