A broad wave of retailers has announced plans to shrink their product assortments, measured in stock keeping units (SKUs), as companies work to stabilize finances amid consumer spending pressures. Dollar General reduced its SKUs by 1,500 starting in March and expanded cuts to 1,500 by mid-year. Under Armour announced a 25% reduction in prior years with plans for an additional 25% cut. BJ’s Wholesale Club targeted roughly a 20% reduction, while Lululemon reported a 15% cut in North America SKUs during September.
Retailers cite multiple benefits to trimming assortments. Reducing product variety can help prevent inventory buildup and associated markdowns that erode profitability. When companies cut unnecessary variants—such as multiple scents of body wash or different package sizes of the same beverage—sales can consolidate onto remaining products while freeing shelf space for new categories. This approach has particular appeal for discount retailers that manage thousands of brands, helping them refine operations without necessarily raising prices.
However, the strategy carries different implications depending on business model. For premium brands like Lululemon and Under Armour, SKU reductions aim to restore pricing power and brand perception. Lululemon grew sales by more than $500 million between fiscal years 2024 and 2025 but saw operating profit fall by approximately $300 million during the same period, with shares declining roughly 65% over two years. Under Armour’s operating income turned negative in recent fiscal years as excessive discounting damaged profitability. Both companies are attempting to reposition by selling fewer items at full retail prices rather than relying on promotions.
Executing assortment cuts successfully proves challenging in practice. BJ’s previously attempted SKU reductions that backfired by driving sales declines, requiring some reversals. The company now pursues more selective cuts focused on removing redundant choices rather than broad eliminations. Analysts note that while some inventory rationalization benefits retailers, excessive cuts can hurt sales and aren’t guaranteed to improve bottom lines, particularly for box stores competing on breadth of selection.
Even as major retailers reduce product counts, some maintain caution about long-term outcomes. Retail analysts emphasize that successful assortment management requires balancing risk-taking on new products with disciplined markdown practices, and that simply cutting SKUs without strategic product positioning may prove insufficient to restore healthy profitability levels.
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