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From BJ’s to Lululemon, retailers are trimming assortments
CNBC • • business
Key Points:
- Retailers including Dollar General, Under Armour, BJ's Wholesale Club, and Lululemon are reducing their product assortments (SKUs) to improve profitability amid consumer spending cuts driven by high gas and food prices.
- Cutting SKUs helps stabilize sales, reduce unwanted inventory, and regain pricing power, though it may limit consumer choice and requires careful execution to avoid hurting brand perception.
- Under Armour and Lululemon have faced profitability challenges due to excessive markdowns and are now focusing on selling fewer, higher-quality products at full retail prices to manage growth sustainably.
- For big-box and small-box retailers, SKU reduction aids inventory management and allows better curation of offerings, potentially increasing sales and margins by focusing on top-selling products.
- Successfully trimming assortments is complex, as retailers risk losing customers if key products are removed, and publicly traded companies must balance short-term investor expectations with long-term strategic goals involving potential revenue contraction.
