Arabic version: تجار التجزئة يقلصون خيارات المنتجات لتعزيز العمليات

According to Cnbc, retailers including Dollar General, BJ’s Wholesale Club, Lululemon and Under Armour are reducing the number of products they sell as shoppers restrain spending because of high gas and food prices. Companies have highlighted SKU reductions in earnings calls as they seek to improve profitability, reduce unwanted inventory and reassure investors.

Dollar General said in March that it had trimmed 1,500 SKUs. Under Armour said in August that it had reduced SKUs by 25% over the past few years and planned another 25% cut. BJ’s said it planned to reduce roughly 20% of SKUs, while Lululemon said in September it had cut North American SKUs by 15%.

For apparel brands, fewer products can be part of an effort to curb markdowns and restore pricing power. Under Armour CEO Kevin Plank said the company was managing for “quality,” with fewer products, tighter execution and a clear reason to buy. Guggenheim Securities senior retail analyst Simeon Siegel said that when a retailer accepts lower revenue in the short term, the objective can be to regain pricing power.

For retailers carrying thousands of brands, assortment cuts can instead help refine inventory and make shelf space more productive. BJ’s CEO Robert Eddy said reducing choices, such as body-wash scents, can direct sales toward remaining products while opening space for new categories. Dollar General said the removal of 1,000 SKUs in the prior year created more shelf space for best-selling products, and later said reductions helped its supply chain.

The approach also carries risks. Retailers can lose customers to competitors if they eliminate products shoppers want. BJ’s said an earlier SKU-cutting effort reduced sales before some products were added back. Siegel said publicly traded companies face a difficult task when they tell investors that revenue may need to shrink before a business can return to healthier growth.