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SKU rationalization is a new keystone retailers need to build in. SKU rationalization is an analytical process used to determine the merits of adding, retaining, or deleting items from a retailer's merchandise assortment. An effective SKU rationalization program lays the groundwork for important initiatives, such as space planning and price optimization, and it's used to improve product availability.
Why is SKU rationalization important? Research shows customers only use approximately 340 unique items per year (down from 390 last year) from a pool of more than a million items sold. All SKUs become liabilities to an organization at some point in their lifecycles.
Smart retailers establish repeatable processes to identify when that point is reached and execute plans to capture as much revenue and profit as possible before discontinuing the item.
Source: AMR Research, http://amrresearch.com
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