Retailers ranging from discount chains to premium apparel brands are cutting the number of products they sell, a shift aimed at reducing markdowns, improving profitability and regaining pricing power as consumer spending weakens.
During 2025 and early 2026 earnings calls, Dollar General eliminated 1,500 SKUs (stock keeping units). Under Armour cut SKUs by 25% and plans another 25% reduction. BJ's Wholesale Club plans to cut roughly 20% of SKUs. Lululemon cut North America SKUs by 15%.
The logic is straightforward. When retailers carry too many options, unsold inventory forces heavy discounting that erodes margins. Trimming assortments concentrates sales on remaining products, reducing the need for markdowns and freeing shelf space for better-selling items.
Under Armour CEO Kevin Plank stated on the August earnings call: "Today, we're managing for quality. Fewer products with greater purpose, tighter execution and a clear reason to buy. We will sell so much more of so many less products at a much higher full retail price."
Guggenheim Securities senior retail analyst Simeon Siegel said the core goal for premium brands is regaining pricing power. Lululemon grew sales by over $500 million from fiscal 2024 to 2025 but saw operating profit fall by $300 million in the same period, with shares down roughly 65% over two years. Siegel said Lululemon's $6.3 billion in U.S. fiscal 2025 sales exceed the typical healthy saturation level of $3 billion to $4 billion, where brands can "be large and still cool." Above that threshold, Siegel noted, companies risk "cheapening what they stand for."
For discount and big-box retailers like Dollar General and BJ's, cutting SKUs serves a different purpose. These chains cannot easily raise prices. Instead, trimming assortments improves inventory management and pushes customers toward remaining products. BJ's CEO Robert Eddy said in August that reducing choice in categories like body wash scents concentrates sales and frees space for new product categories. Dollar General CEO Todd Vasos said in August that eliminating SKUs gets products to shelves faster and improves supply chain efficiency.
The strategy carries execution risk. BJ's acknowledged a prior SKU-cutting attempt failed because it reduced sales overall. The company now focuses on eliminating "unnecessary choice" rather than broad cuts, removing redundancy such as carrying cans, one-liters and two-liters of the same soda product simultaneously. Competitors offering eliminated products can poach customers.
Nike, posting $20 billion in North American sales in fiscal 2026, represents an exception to saturation thresholds. The company reduced classic footwear revenue by over $2 billion in fiscal 2026 while managing an existing stock price decline of roughly 45% this year.