From BJ’s to Lululemon, retailers are trimming assortments to boost business

Retailers are cutting product assortments to restore profitability as shoppers reduce spending in response to high gas and food costs.

Dollar General trimmed 1,500 SKUs (stock keeping units). Under Armour shrank 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% as of September.

Smaller assortments reduce the risk of unsold inventory and excessive discounting, which damages profitability. They also free shelf space for better-selling products. For premium brands like Under Armour and Lululemon, fewer SKUs aim to restore pricing power and brand perception.

Under Armour CEO Kevin Plank said the strategy targets "fewer products with greater purpose" at higher full retail prices. Guggenheim Securities senior retail analyst Simeon Siegel said that when retailers acknowledge wanting to shrink revenue, the actual goal is regaining pricing power.

Lululemon grew sales by over $500 million from fiscal 2024 to 2025 but saw operating profit fall by about $300 million in the same period. Lululemon reported $6.3 billion in U.S. sales in fiscal 2025. Siegel said $3 billion to $4 billion in domestic revenue is where companies typically hit a healthy saturation level, after which brand value dilutes.

For box stores like Dollar General and BJ's, cutting SKUs helps inventory management without necessarily enabling price increases. BJ's CEO Robert Eddy said removing certain product variants, such as reducing body wash scents, pushes sales to remaining products and opens shelf space for new categories. Dollar General said in June 2025 that eliminating 1,000 SKUs boosted top-line sales and supply chain efficiency.

Executing SKU cuts remains difficult. BJ's previously cut SKUs unsuccessfully, losing sales before adding some back. The company now focuses on "removing unnecessary choice," such as no longer stocking cans, one-liters and two-liters of the same soda product.

Nike posted $20 billion in North American sales in fiscal 2026 and cut over $2 billion in revenue from classic footwear franchises, but remains an exception to saturation limits. Nike shares have fallen around 45% this year.