Irrational SKU Rationalization: Why It Fails

By Paula Rosenblum, Retail Systems Research

SKU rationalization is all the rage these days.We all know that Walmart overrationalized and was forced to backtrack. But, recently, Jewel- Osco reported a successful SKU reduction of 15% to 25% in a Chicago test market. Parent company Supervalu touts the "processdriven" nature of this round of rationalization and is convinced that in the end, it will be easier for consumers to find what they want and market basket size will actually increase. We think there's more than a grain of truth in this statement, but also more than a few pebbles of caveats. Some of these pebbles are rising to the surface in our merchandising benchmark report.