Depth vs. Breadth: Finding the Right Balance Through SKU Rationalization

Depth vs. Breadth: Finding the Right Balance Through SKU Rationalization

In retail, more isn’t always better. Expanding your assortment may seem like a way to drive growth — but over time, too many products can clutter your range, confuse customers, and tie up inventory in slow-moving styles.

That’s where SKU rationalization comes in.

What Is SKU Rationalization?

SKU rationalization is the strategic process of analyzing your product mix to identify which styles to repeat, replace, or retire. It’s a core part of both assortment planning and inventory management, and it plays a key role in a fashion retailer’s monthly hindsight process.

The goal is simple: to optimize your product mix by balancing breadth and depth — the number of styles you carry (breadth) versus the number of units you buy per style (depth).

Why It Matters

Every product takes up valuable space — in stores, warehouses, and buyers’ open-to-buy budgets. When styles underperform, they drain margin and slow down inventory turns. By regularly reviewing SKUs and cutting low performers, retailers can:

• Reduce inventory carrying costs
• Improve margin and sell-through
• Simplify supply chain and allocation processes
• Focus resources on high-performing, high-impact products

In short, SKU rationalization benefits include better financial performance and a cleaner, more customer-focused range.

The Science Behind It

At its core, SKU rationalization is a data-driven process. Retailers analyze sales history, profitability, and inventory data to determine which products are earning their keep. Good retail analytics is a key.

This process typically involves:

• Product mix analysis: Reviewing each product’s contribution to sales and margin.
• Inventory optimization: Identifying SKUs that move slowly or carry excessive stock.
• Profitability review: Assessing whether each item supports or erodes overall performance.

Many daVinci Retail clients use  our retail analytics  within their monthly hindsight reviews — deciding what to repeat, replace, or retire from the assortment mix before the next buying cycle.

The Art Behind the Numbers

While data tells part of the story, great retailers know that SKU rationalization is also an art.
Some products might not be top sellers, but they serve an important strategic purpose — such as loss leaders or brand identity pieces that attract customers and drive complementary sales.

This is where buyers bring their expertise and intuition to interpret the data and make the right calls for the business.

Balancing Depth and Breadth

A successful assortment depends on balancing depth vs breadth:

• Too much breadth leads to complexity and dilution — too many choices, not enough focus and can lead to product cannibalization.
• Too much depth risks overstocking a narrow set of styles.

SKU rationalization helps retailers find the sweet spot — the optimal product mix that maximizes sales, profit, and efficiency.

daVinci’s state-of-the-art planning engine supports this by modeling product depth (units per style/color) across categories, helping retailers align buying decisions with both customer demand and financial goals.

The Bottom Line

Think of SKU rationalization as spring cleaning for your assortment — a disciplined way to declutter and refocus on what drives value.
It ensures your product range stays sharp, profitable, and aligned with customer needs.

In a fast-moving retail world, fewer, smarter SKUs can often deliver stronger results.