Retailers are moving aggressively to trim their product assortments. Under Armour has cut more than 25% of its products over two years. Helen of Troy has pared its selection to limit tariff impact. Levi Strauss is eliminating underperforming styles and colorways. According to recent data, about 25% of American companies intend to reduce the range of items they sell in the next six months.
The math is sound. Tariffs increase the cost of importing variety. Freight becomes more expensive when you’re moving multiple versions of the same product. Storage costs rise across more SKUs. Warehousing becomes more complex. By consolidating to bestsellers and high-margin items, companies can reduce their landed costs, simplify their sourcing, and protect their margins.
Most companies discover a critical problem only after they’ve already started the consolidation: they don’t actually know which items to discontinue.
The Assortment Paradox
The drive to reduce SKUs makes sense in theory. In practice, it requires information that most retailers don’t reliably have. A company can’t make an intelligent decision about which products to kill without knowing the complete picture of what they own, where it’s located, how long it’s been sitting there, and whether it’s actually selling or accumulating as dead stock.
Consider a mid-sized apparel retailer consolidating their assortment ahead of new tariff-heavy sourcing. They want to eliminate low-movers to reduce complexity and cost. Their inventory system shows a particular colorway as a slow mover. The real problem: 40% of the units are sitting in a regional warehouse that’s not being turned. Another colorway appears to be steady. The truth: orders are being backlogged and customers are canceling. A third colorway shows as moderate volume. The gap: the company has no idea that a significant portion of that inventory is damaged goods from a shipping incident six months ago.
Without a complete and accurate view of their actual on-hand inventory across all locations, assortment decisions become guesswork.
They might discontinue products that are valuable and keep products that are problematic. If a company discontinues a product based on incomplete data and that product was actually valuable to a subset of customers, they’ve just damaged loyalty without saving the cost they anticipated. If they retain a product based on faulty information and that product has $2 million in slow-moving inventory sitting in a warehouse, they’ve just committed to carrying excess cost into their new simplified assortment.
The Pre-Consolidation Baseline
A growing number of companies are doing something counterintuitive before they start their consolidation work. They invest in a complete and current inventory audit.
Rather than working from system records that may be days or weeks old, inaccurate, or incomplete, they establish a clean baseline of what actually exists. That baseline serves as the foundation for every consolidation decision that follows. It tells them which products are truly slow-moving and which are just poorly distributed across locations. It identifies inventory that’s damaged or obsolete. It reveals which SKUs are generating sales at full price and which are stuck in markdown spirals. It shows them where their cash is actually tied up.
That information transforms the economics of consolidation. A company might discover that discontinuing a particular product actually costs them more than keeping it, because they have $1.5 million in current inventory that they can’t sell through in the remaining time before the new assortment goes live. They might discover that a product they thought was moderately profitable is actually a margin killer because the inventory carrying cost has been so high. Or they find that a category they planned to eliminate is actually generating reasonable returns once you account for the full cost structure of the inventory that’s moving through it.
The Data-Driven Decision
Retailers that have executed this consolidation successfully treat it as a supply chain problem first.
That means the first step is understanding current state with complete accuracy. What do we actually have? Where is it located? How fast is it moving? What does it cost us to carry it? The answers to those questions become the foundation for every decision about what to discontinue or consolidate.
The process often reveals that the best consolidation targets aren’t the ones they expected. A retailer might plan to reduce a product category that has moderate sales volume but then discover that the slow-moving inventory within that category is accounting for most of the carrying cost. The opportunity becomes specific: eliminate the problematic SKUs within the category rather than the category itself. They might discover that a category they planned to keep is generating lower margins than they thought because of hidden carrying costs embedded in slow-moving stock.
Levi Strauss has been aggressive about SKU reduction. The company emphasized that it’s “taking a harder look at productivity” across its assortments. That language points to a simple reality: consolidation decisions require complete visibility. You can’t assess productivity without knowing what sold and what it cost to carry what didn’t sell. You can’t identify underperformers without understanding the full lifecycle cost of the inventory sitting in your buildings.
The Timing Problem
For companies moving quickly on consolidation because of tariff pressure, timeline creates real tension. The faster you want to execute, the more you need complete information.
Missing a deadline costs you one quarter of inefficiency. Making consolidation decisions on incomplete information can lock you into cost problems for years. This is where the operational difference between system data and physical reality becomes critical. A company’s inventory system might show one thing. The actual merchandise tells a different story. Inventory that was supposed to be allocated sits unsold. Inventory that was supposed to be in one location has been moved to a fulfillment center without proper documentation. SKUs that the system marks as active were discontinued at the store level and just never updated in the system.
Before consolidating vendors, changing sourcing, or discontinuing products, companies need reliable information about what they currently own and where it is. For most organizations, that means more than pulling reports from their inventory management system. It means establishing a complete physical baseline that captures the real state of their operations at this moment. That’s the work that has to happen before consolidation work can proceed. The difference between educated decisions about which products to keep and guesses that get locked into place for the next two years comes down to having that baseline first.
The Question Every Company Faces
As tariffs have shifted the economics of product variety, retailers and brands have realized that trimming assortments actually makes business sense. Unit economics improve. Carrying costs drop. Complexity shrinks.
That improvement only happens if the consolidation decisions are good ones. And good consolidation decisions require something most companies haven’t prioritized: a complete, current, and accurate picture of exactly what they own, where it is, and what it costs them to carry it. Without that baseline, consolidation is just complexity reduction. With it, consolidation becomes genuine cost optimization strategy.
The companies getting this right moved carefully on consolidation. They invested in accuracy first.
