A mid-sized fashion retailer was struggling with inventory complexity and poor inventory turnover. The company carried over 45,000 SKUs across their apparel and accessories categories, but many items were slow-moving or redundant. This excess created bloated inventory, high carrying costs, and made it difficult for store associates to locate and sell products efficiently. Gross margin was being compressed due to excessive markdown activity on slow sellers.
Develop and execute a comprehensive SKU rationalization strategy to reduce product complexity, improve inventory turnover, and increase profitability without sacrificing customer choice or market share.
Conducted 12-month sales analysis on all 45,000 SKUs to identify velocity patterns, seasonal trends, and profitability by SKU
Segmented inventory using ABC analysis: 20% of SKUs generated 80% of revenue, while 30% of SKUs had zero sales in the past 18 months
Implemented category-specific rationalization rules (e.g., basic apparel required 6-month minimum velocity, seasonal items 3-month)
Negotiated with key suppliers on minimum order quantities to support the reduced SKU count
Created transition plan to phase out 8,100 SKUs over 6-month period, clearing backstock through strategic promotions
Implemented new assortment planning process with quarterly SKU reviews to prevent re-accumulation
Comprehensive analysis using Excel, SQL, and Tableau to identify optimization opportunities and track implementation progress.
Analysis Tool: Tableau
Analysis Tool: Power BI
Analysis Tool: Excel
SKU Reduction
Inventory Turnover
Cost Savings
Successfully reduced SKU count from 45,000 to 36,900 items, eliminating slow-moving and redundant products. Inventory turnover improved from 5.2x to 6.4x annually, reducing average days on hand by 23 days. The company freed up $230K in working capital previously tied up in slow-moving inventory. Gross margin improved by 140 basis points as markdown activity declined. Store associate satisfaction increased due to easier navigation and better product knowledge. The company maintained market share while improving profitability.
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