by Greg Madison
Like a lot of other industries, grocery rediscovers old ideas and dusts them off like new. That’s happening right now with assortment rationalization. Operators are deliberately refining and reducing the sheer number of products they carry, to better manage shelves and keep stock consistent while still delivering a good experience for shoppers.
This new-old practice went out of style for a decade or more, when the conventional wisdom began to favor expansion; more SKUs… more choice… more trips. The “digital shelf” seemed infinite, and analytics promised to localize assortments precisely. Personalization tools suggested the complexity could be managed easily.
By 2020 and the pandemic, that mindset had pushed assortments to historic highs. Consulting firms like BCG noted that many regional grocery chains were carrying roughly 50% more SKUs per linear foot than mass and value competitors, a sign of just how far assortment expansion had gone. FMI surveys from around the same period showed the average supermarket carrying a whopping 30,000 to 35,000 SKUs, up from the low-20,000s a decade earlier.
What assortment rationalization there was was overshadowed by strong omnichannel growth and the belief that data would “sort out the mess later.”
Welcome to Today. It’s “Later”…
Then reality intervened. Labor shortages, demand volatility, shrink, and thinning margins revealed bloated assortments were really a kind of tax on execution.
When you get right down to it, every additional SKU adds some friction – another forecast to miss, another item to mis-pick, another case to receive, store, count, and rotate. That can look relatively harmless in a spreadsheet, but on the sales floor and in the backroom it shows up as congestion, confusion, and waste. When labor was abundant and demand stable, stores could absorb that friction. Today? Not so much.
Imagine a high-volume suburban Wegmans or Publix store with a 24-foot snack aisle. There are dozens of chip brands with umpteen different flavor extensions, plenty of limited-time items, some regional brands, and of course overlapping package sizes. On paper, the assortment looks strong. But in reality, the data tells a different story. Roughly 30% of SKUs in the aisle turn slowly, sell primarily on promotion, and account for a disproportionate share of shrink, markdowns, and backroom congestion.
In a smart, effective rationalization pass, the retailer wouldn’t slash the aisle indiscriminately. Instead, they’d identify clusters of near-duplicate items, say, three BBQ kettle chips with similar price points, maybe four lightly differentiated tortilla chip SKUs or some niche flavors that might only spike once or twice a year. The lowest-velocity items are removed, shelf space is reallocated to the top sellers, and facings are increased for high-turn private label and core national brands.
Reliability Has Become a Form of Value
The customer-facing result doesn’t actually “read” as less choice. Although fewer choices may be in fact the case, that’s not what strikes the human being browsing the shelves. Indeed, the shopper experiences a shelf that looks fuller and more lively, one where items stay in stock and is much easier to shop. Seen this way, a smartly done assortment rationalization is a kind store beautification, or customer perk.
Availability has also taken on new importance. After years of supply disruptions and empty shelves, shoppers are less impressed by staggering choice and far more irritated by out-of-stocks. A tighter assortment that stays in stock consistently feels better than a broader one that doesn’t.
Sometimes, less really is more.
Wegmans, legendary with the public for its breadth, has pared back slower-moving SKUs in categories like snacks and pantry goods in recent years, focusing instead on higher-turn items and mix optimization. Similarly, Publix has been trimming duplicative SKUs in center-store categories, catering to local customers’ preferences while dropping marginal items that consistently underperform in velocity and drive shrink.
H-E-B, known for its localized assortment strategy, has made similar moves. Rather than expanding SKU count indiscriminately, it has focused on region-specific rationalization, reducing SKUs that underperform in specific markets while keeping high-velocity and locally preferred items. That kind of market-aware trimming has improved availability and reduced backroom complexity.
Volatility has accelerated the reckoning. Promotions don’t land the way they used to. Seasonal patterns don’t behave. Demand swings by week, sometimes by day. One viral TikTok or Instagram post can turn the most obscure food items into fast movers, the next matcha tea, for example. Overly broad assortments amplify the downside when forecasts miss: slower items clog backrooms, expire on shelves, or get marked down into oblivion. Rationalization reduces exposure when things go wrong… and in grocery, things go wrong often enough to plan for it.
Labor is another confounding factor. Time was, extra hands could absorb SKU sprawl, resets, and execution mistakes. But big changes over the past few years – labor shortages, higher turnover, tighter payroll budgets – mean stores no longer have the staffing cushion to manage endless complexity. Fewer SKUs mean faster receiving, simpler resets, cleaner pick paths, and less training overhead. In that sense, assortment rationalization is something like a labor strategy – at least as much as a merchandising one. It’s no coincidence that many SKU reviews are now being driven by operations and store leadership, not just category managers.
Private label has also changed the calculus. As store brands improved in quality and consumer acceptance, retailers gained permission to cut redundant national-brand SKUs without hurting loyalty. In many categories, one strong private label paired with one or two national brands outperforms a cluttered shelf of near-duplicates. Trader Joe’s, for example, has long embraced a curated private brand assortment with a tight SKU roster that drives high velocity while keeping complexity low. Other chains like Kroger, through its Simple Truth and Private Selection lines, have used similar logic to streamline SKUs in staples and basic groceries.
What makes this wave different from past attempts is how decisions are being made; this isn’t blunt-force trimming or seasonal cleanup. Retailers are using better lenses: velocity, substitutability, shrink contribution, labor impact, and promo dependency. When the time comes for assortment rationalization, they’re asking tougher questions: “Does this item earn its space? Does it complicate execution? Does it meaningfully expand choice… or just add friction?”
Complexity Isn’t a Virtue… Unless It Pays Its Rent
The answers are leading to structural cuts and changes.
There’s also a philosophical shift underway. The industry is moving away from optimizing for theoretical choice toward optimizing for resilience. The COVID-19 pandemic showed everyone just how complex and fragile our “endless choices, just in time” systems were. A rationalized assortment bends better under stress. It’s easier to replenish, easier to staff, and easier to explain. When volume spikes or drops unexpectedly fewer moving parts make for tougher resilience.
Importantly, this trend aligns with other changes reshaping the grocery industry. Store-first fulfillment works better with tighter assortments, because fewer SKUs reduce picking complexity and improve fulfillment accuracy. Shrink prevention (now a function of tighter processes rather than beefy security) improves when execution is simpler. Even pricing clarity benefits when shelves aren’t crowded with marginal items fighting for attention.
Assortment rationalization, in other words, isn’t a standalone initiative. It’s part of grocery adapting to the constant changes that are going to define the “new normal” in the late 2020s and, more than likely, beyond.
The industry spent years chasing the promise that data would let it carry everything and manage it perfectly. That promise proved optimistic. Grocery is relearning that in assortment rationalization, discipline beats abundance – and that fewer things done well usually outperform many things done poorly.
