Source: Target Plus
The pandemic has led a number of retailers and brands to rediscover their religion when it comes to SKU rationalization after many reportedly became overly tempted by the promise of endless aisles online.
“Retailers ramped up choices in recent decades as the internet created a so-called endless aisle that freed them from the space constraints of physical stores,” according to a recent article in The Wall Street Journal. “They tried to capitalize on the shift toward personalization with a desire to please everyone and added variety to tempt people to buy items they didn’t need.”
Endless aisles have been widely hyped as a way to offer a wider assortment of products that could never fit in a store. These include less-popular but cutting-edge colors and styles that often end up on sales racks at a single store but find a countrywide audience online.
Practices such as drop shipping — when online goods are shipped directly by vendors — capitalize on the potential for virtually unlimited online inventory. A main advantage often cited for online marketplaces such as Amazon is the endless choices that include products from third-party vendors.
On Target’s third-quarter conference call, Brian Cornell, CEO, said Target Plus, its third-party marketplace launched in February 2019, now offers 400,000 SKUs from 175 vendor partners. Said Mr. Cornell, “We'll continue to make sure we curate very carefully and complement our store and online assortment.”
The Journal article highlighted how Bed Bath & Beyond, Kohl’s, PVH Corp. and Coach were among those culling SKUs. In physical stores, according to the article, eliminating SKUs can reduce clutter and keep top sellers in stock. But SKU rationalization’s benefits for both online and offline selling were said to include reducing supply chain complexities, end-of-season markdowns and "decision paralysis."
Past research has explored how too much variety online is creating a "paradox of choice", not only around shopping, but for online dating and social media. A survey from Zoovu, formerly Smartassistant, from 2018 found 42 percent of respondents admitting to abandoning a planned online purchase altogether because there were too many choices.