The trend: As tariffs raise costs for brands and retailers, many are embracing SKU rationalization—cutting underperforming items to rein in expenses and protect margins.

The fallout: This shift is reshaping the consumer experience. Leaner assortments mean less variety in-store and online, as companies prioritize efficiency and profitability.

There’s no shortage of examples across a range of categories:

• Levi Strauss is cutting SKUs—even as it expands into new categories—to offset tariff costs and focus on full-price sales.
• Hasbro said earlier this year it was undergoing “a significant amount of SKU reduction” and shifting sourcing from China to India. But that strategy may now be at risk amid the Trump administration’s threat of new duties on Indian imports.
• Beyond Inc.’s Bed Bath & Beyond is narrowing its assortment to replicate its legacy in-store experience online, a sharp turn from the broad assortment it touted at launch.
• Polarn O. Pyret is taking even more drastic steps, per The Wall Street Journal. The Swedish brand will shutter its US operations entirely by year’s end. Tariffs on its outerwear, most of which is produced in China, and a weaker dollar have made importing from Sweden unsustainable.

Why it matters: Fewer choices on the shelf can frustrate consumers—especially when favorite products disappear. That could drive shoppers to switch retailers or trade down to private labels, creating a potential win for merchants with strong store brands.

Our take: Retailers face a delicate balancing act: trimming costs without alienating customers. SKU rationalization may be a short-term necessity, but its long-term impact hinges on how well brands can preserve shopper loyalty while streamlining the aisle.