Last week, Lululemon said it cut its North American product line by 15%. BJ’s Wholesale Club announced plans to eliminate 20% of its SKUs. Under Armour has slashed 25% of its product count over the past few years and says it intends to cut another 25%. Dollar General has removed 1,500 SKUs since 2025.
These are not struggling companies cutting costs out of desperation. These are billion-dollar brands making a deliberate strategic choice: sell less, earn more.
And the data backs them up. The pattern is repeating itself across enough major retailers in 2026 that Guggenheim Securities senior retail analyst Simeon Siegel gave it a name: “shrink to grow.”
What This Actually Means
The conventional wisdom in retail has always been that more choice drives more sales. Stock more flavors. More colorways. More sizes. Give customers every option and they’ll fill their cart.
The data says otherwise. When you offer too many SKUs, you create a problem at every stage of your business: more suppliers to manage, more inventory to track, more markdowns to run when things don’t move, more shelf space wasted on slow movers, and more mental load for your customers.
What Siegel explained in his CNBC interview cuts to the core of it: “Selling fewer options is not the same as selling fewer things.” The goal isn’t to shrink your business. It’s to concentrate demand onto fewer, better-performing products so each one moves faster, at full price, with less discounting.
BJ’s CEO Robert Eddy described exactly how this works in practice: by eliminating redundant product variations (say, three sizes of the same soda brand), his stores pushed sales into the remaining products, opened space for new categories, and drove margin dollars up while total SKU count went down.
The Numbers Behind It
The clearest case study is Lululemon, which grew U.S. sales by more than $500 million from fiscal 2024 to 2025, yet saw operating profit fall by approximately $300 million in the same period. They were selling more and making less, because too much product breadth led to more markdowns and a diluted brand perception. Shares are down roughly 65% over the past two years as a result.
Under Armour’s operating income turned negative in both fiscal 2025 and 2026. CEO Kevin Plank’s response: “Fewer products with greater purpose, tighter execution and a clear reason to buy. We will sell so much more of so many less products at a much higher full retail price.”
Dollar General reported in June 2025 that removing 1,000 SKUs from the prior year opened shelf space for best-sellers and contributed to top-line growth. By March 2026, they’d cut 1,500, citing benefits across the entire supply chain.
According to Siegel, most apparel and retail brands hit a healthy saturation level around $3 to $4 billion in domestic revenue. Above that threshold, the brand starts to “cheapen” in consumer perception. Nike, at $20 billion in North American sales, is a rare exception to the rule.
The Hustler’s Library Take
Here’s what the business press mostly missed in covering this story: this isn’t a retail phenomenon. It’s a fundamental business principle that small business owners can apply right now, without waiting to hit $6 billion in revenue.
Most small businesses don’t die from lack of ideas. They die from too many options diluting their core offering. The bakery that makes 47 items instead of mastering 12. The consultant who offers everything to everyone. The e-commerce store with 800 products and a 0.8% conversion rate.
The large retailers cutting SKUs in 2026 are not doing something revolutionary. They’re returning to a principle that the best franchise systems have always known: a focused menu outperforms an overwhelming one every single time. McDonald’s doesn’t serve 400 items. In-N-Out sells four things and has a cult following.
What’s different now is that margin pressure is forcing the hand of companies that had the luxury of complexity. Gas prices and food costs have squeezed consumer spending, and shoppers are making more deliberate purchase decisions. In that environment, the brand with a tight, well-executed lineup wins over the brand with every option available.
Small business owners are already closer to this principle than they think. The constraint is your advantage.
What You Should Do
1. Run a SKU audit on your own business. Pull your sales data from the last 12 months and sort every product, service tier, or offering by revenue and margin. Identify the bottom 20 to 30 percent. These are your complexity costs, carrying their own weight in your inventory, your pricing communications, your fulfillment operations, and your customer decision-making process. Cut or bundle them.
2. Test the “fewer, better” pricing effect. BJ’s didn’t just cut products; it redirected demand into its best performers and raised margin dollars. If you have a service or product that consistently sells at full price without discounting, ask yourself: what would happen if you promoted it more aggressively and reduced the noise around it? Focused demand is pricing power.
3. Reframe the pitch to your customers. Under Armour CEO Kevin Plank gave every small business owner a template: “greater purpose, tighter execution and a clear reason to buy.” That’s not a tagline, it’s an operational philosophy. Before you add your next product or service line, ask whether it sharpens or dilutes your core reason to exist. If the answer is dilute, it costs more than the revenue it brings in. Read how exit-ready businesses stay disciplined about this even when growth pressure says otherwise.
The companies making the most deliberate moves in retail right now aren’t cutting because they’re weak. They’re cutting because they understand that discipline, not volume, is what builds durable businesses. The ones that figure that out sooner don’t need $6 billion in sales to start doing it right.
Source: CNBC: From BJ’s to Lululemon, retailers are trimming assortments to boost business | Additional context: Guggenheim Securities
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