Key industry analysts have recommended that grocery retailers lower operating costs by adopting a strategy of efficient assortment, whereby stock - keeping units (SKUs, or product lines) that sell poorly are eliminated. But grocers have resisted the suggested cutback, on the basis of research showing that assortment perceptions (perceptions by shoppers of wideness in selection of items in a merchandise category—e.g., laundry detergent) are positively related to consumer attitudes toward a given store. Retailers worry that shoppers will notice that offerings have been reduced, lower their assortment perceptions, and thereby shop less frequently in the retailers’ stores.

However, results from a recent study suggest that this risk is smaller than retailers have assumed. The study found that consumer assortment perceptions are significantly affected by the simple cues of availability of a favorite item (the favorite - available cue) and amount of space devoted to a category of SKUs (the category - space cue). If the number of SKUs is decreased while category space is held constant and favorite items remain available, the threshold for perceiving a reduction in items tends to be somewhere between 25 and 50 percent. Therefore, a 25 percent reduction in SKUs within most merchandise categories should not adversely affect consumers' assortment perceptions or store choice.

Moreover, the study found that a 25 percent SKU reduction can increase consumer assortment perceptions when low - preference SKUs are removed and replaced with duplicate facings of the most popular SKUs from the same category, perhaps because it is thereby easier for consumers using the favorite - available cue to find the desired products.

With the recent proliferation of SKUs, there may be considerable latitude for retailers to reduce their SKU numbers while maintaining availability of favorite products for majorities of consumers. Furthermore, even if a few consumers perceive marginal reductions in assortment, the increased profitability due to lower inventory and restocking costs, along with fewer out - of - stock products, still makes assortment reductions worthwhile.

Finally, more - sophisticated guidelines for SKU elimination, factoring in similarities in behavior within identifiable groups of consumers, could allow greater reductions of SKU numbers without negatively affecting perceptions of availability, though retailers need also to carefully consider the category - space cue when making assortment decisions.