FMI offers shoppers a primer on SKU rationalization

Those empty shelves that shoppers sometimes see in grocery stores aren’t just due to supply chain issues.

FMI-The Food Industry Association noted in a blog post on Wednesday that SKU rationalization factors into some of the space gaps between products on store shelves. To that end, FMI has created an animated video to explain that what might appear to customers to be product out-of-stocks or unavailable items actually might be the result of SKU management by retailers and/or manufacturers.

“A couple months ago, FMI was approached by a federal agency for our partnership in educating consumers about a common but little-known industry practice called stock-keeping unit, or SKU, rationalization,” Matt McKinney, manager of communications at FMI, said in the blog. “The goal was to provide information that would help grocery shoppers understand why they might be seeing empty shelves at their supermarket and why those bare spots in the aisles might not necessarily mean there’s a product shortage.”

McKinney defined SKU rationalization in grocery, basically, as the inventory management process used by retailers and manufacturers to offer customers the most-in-demand items or to create space on the shelf for new and innovative products.

“It allows retailers to identify products that aren’t selling well and adjust their product offerings to better reflect what their customers want, or perhaps make room for a new product to gauge shopper interest,” he explained. “Sometimes, this results in empty spots on the shelf as retailers make the transition from stocking one product to another.”

On the manufacturer side, SKU rationalization could involve scaling back the number of package sizes, varieties or flavors of a given product, McKinney said in the blog. Low demand for a certain item, the need to transition production lines to more popular offerings, or the need for additional capacity for seasonal products also could lead manufacturers to trim SKUs, he added.

Shoppers tired of lingering product shortfalls since the pandemic might find FMI’s SKU rationalization video an eye-opener, according to McKinney.

“Because this is a complex practice, we realized we needed to produce a nifty animated video explaining this entire process in a light and digestible way — everything from what SKUs are to how and why rationalization is a normal part of the way the food industry does business to best serve customers,” he said. “So the next time a customer asks why their favorite product is missing, you can be armed with this video as one example of why that might be the case.”