Range expansion is the default growth strategy in retail. The data suggests it creates more complexity than revenue — and destroys margin in the process.
Range expansion is the default growth strategy in retail and distribution. More products means more revenue opportunities. More revenue means growth. The logic is intuitive — and the data suggests it is frequently wrong.
The problem is that range complexity compounds. Each new SKU requires: a buying decision, a supplier relationship, warehouse space, a picking path, a forecast, a replenishment policy, a returns process, and management attention. The cost of each SKU is distributed across systems and people in ways that never appear as a single line item.
The case for rationalisation is counterintuitive because it asks businesses to voluntarily reduce their addressable revenue. But the margin arithmetic usually shows that the bottom quartile of the range is consuming 30–40% of operational cost while generating 5–8% of gross profit. That's before considering the opportunity cost: the capacity freed by removing those SKUs could be redeployed to the SKUs that actually drive margin.
The rationalisation process is not a single decision. It's a framework: classify each SKU by revenue, margin, and strategic importance; identify the segments where cost exceeds contribution; design a transition path that protects the revenue that matters; and build the ongoing governance that prevents the range from expanding back to its previous complexity.
The hardest part is organisational, not analytical. The buyers who built the range, the salespeople who sold it, the customers who depend on it — they all resist rationalisation. The evidence that the range is destroying value is rarely compelling enough to overcome the specific objection. You have to be prepared to make the decision at the leadership level and hold it.