By Retail Brew Staff
less than 3 min read
Definition:
Stock keeping units, or SKUs, are codes assigned to products that sit tightly packed on store shelves in supermarkets and other retail stores. A SKU is one specific, sellable variation of a product, differentiated by style, color, size, or flavor. More broadly, SKUs are retailer-generated alphanumeric codes to track inventory and sales, and are used to manage stocking levels efficiently.
The origins of SKU: The abbreviation SKU came into common usage in the early 2000s in US retail, as stores formalized inventory tracking systems. Fast fashion brand Zara is known for maintaining low inventory levels, thereby driving up demand, which results in less excess or unsold inventory. Walmart’s inventory management has also been tagged as a success story thanks to its AI-enabled inventory system that arranges products based on real-time customer demand. More recently retailers are using AI to get smarter about inventory and the management of SKUs.
SKUs in context: SKU data can be important for managing the supply chain, helpful to target more accurate demand forecasting, inventory management, and logistics planning. Optimizing this data can help reduce costs and improve customer satisfaction through timely product availability.
