What does SKU stand for in retail?

SKU stands for Stock Keeping Unit, which is a unique identifier assigned to a particular product or item in inventory management. This term plays a crucial role in retail operations as it allows retailers to differentiate between various products, manage inventory levels, and streamline the sales process. Each SKU represents a specific item with its own attributes, such as size, color, brand, and other product details, making it easier for retailers to track stock levels, facilitate reordering, and provide accurate sales data.

The importance of SKUs extends to inventory accuracy, as they help in reducing discrepancies between what is physically available and what is recorded in the system. This, in turn, assists in better customer service, as retailers can more effectively manage stock to meet demand. Using the right SKU ensures that both the retailer and the customer have a clear understanding of the product being referenced, thus enhancing communication and efficiency in the supply chain.