What is a SKU in fashion retail?
Stock Keeping Unit: an internal code a company uses to identify and track each distinct product variant it holds.
In short
A SKU (Stock Keeping Unit) is an internal code a business uses to identify and track each distinct product variant it holds. Unlike a GTIN, which is globally unique, a SKU is defined by each company for its own systems, often by combining a style number, colour code and size.
How does it work in practice?
A retailer receiving a new knitwear style in three colours and five sizes will typically create one SKU per colour and size combination. The code might read like a style number followed by a colour suffix and a size suffix, so staff can recognise the item at a glance. Every movement of stock, from goods receipt to transfer, sale and return, is booked against the SKU.
Brands and retailers often use different SKU logic for the same product. The GTIN is what links the two sides when orders and deliveries are exchanged.
Why does it matter?
SKUs are the level at which inventory is actually managed. They are used to:
- Track stock by location and spot broken size runs
- Measure sell-through and weeks of cover for each variant
- Plan replenishment and allocation between stores
- Gauge assortment complexity, since every extra colour or size multiplies the SKU count
A high SKU count is not automatically a sign of a strong range. Many low volume SKUs can tie up working capital, complicate logistics and lead to markdowns.
How is AI changing it?
Forecasting and allocation models work at SKU level, predicting which sizes and colours will sell where. AI can also help rationalise ranges by identifying SKUs that add complexity without adding sales, and by suggesting which variants could be dropped or consolidated in the next season.
Common pitfalls
- Building meaning into codes so rigid that new attributes cannot be added later
- Creating separate SKUs for the same item in different systems without a clear mapping
- Confusing SKUs with GTINs when exchanging data with partners
- Expanding colours and sizes without checking whether the extra SKUs earn their place
Frequently asked questions
What is the difference between a SKU and a GTIN?
A SKU is an internal code chosen by each business, while a GTIN is a globally unique number issued under a global standard. Partners exchange GTINs because each company's SKUs follow its own logic.
Is a SKU the same as a style?
No. A style is the overall design, while a SKU is one specific variant of it, usually a single colour in a single size. One style can therefore have many SKUs.
