From a recent RetailWire discussion about Costco and its approach to keeping assortments narrow:
SKU rationalization can be carried too far: Just look at Walmart’s experience a few years ago when it reduced its SKU count so dramatically that it lost sales along with its competitive edge. But in Costco’s case, the idea of “doing less better” makes perfect sense. Regular shoppers still perceive plenty of choices inside a Costco store, but not to the point where it makes the store difficult to navigate. And Costco’s commitment to fresh assortments — not just in food but throughout the store — keeps consumers coming back with more frequency, despite the bulk packaging found throughout the store.