How a Major Grocery Store Chain Can Dramatically Lower the Cost of Food

What It Covers

Odd Lots hosts tour Aldi's new 25,000-square-foot Times Square location and interview US Chief Commercial Officer Scott Patton, who explains how the chain's private label model, SKU reduction from 40 to 2 ketchup varieties, and operational efficiencies like display-ready cases and multi-barcode packaging systematically lower food costs.

Key Questions Answered

• •SKU Reduction Economics: Stocking 2,000 SKUs versus a typical store's tens of thousands creates compounding labor savings. Restocking four olive oil varieties takes roughly 2% of the time required for 50 varieties. Fewer SKUs also eliminate slotting fees paid by brands for shelf space, directly reducing costs passed to consumers.
• •Private Label Supply Chain Control: Owning the product label means bypassing CPG intermediaries entirely. When sourdough trended on social media, Aldi contacted manufacturers directly to increase line time and adjust packaging within months. The result: over 500,000 sourdough loaves sold weekly, a volume impossible to scale that quickly through branded supplier negotiations.
• •Display-Ready Case Restocking: Aldi requires suppliers to ship products in pre-configured display trays rather than individual units. Staff drop entire cases onto shelves rather than stocking item by item, enabling produce restocking three to four times daily at the Times Square location without the overnight label-turning labor common at conventional grocery stores.
• •Multi-Barcode Packaging Strategy: Aldi places four to six barcodes on every private label package, often disguised as design elements. Combined with bilevel scanners developed partly from Aldi's specifications, this increases cashier throughput measurably in items-per-minute metrics. Branded products cannot replicate this because packaging real estate is allocated to marketing copy rather than retailer productivity.
• •Uniform Pricing Across Markets: Aldi maintains identical prices in Manhattan and Connecticut despite higher New York rents and the logistical cost of shorter trucks requiring two drivers for Times Square deliveries. The math works because higher foot traffic volume offsets elevated fixed costs, making location-specific price premiums unnecessary and predictable for budget-conscious shoppers.