Trader Joe’s is a favorite study in trying to explain how it manages to thrive with just a small number of SKUs (~4000) relative to typical grocery stores that carry 50,000 SKUs. Perhaps this might shed light on their warehousing strategy.
A big part of this is that they are ruthless with cutting products that don't perform well. A good chunk of those ~4000 sku's are dedicated to items that are available for very short periods as they are tested.
I think a big part of Trader Joe's success is that they have a good core of staples that people are willing to come in for, and then they have a big selection of new and interesting items that people are willing to try, since they're already there. The quality of the staples allows them to fly under the radar with the rotating stuff, which is in reality pretty hit or miss. But this symbiotic relationship between the core and the experimental sides allows them to quickly iterate through the experimental stuff to find more popular items.
Easy. You don't need ten different types of butter, yogurt, tea, etc. You can grab the single TJ branded item and have a reliable indicator it's reasonably healthy, tasty, and a good value with minimal margin.
It flips the script - make the store brands the central offering, with big names as a sideline.
Another thing I've seen is that a product might appear only once in a while, but is never discontinued - it's in rotation with other products. I've seen this a lot with frozen goods. That gives them a way to offer variety without having zillions of SKUs in stock at any given time.
But Trader Joe's uses a very different strategy compared to ALDI. It caters to an audience that demands a much more upmarket experience, and puts a lot more effort into team culture, store decor/experience, and sourcing quality white-label food SKUs for house branding.
