How Costco’s Kirkland Signature gives national brands a run for their money

Costco knows a thing or two about private brands. It’s been nearly 20 years since the first Kirkland Signature products made their debut. Costco developed the line of private label products to offer its members value in their everyday purchases.

The Kirkland Signature label today appears on about 20% of the products available on Costco shelves, everything from men's dress shirts to laundry detergent, pet food to toilet paper, canned foods to cookware, olive oil to beer, automotive products to health and beauty aids.

“We will always be known for name brands such as Michelin, Sony and Crest,” said Craig Jelinek, Costco president and CEO. “But we will continue to augment our product offerings with our own Kirkland Signature items.”

Costco has leveraged the Kirkland Signature brand to continue to develop new products, new categories and new products in existing categories — something that allows the company to control the quality of the Kirkland Signature product and drive down prices on competing national brands.

“The working rule followed by Costco buyers is that all Kirkland Signature products must be equal to or better than the national brands, and must offer a savings to our members,” added Craig.

To that end, Costco unveiled earlier this year Kirkland Signature Nut Bars, and this latest hot private brand is giving Kind Bars a run for its money.

The Wall Street Journal early last week reported that “brands fight for space at the retailer’s cavernous warehouses, which on average carry only 3,800 products. The typical supercenter sells [more than] 100,000. Adding to the pressure, Costco often introduces a new Kirkland product when its buyers or executives believe a brand isn't selling at the lowest possible price. The pressure manufactures face from private brands is set to increase.”

Despite the strength of its private brand, Costco finance chief Richard Galanti told the Wall Street Journal that the wholesaler “doesn’t aim to become a store that only sells Kirkland products. Shoppers expect to find brands they know at Costco, and Kirkland looks like a better value next to a higher priced branded version. Often Costco collaborates with brands on products, like its Starbucks-roasted Kirkland coffee beans.”

In the meantime, Kind Bars still have shelf space at Costco, the Wall Street Journal added, “though mostly new varieties, including fruit bars, mini nut bars and a peanut-free bar. ‘We look forward to continuing to grow with them,’ a Kind spokeswoman said [about Costco].”

 

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