Costco’s Kirkland Signature brand brought in $58 billion in sales during Costco’s fiscal year ending August 2021 — equaling about a quarter of the business’s total revenue, CNN reported — making Kirkland America’s biggest consumer packaged goods brand in terms of sales. However, it took Costco a couple of decades to get the strategy right.
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Jim Sinegal, Costco’s co-founder and CEO at the time of the branding changeover, found an opportunity to revamp the company’s private-label strategy. At the time, Costco products were labelled under 30 different brand names.
“We found that there was a resurgence of private-label product, and that was driven an awful lot by the fact that the prices of brand-name products were growing so rapidly,” Sinegal said during a 2019 talk at Georgetown University, CNN noted.
Kirkland Signature was one of the name suggestions Sinegal received, a spin on the company’s corporate headquarters at the time. “We liked it,” Sinegal said. “We cleared it for every country and every product category that we would have. That made it simple.”
By 1995, the private brand names were replaced by the new Kirkland Signature name. Costco’s Kirkland Signature now sells for up to 20% less than other national brand names.
Having one brand name signaled consistency and created other cost efficiencies, per CNN. Costco didn’t have to pay for different packaging and only has to invest in suppliers of the Kirkland brand.
Kirkland Signature not only focused on competitive prices but great quality. When creating Kirkland Signature products — “we upped the quality,” said Richard Galanti, Costco’s EVP and CFO, Mashed reported.
“Kirkland is a brand in its own right,” Karen Short, retail analyst at Barclays, told CNN in a separate report. “It is one of the reasons people go to Costco. That’s not necessarily something you can say about many private labels.”
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This article originally appeared on GOBankingRates.com: Costco’s Kirkland Signature Brand is Wildly Popular — But Why?