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If private labels used to be thought of as nothing more than cheaper products of lower quality, they’ve certainly improved their reputation. Food shoppers today love store brand products, and many of these brands have become recognizable household names, thus gaining the trust of the customers. According to 2024 reports from The Food Institute, 44% of customers consider store brands to have good value despite the low price.
With private labels representing 19% of the market as of 2024, shoppers have admitted that certain private brands influence where they choose to get their groceries. One popular store brand is Kirkland Signature — the only private brand you’ll find at Costco, despite many other retailers opting for several of their own brands. But for Costco, keeping everything under one umbrella has been the winning strategy. After all, a 2000 study published in the Journal of Personality and Social Psychology showed that customers with fewer options are more likely to make a purchase than those with a larger number of options.
It’s safe to say that Costco was well ahead of the curve when it launched Kirkland Signature as its only store brand in 1995, thus preventing its customers from experiencing decision fatigue. Before then, Costco owned multiple private brands, just like other retailers — but a big shift happened when the CEO recognized it would be better for the customers and more cost-effective for the company to simply have one brand for all things, from salsa to gasoline.
Read more: 13 Ways To Help Save Money At The Grocery Store
The Strategy Behind Kirkland Signature Has Proven To Be Successful
Pumping Kirkland Signature Gasoline into a car – Hapabapa/Getty Images
Kirkland Signature was named after the previous location of the Costco headquarters, which was in Kirkland, Washington, at the time. Eventually, the headquarters moved to Issaquah, but the original brand name has stuck. The strategy behind Kirkland Signature is fairly simple: Offer high-quality products at affordable prices. Costco works closely with its manufacturers to ensure that Kirkland Signature isn’t just a cheaper knockoff brand. Not only do Kirkland products meet good-quality standards, but they’re also priced up to 20% lower than other brands.
The strategy is working, as the brand accounts for at least 30% of Costco’s overall profits. It’s therefore not surprising that several recognizable name brands have partnered up with Costco to create Kirkland products. The brands behind your favorite Costco Kirkland products include big names like Jelly Belly and Campbell’s. Through these collaborations, the single brand is able to cater to different demographics at the same time while also lowering operational costs for the retailer itself.
As a final testament to Kirkland’s popularity, its products reach a customer base beyond the shelves of Costco. Amazon sells a wide variety of Kirkland Signature products (like these dried mangoes and s’more caramel clusters) for non-Costco members — so, even if you’re not a membership holder at the wholesale store, you can still benefit from its brand’s good deals.
Read the original article on Tasting Table.
