Abstract

The case ‘Kirkland Signature Private Label – Powering Costco’ describes how ‘Kirkland Signature,’ the private label brand of Costco Wholesale Corporation (Costco), a US-based membership warehouse club, became the leading private label accounting for nearly 30% of all the private-label grocery business in the US, and how it enabled Costco, in the process, to emerge as the leading retailer in the US. Kirkland Signature, introduced in 1995, contributed to over a quarter of Costco’s net sales of US$152.7 billion in 2019 and nearly 26.2% of the company’s overall net sales in 2018. The case touches upon the history of private label products in the US and their revival toward the end of the 20th century. Costco was one of the first contemporary US retailers to focus on building its private label range due to the interest shown by Jim Sinegal (Jim), former CEO of the company. The case then details the private label strategy of Costco. It delves into the various factors such as quality, price, innovative packaging, and products that helped Kirkland Signature become the cornerstone of Costco’s success. The case ends with a note on the future plans of Costco for the ‘Kirkland Signature’ product range as well as the need for it to further innovate and differentiate itself owing to the rising competition in the private label space from other retailers like Walmart and Target.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Learn about the rising popularity of private label brands
• Understand the reasons behind the success of private label brands like Kirkland Signature
• Understand the benefits of private label brands for retailers
• Become aware of how private labels can grow into a national brand without a deep marketing budget
• Understand how private label brands can help retailers withstand and grow despite the onslaught from online retailers

Keywords

Private Label Strategy, Retailing, Packaging Strategy, Customer Loyalty, Purchasing Power, Customer Value, Wholesaling, Brand Differentiation, Loyalty Program, Product Development