One potential reason Costco’s Kirkland Signature products win over shoppers? The CEO signs off on every new item

One potential reason Costco’s Kirkland Signature products win over shoppers? The CEO signs off on every new item
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Costco Kirkland Signature's Basil Pesto sells for $9.49.
Costco Kirkland Signature’s Basil Pesto is a hit with foodies and sells for $9.49.

  • Kirkland Signature, Costco’s private label brand, has won the company some die-hard fans.
  • Non-fuel sales reached $56 billion last year, or nearly a quarter of Costco’s annual revenue.
  • One way the company tries to build trust? Each new item is approved by the CEO.

Costco is well-known for offering jumbo sizes and low prices on the leading national brands.

But some customers are even more enthusiastic about a brand they can only get from the warehouse club: Kirkland Signature.

For nearly 30 years, Costco’s private label brand has been winning the company some die-hard fans with products that are easily as good — or better — than their national brand competitors, and priced as much as 20% less.

Whenever analysts would ask about shoppers “trading down” to the store brand, avowed brand loyalist and CFO Richard Galanti would quickly correct them to say shoppers are “trading up” when it comes to Kirkland Signature.

Now spanning some 550 items across dozens of categories ranging from chicken, to eyeglasses, to golf clubs, Kirkland Signature has earned a level of consumer trust and loyalty that few brands ever achieve.

Galanti said in December that sales of Kirkland Signature merchandise reached approximately $56 billion last year, or nearly a quarter of Costco’s annual revenue. Including fuel, Costco attributes more than $80 billion to the brand.

One reason people may choose to stick with Kirkland? Costco is very selective about what it offers.

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“We’re not looking to win a trophy for the highest amount of Kirkland Signature SKUs,” Costco’s chief of operations for merchandising Claudine Adamo told Fortune. “You build loyalty with that brand.”

Plus, all new products are thoroughly vetted before they ever see the sales floor.

“We don’t just put our name on products that someone else makes,” Adamo said. “Any new item goes all the way to the CEO’s office for sign-off.”

That reputation for quality, plus Costco’s generous return policy, make it easy for shoppers to try a Kirkland Signature offering — and come back for more.

Read the original article on Business Insider

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