#9: Kirkland Signature brand is a Costco flagship
Costco Private Label brand Kirkland has grown over the last 20 years rapidly. It has become a really important part of the Costco business representing 30% of the overall business. The brand includes products from non-food to fresh products like fruits and vegetables.
If Kirkland were an independent FMCG brand, it would be world’s 7th biggest brand just behind Unilever.
Kirkland might also be one of the reasons why Costco has been able to increase its profits on top of the membership fees. Kirkland brands have slightly better margin than the branded goods.
Name from the original headquarters location
In the mid 1990s Costco decided to put all of its different Private Label brands under one single brand. They wanted to name the brand after the location of the company headquarters. Costco had recently moved the headquarters within the Washington State to Issaquah.
As the new location name was difficult to pronounce, the company decided to name the Private Label products based on the old location: Kirkland.
Hot dogs as an example of the Costco focus to low prices
Costco has for decades sold deli products in the warehouses. The most popular being probably the hot dog combo with a drink. For decades the price of the combo has remained flat $1,50. The price of the hot dog Combe has become a somewhat symbol for the promise of low prices by Costco. There is a story about a time, when the new CEO Craig Jelinek complained about the unprofitable price point of the hot dog combo to the founder Jim Sinegal. His response tells a lot about the Costco culture.
“ If you raise the effing hot dog, I will kill you. Figure it out.”
Source: ecoinometrics.substack.com