What do laundry detergent, French Bordeaux, blue jeans and Martha Stewart have in common? No, it’s not a handy home spun remedy on how to remove wine stains from your pants. It’s that they’re all premium products sold under the single, amazingly elastic Costco Kirkland Signature brand.
Anyone who has ever been to a Costco (NASDAQ: COST) warehouse knows Kirkland Signature, the “house brand” first introduced in 1995 and named after original company HQ in Kirkland, Washington. What is hard to believe is that Kirkland Signature has built its success by violating every rule of consumer packaged goods marketing dreamed up by a starry-eyed MBA or classic brand manager. Not only is consumer segmentation out — no need for different Tide, Cheer, Gain, Era, Dreft, and Ivory Snow detergents — there’s no need even for different brands for different products like Duracell, Pringles, Vicks, Pampers, Clairol, etc. (all the foregoing, by the way are separate Procter & Gamble (NYSE: PG) brands).
House brands are of course nothing new. Every grocery store markets its own brand that purports to be “as good as the leading brand.” But Kirkland Signature doesn’t strive for parity, it demands superiority. Here’s Costco’s own explanation of what it takes to be worthy of the Kirkland Signature imprimatur. Or take the case of Kirkland Signature canned tuna fish, it not only costs more and is of higher quality than the national brand Bumble Bee, it is actually made by Bumble Bee to compete with their own, inferior national brand! Kirkland Signature paper towels and toilet paper are two of Costco’s all time best selling products (that’s why they’re always located in the farthest reaches of the warehouse, of course), and they consistently perform better than their national counterparts. Costco does not use product brands to distinguish luxury Kirkland Signature products from the merely high quality. No Lexus, Toyota and Scion product lines for different types of customers. Nor are there even tiers of Kirkland Signature: no Kirkland Signature Ultra, Premium or Select. No Black, Platinum, Gold, Green, Red, and Blue Cards. The Kirkland Signature brand is a branded house of one.
How does Costco get away with this incomparable elasticity? If BrandCultureTalk has consistently asserted one thing, it’s that great brands make hard choices, and Kirkland Signature is so catholic in its reach that it appears to make no choices at all. But that’s not really the case. Kirkland Signature does make tough choices, but it does so behind the scenes through unwavering fidelity to quality and value. For example, Costco also sells more wine than anyone else in the country, despite being restricted by state laws that limit where it can operate. Costco isn’t only the world’s largest retailer of high-end wines and spirits, it is in the vanguard in using the Kirkland brand to market premium, super-premium and luxury wines and spirits. Unless you have Costco’s perpetual commitment to enhance quality and can leverage huge economies of scale to continually reduce cost, don’t aspire to become the next Kirkland Signature brand.
Right next to the bin of 2004 Chateau Margaux for $165 a bottle a savvy shopper may well espy a 2005 Kirkland Signature Margaux for $17.99. Kirkland Signature Champagne isn’t just from Champagne, France, they amazingly use Grand Cru and Premier Cru grapes to make it. But you wouldn’t know it from looking at the label because the Kirkland Signature imprimatur has become so strong that it evidently requires no additional support to bolster its “signature” quality. Oh, and it costs $24.99.
Such power explains the rush for premium independent brands as valuable as Martha Stewart (NYSE: MSO) , Macallan Whisky (a premium brand that’s been around for 300 years) and Starbucks to embrace co-branding with Kirkland Signature to help build their brand equity. Similarly Costco required Tyson to upgrade the quality of “Tyson Skinless Chicken Breasts” before they earned the right to be “Kirkland Signature Tyson Skinless Chicken Breasts.”
Yet even the elasticity of Kirkland Signature is not infinite, despite its ability to span boat batteries to cashmere sweaters to glucosamine to prime rib. One Kirkland Signature product the world will never see, no matter how high the quality or fervently coveted: Kirkland Signature Smokes.
17 responses so far ↓
1 Cruella da Villey // Mar 6, 2009 at 3:00 pm
Oh, blogger, you have made CostCo brands seem even more desirable than I felt they were. I think one aspect of CostCo’s continued success is that it’s employees are well treated. You see lots of smiles and good natured responses in their stores from coast-to-coast. And you, blogger, are the J. Gettleman of blogging.
2 Interesting // Mar 8, 2009 at 9:59 pm
This entry was very thought provoking. I always assumed the Kirkland brand was the cheapest, maybe not with wine, but definitely wouldn’t have noticed the tuna prices probably. And, I’m likely not the only one who thinks this.
3 Rob // Mar 15, 2009 at 8:10 pm
Great idea for a post. It is impressive that Kirkland Signature manages to stand for something as broad as “quality” across a wide swath of product categories. I’m still left wondering why Costco made the decision to use one brand name across the board, however.
4 Allan // May 28, 2009 at 11:39 am
wow! I’ve been a Costco shopper for a good 12-15 years and never thought of the Kirkland brand being anything but the house brand that was intended for those willing to sacrifice a little less in quality to save a few pennies! Maybe Costco needs to give all it’s shopper’s a “free” trial to get them hooked.
5 John Crook // Aug 8, 2009 at 6:16 pm
Need replacement nylon weels for the spill tray on my Kirkland BBQ, can you direct me to the source.
6 Michelle Dastrup // Oct 8, 2009 at 5:32 pm
Please take Sucralose out of The Kirkland bran Vita-Rain and Use Steiva because Sucralose contains Chlorinated table sugar
7 Richard Balsley // Oct 10, 2009 at 2:23 am
Michelle, maybe we should get them to take the chlorine out of table salt while they’re at it as well. I mean, after all, the appeal of salt is the sodium, not the chlorine that’s bound to it to make the mineral.
8 steve esposito // Oct 31, 2009 at 8:39 pm
I’ve been buying Kirkland brand products for many years, and find their quality and price to be unbeatable. Thank you Costso for saving me thousands of dollars yet providing superb products!
9 Rita Banks // Nov 8, 2009 at 3:39 pm
I am very much interested to know where I can purchase “Kirkland Signature Jpanese \green Tea” .I do not have amembership to Costco. Is it distributed to other shops?
Oakville or Mississauge , Ont. is the area I can search for this product.
Thank you,
Rita
10 Jeff S. // Dec 16, 2009 at 10:40 pm
Rita,
You can join. Anyone can. Just walk in and tell them you’re here to join.
11 Nick Bosco // Feb 3, 2010 at 8:48 am
I am concerned with additives like “natural flavor, autolyzed yeast extract, and there are many more in various Kirkland S. food products. As far as I can tell from researching these additives is that they contain MSG which contains d-glutamate which crosses the blood-brain barrier and will stimulate neuro receptors in the brain. Stimulation continues sometimes until cell death due to the neuropathway gate being blocked from closing naturally. This is how addiction happens and that is exactly why these flavor enhancers are put in these foods. There are many negative health effects when these additives are ingested, short and long term, and developing children are especially vulnerable. Aspartame, Phenylkurtonics, Msg, artificial food coloring, and many more are slowly poisoning you and your loved ones. Take these harmful products out of our food. Looks like KS needs to step it up another notch if it really wants to set itself apart from the rest.
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[...] we remind you of the diverse businesses and branding practices we’ve extolled including Costco, USAA, Thule, KitchenAid Mixers, Verizon, Johnny Walker, Scion, Microsoft, (well, in fairness, [...]
13 Bill // Feb 26, 2010 at 12:01 am
I have been lo0oking for Kirkland Signature Environmentally Friendly Multi-Purpose Cleaner. It was introduced along with with several other “Environmentally Friendly products (dishwasher soap, laundry detergent, etc).” I bought a gallon container about three months ago and have been impressed with its cleaning power and versatility of use. However, it appears it is no longer carried at the Chico Costco and the employees I’ve asked about it are unsure if they will restocked. Does anyone know if Costco has stopped marketing this product.
14 Alfred Chompff // Mar 16, 2010 at 8:41 pm
I have a great need for Kirkland Signature Fruitcakes. Whenever I eat those fruitcakes my restless leg problems vanish. Please tell me where I can buy more.
15 The Joe Donatelli Column » Blog Archive » Always be prepared // May 18, 2010 at 12:55 pm
[...] a few years ago, because like all men, I am slowly turning into my dad. I call these jeans my Kirkland Signature jeans. Standing next to my car, where only the neighbor’s horses could see me, I stripped [...]
16 Kimberly Levin // May 27, 2010 at 12:34 pm
is there any other store that has this product??
I am not a member of Costco, so maybe another store may have this.
17 Rorxanne McGrath // Jul 9, 2010 at 12:32 pm
Hello,
I have been buying “Kirkland signiture Crystal clear cutlery’ from Costco for many years, and was wondering why you only put 60 pcs of knives in the box? I would like to have more, is there any way possible I could order a box of Knives only? Thanks
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