Why Costco Went All in on Kirkland — and How It Paid Off | WSJ Case Study

About this Video

• Video Title: Why Costco Went All in on Kirkland — and How It Paid Off | WSJ Case Study
• Channel: The Wall Street Journal
• Speakers: Narrator, Jim Sinegal, Claudine (likely a Costco employee)
• Duration: 00:09:34

Introduction

This Wall Street Journal case study examines Costco's successful Kirkland Signature private label brand. The video explores the risky decision to consolidate multiple private labels into a single brand, how this strategy impacted profit margins and supplier negotiations, and the resulting significant growth of Kirkland Signature into a major brand exceeding the size of Proctor & Gamble and Kraft Heinz.

Key Takeaways

• Costco's early strategy: Initially focused on a limited selection of high-quality name brands.
• The rise of private labels: Costco noticed rising name-brand prices despite decreasing manufacturing costs, recognizing an opportunity in private labels.
• Consolidating brands: Costco initially had numerous private labels under different names. The decision to consolidate all private labels under the single "Kirkland Signature" brand defied industry norms.
• Negotiating power: The Kirkland Signature brand became a powerful negotiation tool with suppliers, giving Costco leverage to secure better pricing and quality. This was particularly evident in the example of Kirkland diapers.
• Limited SKU environment: Costco's limited selection strategy (a small number of SKUs in each category) amplified the impact of Kirkland Signature and made it even more competitive.
• Kirkland's exceptional success: Kirkland Signature achieved record growth, becoming a brand larger than Proctor & Gamble and Kraft Heinz. The video highlights Kirkland Signature's significant impact on Costco's overall sales and profitability.
• Green Ink Meetings: The CEO personally approved every Kirkland product since 1995, signaling a high level of quality control.