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Why Costco Went All in on Kirkland

Private label strategy helps retailer keep prices low and margins high.

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In 1995, Costco took a big risk by creating its own private label, Kirkland Signature, to compete against name brands in numerous product categories. As this video explains, though, the warehouse retailer’s gamble paid off handsomely. Kirkland earned more than $86 billion in sales last year, and now other retailers are following Costco’s lead by expanding their own private labels. 

Questions:

  1. What are some advantages that private label products give to retailers? What are some drawbacks?
  2. Why did Costco eventually consolidate all of its private label products into the Kirkland Signature brand? How did this benefit the company?
Author: NickelsMcHughMcHugh

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