Costco, headquartered in Issaquah, is a leading American retailer and has a private label brand, Kirkland Signature. The brand got named after the previous location of the store. It offers better quality products at rates about 20% cheaper than other brands, and these products get manufactured by third parties. Costco claims to provide better quality, but some customers complain about its defective products.
Source Of Kirkland Signature Products
The Kirkland Signature products get manufactured by third parties. But, Costco does not disclose all its secrets. Some manufacturing and packaging brands for Kirkland Signature are Starbucks Coffee, Duracell Batteries, Diamonds Pet Foods, and more. So, the customers can see that the brand does not compromise quality. Costco charges more membership fees than its competitors, whereas lower prices on the products through its private label brand.
The purchasers may further re-sell these products only if they have a valid business license. But, they cannot do that if they are only regular consumer members of Costco. They might find a product from another company and a similar product offered by Kirkland Signature together on the shelf. But, the latter one will have lower costs.
No Need Of A Membership
The payment methods taken by Costco under Kirkland Signature are Visa, MasterCard, Discover, Citi card, Debit/ATM, and Costco Shop cards.
Kirkland Signature’s Contribution To Costco
Costco has a rule that Kirkland Signature items cannot have more than a 15% markup price over the cost. This brand ensures that its products are at least 10% better than its competitors. Over 25% of Costco’s annual revenue consists of the sales made by this private label brand. It is worth over $75 billion. In 2018, Costco made more than $35 billion through this house label brand. So, it is one of the vital assets for the store. It is more complex than it seems. Costco offers a limited range of products through its personal brand. So, the chances of errors are lower, and the sales will not get affected.
Advantages Of Kirkland Signature
The following are the advantages of Kirkland Signature:
Since this brand offers lower prices without compromising the quality, more customers get attracted to it. It keeps the supply chain costs for Costco in check. This brand separates Costco from its competitors. The store has exclusive rights over this brand and can create strong customer demand. Kirkland Signature sells itself. So, Costco does not require to invest in advertising the brand. The store can create new categories of products.
Disadvantages Of Kirkland Signature
The following are the disadvantages of Kirkland Signature:
People that trust the branded products may consider Kirkland Signature of lower quality. Kirkland Signature is not the best of all. Customers have some complaints regarding the products under this label. Since the brand gets the products manufactured from third parties, it does not control product quality. Though it tries to provide better quality, it may lag somewhere. This brand has many competitors, and it is not new. So, Costco may get out of track by focusing more on the competition than business strategies.
Conclusion
They cost lower than the other branded products down the aisle. This brand sells products 20% cheaper than other brands. Kirkland Signature and other such personal brands are defeating the national brands. It is one of the methods for Costco to attract customers. Thus, it creates a loyal customer base. Since third parties manufacture its products, they may have no control over the quality, thus allowing the customers to complain about the defective products. Costco can increase the product range offered by Kirkland Signature, but it may introduce more competitors and efforts to stand still.
What Other Private Label Brands Compete Kirkland Signature?
Answer:
Some competitors of Kirkland Signature are Member’s Mark (from Sam’s Club), Private Selection (from Kroger), Great Value (from Walmart), Archer Farms (from Target), and more.
What Categories Of Products Does Kirkland Signature Sell?
Answer:
Kirkland Signature sells different products such as office products, pet food, home and kitchen, baby products, clothing and luggage, organic, grocery, household and cleaning, and more.
