Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 10
Costco Wholesale's Kirkland Signature brand continues to be a major force in the retail sector. Costco launched the brand in 1995, consolidating its fragmented private label products under a single name inspired by its original headquarters in Kirkland, Washington. Before Kirkland, Costco used around 30 different private label names, but co-founder Jim Sinegal sought a unified brand to ensure consistency and instant recognition for shoppers. Kirkland Signature’s rollout began with shampoo and vitamins, and the brand gradually expanded to cover a wide range of categories, from groceries to apparel, to enhance Costco's (COST) reputation for value.
Kirkland Signature is now central to Costco's (COST) earnings firepower, generating about $86 billion in annual sales to account for about one-third of the company’s total revenue. That revenue tally puts Kirkland's in the same ballpark as Lowe's (LOW) and Procter & Gamble (PG). Analysts have noted that Kirkland's success is rooted in its ability to offer high-quality products, often manufactured by well-known suppliers, at prices lower than national brands. Importantly, the brand's presence gives Costco (COST) significant leverage in supplier negotiations, allowing it to keep prices low and margins healthy. Kirkland products also drive customer loyalty and traffic, which reinforces Costco's (COST) membership model and helps the retailer maintain industry-leading renewal rates.
https://seekingalpha.com/news/4449907-costcos-kirk...
No. of Recommendations: 2
No. of Recommendations: 17
Kirkland Signature is now central to Costco's (COST) earnings firepower, generating about $86 billion in annual sales to account for about one-third of the company’s total revenue. That revenue tally puts Kirkland's in the same ballpark as Lowe's (LOW) and Procter & Gamble (PG).
This statistic, assuming it’s accurate, is astonishing. That means Costco, with around 900 stores, pushes as much Kirkland merch by dollar (and more by volume) as P&G, which has products in over 100,000 pharmacies and another 60,000 grocery stores and 40,000 dollar type stores and whatever other spotty locations they might have (convenience stores, hotels, online, etc.)
That comparative is amazing.
No. of Recommendations: 6
That comparative is amazing.
It gets more amazing. The Kirkland Signature brand generates more revenue than Nike, Starbucks, McDonald's, Coca-Cola, and Kraft Heinz. And just a bit less than Tesla. And you have to buy a membership to even get in the door.
No. of Recommendations: 2
This statistic, assuming it’s accurate, is astonishing. That means Costco, with around 900 stores, pushes as much Kirkland merch by dollar (and more by volume) as P&G, which has products in over 100,000 pharmacies and another 60,000 grocery stores and 40,000 dollar type stores and whatever other spotty locations they might have (convenience stores, hotels, online, etc.)
That comparative is amazing.
It's certainly a comparative, to be sure.
But - Kirkland has far many more higher-dollar products than P&G or Lowes. How much do P&G shirts or wine cost :)
Unrelated:
Another of the drivers for Costco's success is also that they force you to overbuy. (Applicable to only some Kirkland products).
I don't need a 3-pack of half-liter shampoo bottles or 10 pounds of meat. But that's what's in the store. And then I have to finish some of it (the meat, not necessarily the shampoo) because it's there at home and I already spent money on it. And the per-ounce (per-unit) price is the same as in the comparable store selling smaller packages. There is no saving (in general, except for Costco's smaller profit margin). They really do make up on volume what they lose on margin.
No. of Recommendations: 3
Another of the drivers for Costco's success is also that they force you to overbuy. (Applicable to only some Kirkland products).
I don't need a 3-pack of half-liter shampoo bottles or 10 pounds of meat. But that's what's in the store. And then I have to finish some of it (the meat, not necessarily the shampoo) because it's there at home and I already spent money on it. And the per-ounce (per-unit) price is the same as in the comparable store selling smaller packages. There is no saving (in general, except for Costco's smaller profit margin). They really do make up on volume what they lose on margin.
A while back, I bought some Costco plastic food wrap, which is sold in a two-pack. Just for fun, I dated the first one when I started using it--April 2024. It is still going strong, and the second one hasn't been opened yet. So yes, Costco sizes are no joke. But the price per square foot is literally an order of magnitude lower than sane-sized packages from my local Safeway or Wal-Mart. You just have to a buy an absurd number of square feet.
No. of Recommendations: 18
We bought a roll in a box of aluminum foil from Sam's Club some 20+ years ago.
We haven't yet finished the roll. One of our kids will probably inherit it.
No. of Recommendations: 5
<<A while back, I bought some Costco plastic food wrap, which is sold in a two-pack>>
Me two😄 and my “while back” was 2019! I’m on pack two. Should we need to buy another two-pack, there’s a very high probability that it would make it a part of our estate🤓
I remind myself that it’s a “wholesale” store every time I walk in. The fact that we’re nesting empty these days hasn’t stopped me from walking through those doors.
No. of Recommendations: 2
We had an interesting dinner table conversation just yesterday about which products carry the Kirkland Signature brand. I entered the term “Kirkland Signature” in the search window of Costco.com and I get 326 items. So, with Kirkland revenues of $86 Billion, so an average sale volume of $264 million.
Another terribly important metric would be what percentage of 2-dimensional customer facing shelf space these 326 products occupy. And the %age of the cart volume at checkout.
No. of Recommendations: 0
I wonder what the "derivative" volume does to help/hurt the bottom lines of the vendors who actually manufacture the items sold under the Kirkland name.
Jeff
No. of Recommendations: 1
I wonder what the "derivative" volume does to help/hurt the bottom lines of the vendors who actually manufacture the items sold under the Kirkland name.
I'd guess that they only agree to do it if they have the excess capacity. And if the manufacturers sell for, let's say, 10% less, but with minimal distribution costs, and zero shelving costs, the profit margin probably comes pretty close to traditional retail.
No. of Recommendations: 12
I wonder what the "derivative" volume does to help/hurt the bottom lines of the vendors who actually manufacture the items sold under the Kirkland name.
It usually helps. Costco looks for high margin consumer products that can be sold in high volume. In exchange for reduced margins, the manufacturer gets enormous volume without having to do any marketing or distribution.
Interestingly, Kirkland Signature products are often co-branded. For example, the infamous giant aluminum foil roll says "Reynolds" right below Kirkland Signature. The Kirkland golf balls say Titlist on them. Starbucks originally roasted Kirkland coffee and the packaging plainly said Starbucks on it (I don't think this is still true). After it was introduced, Starbucks noted a measurable increase in store sales around the Costco warehouse, which meant customers were being introduced to Starbucks by Costco. This helped Starbucks go nationwide. Coincidently or not, Costco board member Jeff Brotman was an early, pre-IPO investor in Starbucks.
Similarly, some manufacturers have brands/models that are only sold at Costco. I saw some Shokz Open Run SE headphones at Costco for $80. Regular Open Run headphones (not SE) are normally $130. I emailed Shokz asking them what the difference was. They said the only difference was the color. Presumably, they created a different model so the don't undercut their retailers who are selling the same thing for $50 more dollars.
