Costco’s Kirkland brand is bigger than Nike—and it’s about to get even bigger

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Costco has been on a good run lately. The beloved big-box club chain has been winning new fans for its no-nonsense stand on continuing its DEI policies, with comparable store sales up 6.8% in its most recent quarter. But as Costco shoppers know, its in-house Kirkland Signature brand, which includes everything from underwear to frozen pizza, has long been the discount club’s not-so-secret weapon. Kirkland marks its 30th anniversary this year, and in what’s shaping up to be a challenging economy for consumers across the board, it’s poised to become more important than ever.

Kirkland-branded products (excluding gas) already account for nearly a quarter of Costco sales—some $56 billion in its fiscal year that ended September 1. That makes Kirkland bigger by revenue than Nike ($51 billion last year) or Netflix ($39 billion). Like all private labels, it competes with brand-name consumer products largely on price—an obvious advantage in belt-tightening times. But Kirkland is also the rare private label that’s developed its own powerful, and surprisingly elastic, brand identity.

When it was founded in 1983, Costco offered only name-brand goods, but over time the company became concerned with rising prices, sometimes even when underlying commodity prices were going the other way. So it decided to jump on the then-burgeoning trend of creating lower-priced house-brand alternatives.

At first, it followed the practice of Sears and other major players of that era who created multiple distinct private brands for different categories. But ultimately this struck management as confusing: Consumers couldn’t be expected to associate dozens of newly invented brand names with Costco. Kirkland Signature—first used on vitamins and shampoo, in 1995—was named after the Seattle suburb where Costco was based at the time.

The biggest-selling Kirkland products tend to be staples like toilet paper, paper towels, and bottled water. But as the label has developed a quality reputation, Costco has gradually become more and more adventurous about where the brand can go, and there are now an estimated 500-plus Kirkland-branded products, from high-end liquor to aluminum foil to sushi. It’s hard to think of any other single brand successfully competing in such a dizzying array of categories.

Meanwhile, the discounter’s core strategy of limiting choices in each category and generally offering far fewer SKUs (stock-keeping units) than most big-box stores ended up making Kirkland even more potent. A few years ago, according to The Wall Street Journal, Costco decided Kirkland would become one of its two diaper offerings—meaning either Huggies or Pampers had to go. Costco and Huggies-maker Kimberly-Clark made a deal to manufacture the Kirkland diapers; Huggies stayed. (Costco later switched to another manufacturer, but Huggies kept its slot.)

Speculating about which big brands actually make Kirkland products—are its apparent dupes of a popular pair of Lululemon pants actually made by Lululemon?—is a Costco-fan pastime. Costco generally doesn’t comment (and did not respond to an inquiry from Fast Company), but it’s widely accepted that Starbucks supplies some Kirkland coffee, its batteries are made by Duracell, and Bumble Bee supplies its tuna fish.

And plenty of Kirkland’s supply partners are quite open about the relationship: Ocean Spray’s logo is right below Kirkland’s on its cranberry juice bottles. And while Grey Goose has in the past denied supplying its vodka, Oregon’s Deschutes Brewery has put its logo on the popular Kirkland Signature Helles-Style Lager it now brews for Costco.

Traditional brands continue to outsell private label alternatives by a wide margin, but store-brand sales continue to grow. (Target, Walmart, and others still have multiple private labels, but direct Costco rival Sam’s Club has moved to a similar model built around its Member’s Mark cross-category house brand.)  And Costco has reiterated that it believes it can continue to grow private-label sales.

While it’s not yet clear what the full fallout of the The President administration’s nascent and ever-changing trade war policies will look like, it’s a safe bet that shoppers are going to become increasingly price-sensitive this year; the Conference Board’s “expectations” index of forward-looking consumer sentiment has plunged, with tariffs a cited concern. That means more interest in lower-cost private labels in general—but maybe especially for a private label with a quality reputation. It may not be as attention-grabbing as a $1.50 hot dog, but Kirkland Signature seems positioned to become more popular than ever.  

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