Costco makes strategic move to capitalize on growing trend
Costco is a retailer many companies look up to for good reason. The warehouse club giant has managed to build and retain a loyal customer base, despite inflation squeezing budgets.
“We reported membership fee income of $1.849 billion, an increase of $125 million or 7.3% year-over-year,” CFO Gary Millerchip said during Costco’s most recent earnings call.
That’s impressive, given that many consumers are cutting back on spending to combat higher costs.
But Costco’s strong member retention rate isn’t just a matter of low prices on bulk items. Costco has also capitalized on a growing trend by investing heavily in its Kirkland Signature brand.
Consumers increasingly turn to private-label products
In August, the Consumer Price Index rose 3.4% on an annual basis. Food costs rose 2.7%.
Not surprisingly, nearly 42% of U.S. grocery shoppers said they’re switching to private-label products to save money, according to an August 2026 Algolia survey. That figure was up from 40% the previous year.
For Costco, that shift plays directly into one of the most important parts of its business: Kirkland Signature.
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The company has spent decades developing Kirkland from a traditional store brand into a sprawling private-label business covering everything from food and beverages to clothing, household products, and health items.
Costco said in its 2025 annual report that it’s making longer-term investments in Kirkland Signature.
“We sell many products under our Kirkland Signature brand. Maintaining consistent product quality, competitive pricing, and availability of these products is essential to developing and maintaining member loyalty,” the company stated.
Not only is Costco expanding the Kirkland line into more products, but it’s looking for greater control over how Kirkland products are made and distributed. That ultimately allows Costco to control prices and offer superior savings over national brands.
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Kirkland could become even more important to Costco
Costco’s interest in Kirkland isn’t simply about giving shoppers a cheaper alternative to a national brand.
The company has described the private label as an important part of its value proposition. And its limited-SKU business model allows Costco to concentrate purchasing power on products it believes can generate strong sales.
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That creates an interesting dynamic as shoppers become more willing to switch brands.
In the aforementioned survey, 75% of respondents said they’re stressed about grocery prices.
For Costco, Kirkland gives those shoppers a way to lower costs without sacrificing quality.
That’s a meaningful distinction.
“Costco works hard to ensure that the manufacturers meet high quality standards for their Kirkland brand,” retail expert Mark Ryski told Retail Wire. “Quality products further build the trust as it extends across categories.”
“Building trust in the quality and brand equity of Costco has been decades in [the] making, and it is unstoppable now,” Suresh Chaganti told Retail Wire, further emphasizing the point.
As consumers continue looking for value, Costco has an opportunity to make Kirkland increasingly central to the shopping experience.
And if the company continues to invest in Kirkland, there’s a good chance it will continue to enjoy a steady stream of membership renewals.
Maurie Backman owns shares of Costco.