Costco is a trusted retailer for many companies, and for good reason. Even as inflation squeezes its budget, the warehouse club giant has managed to build and retain a loyal customer base.
“We reported membership fee revenue of $1.849 billion, an increase of $125 million, or 7.3%, year over year,” Costco Chief Financial Officer Gary Millerchip said during Costco’s most recent earnings call.
That’s impressive considering many consumers are cutting back on spending to cope with higher costs.
But Costco’s strong membership retention isn’t just about low prices on bulk items. Costco is also capitalizing on this growth trend, investing heavily in its Kirkland Signature brand.
Consumers are increasingly turning to private label products
In August, the consumer price index rose 3.4% compared with the same period last year. Food costs rose 2.7%.
Not surprisingly, nearly 42% of U.S. grocery shoppers said they are turning to private label products to save money, according to an August 2026 Algolia survey. This number is up from 40% last year.
For Costco, this shift directly affects one of the most important parts of its business: Kirkland Signature.
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The company has spent decades growing Kirkland from a traditional store brand into a massive private label business spanning food, beverages, apparel, homewares and health products.
Costco said in its 2025 annual report that it is making a long-term investment in Kirkland Signature.
“We sell many products under the Kirkland Signature brand. Maintaining consistent product quality, competitive pricing and the availability of these products is critical to developing and maintaining member loyalty,” the company said.
Costco is not only expanding its Kirkland product line into more products, but it is also seeking greater control over how Kirkland products are manufactured and distributed. This ultimately allows Costco to control prices and offer better deals than national brands.
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Kirkland could become even more important to Costco
Costco’s interest in Kirkland goes beyond providing shoppers with a cheaper alternative to national brands.
The company describes private label as an important part of its value proposition. Its limited-SKU business model allows Costco to focus its buying power on products it believes will generate strong sales.
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This creates an interesting dynamic as shoppers become more willing to switch brands.
In the aforementioned survey, 75% of respondents said they were stressed about grocery prices.
For Costco, Kirkland offers these shoppers a way to lower costs without sacrificing quality.
This is a meaningful distinction.
“Costco works hard to ensure manufacturers meet the high quality standards of its Kirkland brand,” retail expert Mark Ryski told Retail Wire. “Quality products further build trust as trust extends across categories.”
“For decades, people have built trust in Costco’s quality and brand equity. [the] Suresh Chaganti told Retail Wire, further emphasizing this point.
As consumers continue to seek value, Costco has the opportunity to make Kirkland the center of the shopping experience.
If the company continues to invest in Kirkland, it will likely continue to enjoy a steady stream of membership renewals.
Maurie Backman owns shares of Costco.
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