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Costco Loyalty Is the New Hot Fashion Brand
Introduced in 1995, Costco’s Kirkland Signature private label brand has become a household name. According to Yahoo Finance, the Kirkland Signature brand is a premium label that “spans across groceries, clothing and household essentials, and seems to have something to offer in every department.” The private label’s name stems from the location of Costco’s original headquarters and provides some quirky charm.
Kirkland Signature “brought in $58 billion in sales during Costco’s fiscal year ending August 2021 — equaling about a quarter of the business’s total revenue, CNN reported — making Kirkland America’s biggest consumer packaged goods brand in terms of sales,” according to Yahoo.
It took some trial and error to get the formula right, as Costco once had its products divided into at least 30 different labels before combining them. Under their unified signature line, they created consistency, lower packaging costs, and competitive prices against other brands.
But that’s not all — they have inadvertently birthed a fashion trend and increased customer loyalty.
The Street shared how Costco released “a sweatshirt featuring a black-on-black logo of Costco’s in-store brand Kirkland Signature” at the end of August to a growing cult of niche fans who consider the Kirkland brand a form of “wholesale haute couture.” Now Costco shoppers “are seriously hyped for this wholesaler’s gear launch,” evolving the brand into a recognized fashion label.
It shouldn’t be a surprise that Costco’s range of inexpensive Kirkland basics and discounted clothes from other brands have always attracted shoppers, but the introduction of limited Kirkland-branded clothing is a new dimension altogether. These limited releases have become a successful form of “swag drops” used by brands like McDonald’s with its limited Happy Meal toys and Nike with its exclusive shoe collaborations.
With this rising fandom for Kirkland Signature clothes, experts can learn even more about the correlation between exclusive products and customer loyalty.
According to the Progressive Grocer, Costco “continually lands in the top tier of third-party polls of both shoppers and employees. Costco ranked first on Newsweek’s recent list of superstores and warehouse clubs, based on a survey of 30,000 customers. In another Newsweek poll of America’s Most Trustworthy Companies, the Issaquah, Wash.-based retailer came in 10th.”
Renewal rates also show how loyal customers can be, and “Costco’s membership renewal rate reached 92.6% in the United States and Canada by the end of its recently concluded fourth quarter. The retailer’s latest financial report shows a base of 65.8 million paid household members and 118.9 million cardholders.”
Furthermore, Kirkland Signature merchandise penetration saw a slight uptick to 28% for the last fiscal year, proving that Costco shoppers have accepted the private label and pay attention to it.
Although Kirkland Signature clothing might not sell out in seconds or beckon the call of scalpers and resellers, the brand is definitely on the right path. As one Reddit user put it, “Costco from head to toe.”
Discussion Questions
Have Costco shoppers become more loyal to the big box warehouse because of Kirkland Signature products, especially branded clothing? Or are members simply expressing their loyalty through Kirkland-branded clothing?
Poll
Loading …BrainTrust
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Joan Treistman
President, The Treistman Group LLC
Costco has a lot of fans and this, along with heightened activity on social media channels like TikTok, has made both the Costco and Kirkland brands hot fashion items. The products are also a statement against overly engineered, expensive high fashion – in that they are down-to-earth products from a brand known for representing everyday good value. On top of all of this, as you’d expect from Costco, its apparel items are comfortable and well made.
It is becoming exhausting to point out all the things that Costco can do right. Kirkland has managed to become as well known and liked a brand as many brands we have called national heretofore. Given the volumes that Costco sells (at Costco, one can’t buy one of anything except a huge-screen TV, or lawn mover), Kirkland probably compares to many national brands. Why? Because Costco insists on quality and limits its initial markups to provide value. Any other questions?
Costco has earned the loyalty of its faithful customers by consistently delivering exceptional value – and the powerhouse Kirkland brand is part of the success equation. With the Kirkland brand representing 25% of revenue, there’s no question that the Kirkland brand is part of the attraction to Costco. And while Costco’s branded clothing may have it’s fans, I’m skeptical that Kirkland clothing will be seen at New York’s fashion week any time soon, but I’m sure the team at Costco couldn’t care less. With over 118 M cardholders, Costco rivals Amazon’s 200 M Prime members and far exceeds Walmart’s 59 M Walmart+ members, and they continue to deliver impressive growth and financial results – whether you’re a fan of their branded clothing or not.
I think today’s discussion has the tail wagging the dog a little too much. Costco is one of the world’s great retailers and great companies. It has everything to do with management and philosophy. The Kirkland private label is popular because the offerings are good quality. The private label share at Costco is similar to the 33% that club stores experience.
While I have never seen any apparel emblazoned with the Kirkland name, I don’t imagine anyone goes to Costco to buy that unique “T”.
Ironically, the Kirkland brand men’s under T-shirt (not the V-neck) is as good an under-T as any. Look for the feel of the high thread count and you’ll see and ‘feel’ the difference instantly (you can’t kill that shirt).
I really like their Kirkland jackets, long sleeve dress shirts, and trousers. I tried them years ago, and they are all well made, and last a long time.
Color me impressed.
Completely agree. The Kirkland brand total value equation: quality + low price is what sets them apart and what keeps bringing customers back. There are a number of Kirkland products that I will buy over the leading market brand any given day, even when at price parity. While I also agree that people aren’t going to Costco to buy a unique “T”, they are going to the apparel section to see what high quality basics are available at a ridiculously low price to round out their wardrobe, or to discover a $14 shacket that in the span of 4 days went from a full table to almost nothing at my local store. Few stores can increase basket size like Costco, and their customers love them for it.
The rise of Kirkland Signature as a trusted brand in the fashion industry means that customer loyalty and the appeal of value-driven shopping are a winning combination. Costco has successfully leveraged its reputation for quality and affordability to extend its private label into the clothing sector, and the response from shoppers has been overwhelmingly positive. This isn’t just about affordable clothing; it’s about a brand that’s earned its stripes (and plaid, and polka dots) in quality and consistency across various product lines. In a world where high-end brand names are often out of reach, Kirkland Signature clothing is both reachable and, apparently, easy to put in an oversized Costco shopping cart.
Costco is simply the best warehouse club. Their Kirklang Signature brand is superior in quality and price, and that’s a combination that’s hard to find anywhere else. That’s also why they generate a cult following. If you’re buying a tenderloin for that special occasion, or just hamburgers, you know you get the best quality and value.
Kirkland is a fabulous example of taking a private label item and turning it into a brand. It’s a treasure hunt, and I got great tee shirts some years ago, which I can no longer find, but all retailers could take a lesson from Costco in earning consumer trust.
Yes, you should it when you see it, because when you come back they are more than not sold out of it…
Beyond the Kirkland branded products and merchandise, Costco employees do a great job with, for the most part, a smile on their faces. Even the pharmacy staff is super friendly and helpful. Costco deserves to be successful.
Now, if they can only carry more small and medium sizes in sweatshirts, etc. that would be good. Seems large and extra large sizes tend to dominate their inventory.
Wearing my Kirkland joggers as I write. For us the Kirkland brand has come to mean quality and value. Food, clothing, wine – almost always great
…and, they are the largest wine retailer in the country…
Bob, there wines are very drinkable, particularly the reds and their Prosecco
Yes-1000%
First comes the loyalty, born out of decades of Costco’s total commitment to quality and value. Then add some “treasure hunt” seasoning as a result of all the great brands that have been sold in Costco over the years. Kirkland was born of quality and value and enjoyed the halo effect from the company of great brands. Customers are devoutly loyal to the Costco brand promise and Kirkland is the perfect expression of that brand promise.
Wow, leave it to Costco to come up with a new category: middle-age haute couture! The desirable apparel landscape now includes unlikely players, such as Chipotle, Sweetgreen, Arby’s, Whataburger, Chick-fil-A….why not Costco?
Costco merchants have a unique advantage that no other Retailer really can replicate. Essentially Costco profit comes from membership fees, and product margins have to “just” cover operational costs, which sets a different tone for the merchants who don’t have to strive for ever higher gross margin. This coupled with a culture of experimentation and finding the next great product helps make Costco the great retailer that they are. Now there’s nothing to prevent any other Retailer from trying to act similarly, but can you imagine a Merchandise Meeting where someone comes in over their gross margin plan and is told to cut back on the profitability? A lot of Retailers take excessive risk by trying to buy just one more product or squeeze a few more basis points.
Costco is all about consistency in execution. From wine to meat to TV’s to clothing, they always deliver on their brand promise of high-quality products at commensurate price points. I don’t buy my clothes at Costco, but nearly everything else, and the Kirkland brand commands incredible loyalty from shoppers, as evidenced by its whopping $58 Billion in sales. If that doesn’t scream ‘evangelista’, not sure what does.
I agree with some of the comments that loyalty toward the Kirkland brand is driving its success in apparel, not the other way around. Longtime Costco shoppers have learned to trust the quality and value of the Kirkland brand throughout the store — from food and wine to cleaning supplies and much more — so the Kirkland apparel benefits from brand equity going back decades.
Costco’s Kirkland brand holds power because it always delivers what is promised, quality at a good price. Customers have been trained to understand the Kirkland label is usually a high quality product from a reputable manufacturer/vendor. There are no hoops to jump through to get these products at a good price. And if the customer is ever unhappy, it can be returned, no hassles. Loyalty to Costco has been built with care.
Costco has done a great job in a number of areas. They are known for service, low prices, good merchandise, and a high-quality private brand. If you look at the parking lot of a Costco, you’ll most likely see high-end luxury cars like Mercedes, BMW, etc. The point is that low prices mixed with a good experience and quality merch aren’t just for low-price shoppers or a demographic that can’t afford more. On the contrary, Costco has cracked the code on appealing to a wider base of customers and part of that appeal is their private-label merchandise.
While I would never mistake Costco for a fashion destination, I do wear a few store brand wardrobe basics purchased there, including several fine hiking shirts. And I never skip a browse through the apparel tables, in case I spot a bargain-priced branded garment.
As long-time Costco members, our household has come to trust their Kirkland brand to deliver reliable quality across numerous consumable categories. Don’t ask me to wear their logo on my chest, though, not even ironically.
Especially branded clothing?? I doubt it. But so what? it costs little – actually if is sells it may “cost” less than nothing (i.e. it makes money) – to offer the clothing. There’s really no downside to this.
It’s hard to wear blinders in the Costco aisles so that you only buy what you came for. Their merchandising is effective at engaging customers throughout the time they spend at the store. Costco has passed the point of questioning the brand or looking for the brand. It’s a product being sold at Costco, so it must be good. And I have no problem comparing the price I would pay somewhere else and still feeling good about my purchase at Costco.
I think you need to separate the non apparel Kirkland brands from the Kirkland Signature clothes. Non apparel brands simply outperform &/or underprice the competing national brands. The clothing line is about fashion.
I’m not a fan of the concept of customer loyalty. Loyalty to a retailer should be subservient to loyalty to family, country, church, etc. Retailers need to be loyal to the customers. How – by delivering on their promises. That is what the non apparel brands do.
I have never understood the attraction to Costco! And people pay to shop there? LOL. I cant find anything I want.
The food court is all right. Single people do not need this. This strikes me as shopping snobbery or reverse-snobbery. Loyalty to what, a gigantic impersonal experience?