Unfortunately for Kind LLC, that meant its own best-selling, chocolate-dipped, slightly salty Kind Bars now faced cheaper competition on Costco's shelves. Kirkland Signature, Costco's store brand, is challenging manufacturers hoping to earn or retain a coveted spot at the warehouse retailer. Since , Costco has used its Kirkland products to attract shoppers, building a reputation for quality and low prices on milk, toilet paper, men's shirts and golf balls bearing the unassuming red logo.
LaunchPad Inc. At Costco, negotiating for a spot in stores is a complex dance. Brands fight for space at the retailer's cavernous warehouses, which on average carry only 3, products. The typical supercenter sells over , Adding to the pressure, Costco often introduces a new Kirkland product when its buyers or executives believe a brand isn't selling at the lowest possible price.
Today, Costco's nut aisle is almost entirely made up of Kirkland Signature products, including single-serving packages sold in boxes of 30, bags of almonds and nut clusters. Over a decade ago, what was formerly called Kraft Foods lost spots for its Back to Nature fruit-and-nut mix single-serving packages and several varieties of Planters nuts, said a person familiar with the change. Leading up to the Kirkland introductions, Kraft raised the price on several nut products without showing the direct justification Costco demands, like an increase in nut prices, and declined Costco's offer to make Kirkland products, the person said.
Since then only a handful of Planters products have been sold at Costco, currently two varieties in some stores and on Costco. Because of Costco's size, the retailer can sometimes buy commodities like nuts at lower prices than consumer-goods companies. Building successful store brands is a priority at Wal-Mart Stores Inc. After Amazon acquired Whole Foods, it quickly added the grocer's store brand, , to its online food offerings. Wal-Mart and its warehouse chain, Sam's Club, are reworking and adding to their store brands.
Though Costco's stock price has suffered amid investor fears that its e-commerce operations aren't ready to go head-to-head with Amazon, the retailer has kept sales growing, in part by using Kirkland to pressure manufacturers to lower prices and bring products to shelves that can't be purchased elsewhere.
