The Friday Checkout is a weekly column providing more insight on the news, rounding up the announcements you may have missed and sharing what’s to come.
Costco has become a force to be reckoned with in grocery, boasting market share gains every year for the past five years. A big reason for that is the success of the club retailer’s private label juggernaut, Kirkland Signature, which launched 30 years ago.
At a time when grocers are pouring money into private brands, Kirkland Signature shows the heights to which a store brand can soar. It accounts for around $86 billion in annual sales, or around a third of Costco’s total haul, according to a Wall Street Journal report from earlier this year. By comparison, Kroger’s numerous private label brands last year brought in $32 billion, or about 25% of the supermarket chain’s total sales excluding fuel, per a regulatory filing.
Around 600 products globally carry the Kirkland Signature label in categories ranging from batteries to pet food to wine to bath tissue. And some of its best sellers — including eggs, bottled water and butter, according to a recent story in Costco Connection, Costco’s in-house magazine — are the same products grocers rely on to drive trips.
Costco is in many ways a private label pioneer. It puts quality at the forefront, relying on buyers to identify expansion opportunities for Kirkland Signature and requiring CEO Ron Vachris to personally sign off on each addition to the line. It also views the brand as a tool for playing hardball with suppliers. “I see it as a tremendous negotiating tool,” Claudine Adamo, Costco’s COO of merchandising, told The Wall Street Journal.
But there’s one key way in which Costco’s store brand strategy differs from that of other retailers. While the club chain has put all its private label eggs in the Kirkland Signature basket, most other companies have chosen to roll out multiple brands. This allows them to appeal to different needs across value, premium and specialty segments — and the approach seems to be working, judging by the latest private label sales growth figures.
After 30 years, Kirkland Signature stands in a class of its own and is gaining momentum. That’s worth raising a glass of Kirkland-brand wine to.
In case you missed it
SpartanNash shareholders greenlight merger
During a virtual meeting on Tuesday, SpartanNash shareholders voted in favor of the company’s plan to merge with C&S Wholesale Grocers, according to a Securities and Exchange Commission filing. Holders of just over 82% of SpartanNash’s outstanding shares voted in favor of the merger.
The companies announced their $1.77 billion deal in late June. The combined entity would run nearly 60 distribution centers, serve around 10,000 independent retail locations and own over 200 grocery stores.
Heinen’s continues Chicago growth
The grocery chain opened its fifth Illinois location on Wednesday in Naperville, adding to its presence in the greater Chicago metropolitan area, the Chicago Tribune reported earlier this week. Heinen’s newest location spans 46,000 square feet and houses a wellness and floral department, a specialty cheese shop and an in-house butcher, according to the news outlet.
NYC council members override mayor’s vetoes of grocery delivery bills
The New York City Council on Wednesday overruled Mayor Eric Adams’ vetoes of bills that would require delivery companies to pay grocery delivery drivers more, according to a press release.
The two bills would require third-party grocery delivery services to pay their gig workers a minimum pay rate that would meet or exceed the rate set by the Department of Consumer and Worker Protection, as well as extend food delivery worker protections to all contracted delivery service workers.
Impulse find
Fresh off the hoof
A Hy-Vee store in Dubuque, Iowa, had a meaty delivery earlier this week that was a little too fresh.
A highland cow paid the store a visit, and bystanders captured videos of the cow galloping around the Hy-Vee parking lot.
Hy-Ve immediately added to the commentary with a Facebook post that read: “Yes the rumors are TRUE… our beef is THAT good!! Even ask the highland cattle that came by to try some last night.”
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