Costco Connection - June 2006

No fish tale

WHEN COSTCO SET OUT to develop a Kirkland Signature fish oil supplement in the mid-’90s, it was apparent that the biggest challenge to overcome was the industry itself. “The supplement industry wasn’t regulated at all. There was no guarantee that what was on the label of many supplements was what was inside,” says Teresa Thompson, buyer for Kirkland Signature health supplements. “We needed to establish a standard of quality that members could rely on.” Costco turned to the United States Pharmacopeia (USP), the official public standards-setting authority for all prescription and over-the-counter medicines and dietary supplements. In doing so, Costco became the first retailer to participate in the USP’s voluntary verification process. “USP verification means the ingredients are consistent in quality from batch to batch, that they meet claims for strength, purity and quality—basically that what’s on the label is in fact in the bottle,” says Teresa. Making that extra effort has resulted in high praise for Kirkland Signature Fish Oil Concentrate from consumer-research magazines since its introduction in 1994. Kirkland Signature fish oil consistently ranks in the top three (and is frequently ranked number one) in terms of quality and value in the industry. Says Teresa, “Our Kirkland Signature Fish Oil, and the newer enteric-coated Kirkland Signature Fish Oil, are perfect examples of Costco going the extra mile to make sure there is no question about just how good these products are.” —T. Foster Jones

To learn more about some of the popular Kirkland Signature products, see the June Online Edition. Visit costco.com and click on “Costco magazine.”

Any item carrying the Kirkland Signature brand must offer a significant value over the competition. What about the chicken Caesar wrap? Each Kirkland Signature wrap has 5 ounces of chicken, for a total protein count of 31 percent. A similar wrap at a national fast-food chain has less than 2 ounces of chicken. “On a per-pound basis, the Kirkland Signature wrap is a tremendous value,” Shawn says.

IRIDIO PHOTOGRAPHY

Still on a roll

IT’S NOT THE MOST GLAMOROUS product, but Kirkland Signature Bath Tissue—Costco’s most popular item— offers a perfect example of what Costco’s private-label program is all about.

Costco decided to create Kirkland Signature Bath Tissue because, simply put, the company believed it could make a high-quality tissue for less than national brands. “We can control the quality, and the value,” says Costco buyer Deb Belcourt.

As is the case with many Kirkland Signature products, Costco still offers a national bath-tissue brand for members who prefer it. “As with detergent and other products, members have a choice when it comes to bath tissue,” Deb says.

For Costco, an important part of the Kirkland Signature program is that it enables the company to maintain control over quality and pricing in the face of changes in the market. In the case of bath tissue, for example, some national brands have shortened their rolls to save money.

“We continue to try to maintain sheet counts to go along with our standard of quality,” Deb says.

And in terms of quality, Costco has complete control over the product’s standards. “Our tissue goes through extensive testing every month,” Deb says. “We test for strength, softness and appearance. We conduct six different tests on strength alone.”

To see how successful Kirkland Signature Bath Tissue has been in the past 12 years, just look at the sales figures. The product is on pace to sell more than 20 million packages in the 2006 fiscal year. That’s 720 million rolls and more than 20 million miles of tissue.

What’s most important, Deb notes, is that Kirkland Signature Bath Tissue represents a tremendous value for Costco members.

“This product is a foundation of what Kirkland Signature represents,” says Deb. “There’s no Kirkland Signature product that we sell more of, or one that reaches more people.”—Mark E. Stroder