Costco quietly makes a major product assortment change

As a Costco member, you have certain expectations. Even though the warehouse club has an ever-changing product mix, you expect the basics to be there, albeit with limited choice in some areas.

"Costco’s approach to product selection is minimalist yet highly strategic. By offering fewer but carefully chosen items, Costco simplifies operations and delivers consistent value. Its private label, Kirkland Signature, plays a vital role in reinforcing quality and loyalty," according to an Entri.app research report, "Costco Marketing Strategy."

The warehouse club has simple core marketing strategy:

• Limited product assortment
  Stocks about 3,500-4,000 SKUs per warehouse (vs. 30,000+ in typical supermarkets). Warehouse club's streamlined selection lowers inventory and storage costs. Limited selection reduces choice overload and speeds up the buying process.
• High-demand, high-turnover Items
  Products are chosen based on popularity and sales velocity. Focus is on essential goods: groceries, household items, and seasonal needs. Faster turnover means fresher stock and better deals.

Costco members know that the mix of products will change, but they have certain expectations. In many areas, they appreciate the chain's Kirkland Signature brand as a lower-cost option, but in other cases, some people do prefer name brands.

Those members may not be happy with the changes Costco is making to mitigate the impact of President Doland Trump's tariffs.

Costco leans into Kirkland Signature

Costco CEO Ron Vachris talked about his chain's house brand during his company's fourth-quarter earnings call.

"Our private label Kirkland Signature reached its 30th year anniversary this year. Kirkland Signature sales penetration continued to increase, bringing an even more high-quality value to our members while offsetting potentially inflationary impacts from tariffs," he said.

Vachris noted that the warehouse club plans to expand its house brand in order to lower expenses.

"As mentioned last quarter, we are continuing to look at opportunities to move more KS product sourcing into the countries and regions where the items are sold, and this is helping to lower costs as well as reduce emissions from transporting goods around the world," he added.

Kirkland Signature products generally score good reviews, and many members seem to think of them as a good value.

"We are big Kirkland fans and the reason is simple – mostly great products at very good prices," retail expert Stephen Needel shared on RetailWire.

He noted that many products are well-rated, while others meet a need.

"Their laundry detergent and dishwashing pods have been at the top of Consumer Reports for years in terms of effectiveness, yet they are at a substantial discount. Their Sauvignon Blanc and Prosecco may never win awards, but it’s hard to beat drinkable wines at those price (not to mention the Rioja, Chianti, and Malbec). And they have mixed nuts at half the price of Planters. I could go on forever," he added.

Costco members are looking for value

CFO Gary Millerchip made it clear that Costco members look to the chain for value.

"While our members love the treasure hunt items that they find in our warehouses and online, our everyday value items are also extremely important to them, especially in times of economic uncertainty," he shared.

That includes two classic deals that the chain has offered for decades.

"There are no better examples of this than our hotdog combo, rotisserie chicken, and KS bath tissue. And in fiscal year 2025, we sold over 245 million hotdog combos, over 157 million rotisserie chickens and enough bath tissue to reach the moon and back over 200 times," he added.

Costco adds more Kirkland Signature

Miilerchip made it clear that Costco's members have gotten more cautious with some spending.

"Our buyers continue to do an excellent job finding new and exciting items at great values, which are resonating well with members even as they remain very choiceful in their spending on discretionary items," he said.

The CFO shared how Costco has worked to offset President Doland Trump's tariffs.

"We continue to work closely with our suppliers to find ways to mitigate the impact of tariffs, including moving the country of production where it makes sense and consolidating our buying efforts globally to lower the cost of goods across all our markets," he added.

Millerchip also made it clear that Costco has swapped out name-brand items for Kirkland Signature products in some cases.

"Additionally, we are changing item assortment where appropriate. This includes leaning into KS items and increasing domestically sourced goods. Examples include an increased emphasis on items in health and beauty, live goods, tires, and mattresses," he said.

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The CFO shared that the ultimate goal is offering value, not name brands.

"We believe our expertise in buying and the flexibility afforded by our limited SKU can give us greater agility to navigate the current environment and minimize the impact of tariffs. Our ultimate goal is to increase our member values compared to the market," he added.

Kirkland Signature offers added value

Tariffs have added significant costs to many items that Americans purchase regularly.

"We estimate the dollar value of the new US tariffs at $780 billion (2.5% GDP)," according to a study by UBS.

Costco's house brand helps the chain keep prices down.

"KS items typically offer members 15% to 20% value compared to national brand alternative with equal or better quality. In Q4, we launched over 30 new KS items, including grass-fed beef sticks, organic extra firm tofu and various apparel items," Millerchip said.

Retailwire Brain Trust member Katie Thomas thinks that Costco members won't be upset with more Kirkland Signature products.

"For consumers, price is both the most and least important factor – in reality, what they are looking for is a rather nebulous 'fair price' – a price that matches the quality. As Costco highlights, Kirkland does just that – good quality at a competitive price. I’d say that’s the obvious reason for the success," she wrote on RetailWire.

Her colleague Zel Bianco agrees.

"Private label does not need to mean dull and boring all white packaging and product of questionable quality. Quality products like those from Kirkland are just as good as national brands and for the most part less expensive. The jars of mixed nuts and frozen berries from Kirkland are excellent examples of this, to name just a few," he posted.

Related: Costco pulls a popular product line from its warehouse shelves