Costco, BJ's and Sam's Club Expand Store-Brand Products
The three largest warehouse clubs in the United States each offer shoppers unique features and their own brand of bulk discounting that have gained in popularity as more consumers in recent years have sought out money-saving options.
More recently, the trio’s biggest commonality is the effort by each to expand its assortments of store-brand products. Shoppers who visit Costco, Sam’s Club or BJ’s Wholesale today have a broader assortment of private-brand products from which to choose. In fact, the amount of each retailer’s private label products filling the shopping carts of members has been quite noticeable, both in person and in the sales data.
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“We are looking at data a lot with the club channel, which is outpacing overall private-brand growth by almost two times,” affirms Jim Griffin, president of Stamford, Conn.-based Daymon North America. “The three clubs collectively have about 20% of the market in private brands and have seen growth of about 50% in 2024.”
During Costco’s investor conference call this past December to discuss fiscal year first-quarter results, Ron Vachris, president and CEO of the Issaquah, Wash.-based retailer, reported that its Kirkland Signature own brand has a penetration rate of 33%. He noted that products sold under the brand were growing “a little faster” than the rest of its business, with most Kirkland Signature products sold in the food and sundries categories.
Private label growth is also in the cards at BJ’s Wholesale as executives at the Marlborough, Mass.-based retailer reported in 2024 that it was on track to reach the 30% penetration rate goal set for its assortment of private brands. While value certainly plays a vital role in this continued growth, product quality is also of major importance. In fact, 95% of BJ’s own-brand products earn ratings of four out of five stars.
Over at Sam’s Club, the expansion of its Member’s Mark private brand has been a focus, and the voice of its members in product development has played a significant role. The retailer’s Member’s Mark Community, an opt-in network, allows participants to vote on exclusive flavors and test and trial new items. Officials at the Bentonville, Ark.-based division of Walmart say that the continuous flow of feedback is the cornerstone for guiding the large-scale development of products to ensure that new items align with members’ needs and preferences.
“We don’t send [Member’s Mark-branded] products to our clubs without member approval,” said Myron Frazier, Sam’s Club’s then-VP of Member’s Mark, when the retailer was named Store Brands’ Retailer of the Year in 2023.
Top Quality
Where price was once the main driver of private label product sales at the clubs, that has evolved into a broader conversation about value, which has increasingly brought product quality into the equation.
At Costco, the Kirkland Signature brand has expanded its presence across the store. The brand today continues to have a major presence in food and various home goods but has also moved more into apparel as the retailer looks to build off the brand’s strong reputation.
While seemingly a good idea on the surface, the challenge that Costco and other retailers face as they extend their own brands into new categories is maintaining the product quality that shoppers have come to expect.
“When I see the Kirkland brand in a place I didn’t expect, the positive experience I’ve had with the brand in paper goods and food is going to create a halo of Kirkland quality onto the new product,” says Gary Stibel, founder and CEO of Westport, Conn.-based New England Consulting Group. “I’m going to assume that it will be worth me paying for that new Kirkland product, even if it’s more expensive.”
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With product quality top of mind for Costco with Kirkland Signature, having an item priced below that of a comparable national brand isn’t always a priority for the retailer. An example of this is a recent study from Consumer Reports that rated a variety of store-brand and national-brand products across 10 categories.
In the orange juice category, Kirkland Signature organic orange juice was one of two products ranked as “Best Tasting,” joining Simply Orange’s pulp-free juice. Perhaps most interesting is that Costco’s own-brand orange juice costs 93 cents per cup, 24 cents more than Simply Orange and the most expensive orange juice tested. Tropicana came in at 73 cents per cup and was one of three orange juices ranked as “Skip It.”
“Costco is not focused on how cheap they can sell a product,” Griffin says. “Quality is vital, and they, along with all the clubs, have member data that shows what items are repeat purchases and which are not. This allows them to investigate why an item isn’t selling.”
The Perception of Value
While Costco isn’t shy about pricing select own-brand items near or above similar national-brand products, retailers in the channel are keenly aware of the need to offer products perceived as offering good value.
An example of this is seen in BJ’s assortment of food storage bags sold under its Berkley Jensen brand. Introduced in 2024, the gallon double-zip freezer bags (152 count) go for $9.49, Berkley Jensen freezer quarter double-zip bags (216 count) go for $9.49, Berkley Jensen sandwich bags (580 count) go for $9.49, and a Berkley Jensen food storage variety pack (340 count) goes for $11.99. All prices listed were at the time of launch.
By comparison, Ziploc gallon freezer bags (152 count) seen on bjs.com were priced at $19.99, and Ziploc quart freezer bags (216 count) were priced at $19.49.
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Bob Eddy, president and CEO of BJ’s Wholesale, previously called the new food storage bags a strong illustration of the retailer’s capabilities and approach to its own brands.
“Our research suggested that our members were seeking greater value than the national brands offer,” he said at the time. “Our members’ response has exceeded our expectations, improving the category sales trend, with more than half of the sales coming from new members to the category.”
Moving forward in 2025, each of the clubs is expected to grow in terms of top-line sales and store count. Expansion of their respective private label assortments will also remain a key driver, as each is focused on providing shoppers with high-value products that also provide strong margins. This growth includes strong membership retention, and new members join without the support of a significant marketing effort from any of the three.
“The bathtub has a very small exit, and they’re not losing customers, and gaining shoppers at a high rate,” Stibel notes. “The water level continues to go up.”
