Member’s Mark: Sam’s Club’s Ambitious Play to Unseat Kirkland’s Reign
The private label market is booming, with Kirkland Signature, Costco’s own brand, raking in an estimated $58 billion in 2023. But a formidable competitor is emerging in the form of Member’s Mark, Sam’s Club’s revamped private label program. While Kirkland has enjoyed a near-mythical status for over two decades, Member’s Mark is making a bold play for a piece of the market share pie, and it’s taking a page right out of Kirkland’s playbook.
"Member’s Mark is one of our catalysts for growth," Sam’s Club CEO told CNBC. "You can now connect the entire life for our members so we can feed you, we can clothe you, we can clean your home, we can style your home."
This ambitious goal involves a complete rebranding, consolidating multiple private labels under one umbrella. The results are already showing. Since 2020, Member’s Mark has revitalized more than 1,200 items, now accounting for an impressive 30% of Sam’s Club sales. This achievement, according to industry experts, surpasses Kirkland’s footprint in terms of unit sales, even though Costco carries a significantly smaller selection of products.
"We’ve seen some great benefits from it," the CEO continued. "Brand recognition has gone up, member acceptance has gone up, and the business is in a much better place going forward."
Sam’s Club is also taking a cue from Kirkland’s strategy of partnering with national manufacturers for its private labels. The company has been leveraging smaller suppliers known for private label expertise, giving them the agility to adapt and evolve rapidly. Member’s Mark has even launched a program where members can directly participate in product development, co-creating new items and providing valuable feedback.
"What we’re doing is we’re working with our members each and every day to say, ‘What do you want? What are you missing? What flavor profiles, what styles do you want?’ And we’re finding that that connection with our members creates this really positive organic growth in word of mouth for Sam’s Club," shared an industry analyst.
While Member’s Mark is making significant strides, it faces a formidable opponent in Kirkland Signature. Consumer Reports consistently places many Kirkland products, including diapers, above Member’s Mark in terms of quality. Further, Kirkland’s brand recognition remains much higher among consumers.
However, Sam’s Club has a strong foundation with nearly 70 million members and a robust expansion plan that includes 30 new warehouses by 2028. The company’s focus on quality, coupled with its direct customer engagement, could help bridge the gap in brand perception.
"The potential is there," concluded the analyst. "Member’s Mark, as we know it, is relatively new. With its customer-centric approach and strong resources, Member’s Mark could eventually challenge Kirkland’s dominance."
This private label showdown is sure to be a fascinating watch. The future will reveal whether Member’s Mark can truly steal the crown from Kirkland Signature or if Costco’s brand continues to reign supreme.
Private Label Powerhouse: Kirkland Signature vs. Member’s Mark
It’s no secret that private labels have witnessed massive success in recent years, growing into a $236.3 billion industry. Kirkland Signature, Costco’s flagship private label, has emerged as a leader, boasting over 300 products ranging from vodka to laundry detergent and garnering a fiercely loyal following. In 2023, Kirkland Signature sales surpassed the combined net sales of consumer packaged goods giants Kraft Heinz and Kelly Nova. However, this established brand is now facing competition from Sam’s Club’s revitalized private label, Member’s Mark. While Member’s Mark is younger, it’s rapidly gaining traction, aiming to become the next big name in private labels.
Key Takeaways
- Private labels are booming: The industry is growing rapidly, with consumers increasingly opting for private label products over national brands.
- Kirkland Signature is a juggernaut: Costco’s exclusive brand is a major driver of its success, generating over $58 billion in sales in 2023.
- Member’s Mark is on the rise: Sam’s Club’s rebranded private label is challenging Kirkland Signature with a fresh approach and strategic expansion.
- The competition is heating up: Both Kirkland Signature and Member’s Mark are vying for consumer loyalty, utilizing different strategies to stand out.
The Rise of Private Labels
Private labels, once viewed as low-quality alternatives, have undergone a significant transformation. Several factors have contributed to their growing popularity:
- Shifting consumer perceptions: Consumers have come to realize that private labels can offer comparable quality to national brands at more competitive prices. This shift in perception is particularly evident in the wake of the pandemic when consumers were forced to explore alternative options.
- Increased investments: Major retailers like Amazon, Aldi, Trader Joe’s, and Wegmans, have invested heavily in private labels, elevating their quality and expanding their offerings.
- Economic pressures: Rising inflation has prompted many consumers to seek more budget-friendly alternatives, pushing them towards private label options.
Kirkland Signature: The Established Powerhouse
Kirkland Signature’s success is rooted in its exclusive nature, high quality, and strategic product selection. Costco’s unique business model, featuring limited product choices and a strong focus on private labels, has created a strong demand for its signature brand.
- Limited choices, high impact: By limiting the number of SKUs, Costco ensures a focused selection of national brands and Kirkland Signature products, maximizing the brand’s visibility and driving sales.
- Quality commitment: Costco prides itself on sourcing high-quality products, often partnering with established national manufacturers to produce Kirkland Signature goods. This strategy builds trust and fosters consumer loyalty.
- Exclusivity: Kirkland Signature products are only available at Costco, creating a sense of exclusivity and encouraging membership renewals.
Member’s Mark: A Fresh Approach
Sam’s Club has recognized the power of private labels and has embarked on a strategic revamp of its Member’s Mark brand, drawing inspiration from Kirkland’s success.
- Consolidated branding: Member’s Mark now stands as the sole private label for Sam’s Club, consolidating over 20 previous brands and enhancing brand recognition.
- Elevating quality: Sam’s is focusing on improving product quality, drawing on a diverse mix of national and smaller suppliers.
- Direct consumer engagement: Member’s Mark has implemented a program where members can actively participate in product development, offering feedback and co-creating products. This fosters a sense of ownership and drives word-of-mouth marketing.
The Battle for Market Share
The rivalry between Kirkland Signature and Member’s Mark is set to intensify as both brands are aggressively expanding their offerings and targeting new customer segments.
- Expanding categories: While both focus on food, Member’s Mark is venturing into home goods, furniture, and small appliances, hoping to become a lifestyle brand.
- Competing for membership: Both clubs are vying for membership with new warehouse locations and appealing product offerings.
- Differing strategies: Costco’s focus remains on a limited selection of high-quality products, while Sam’s Club is prioritizing variety and direct consumer engagement.
The Future of Private Labels
As the private label landscape continues to evolve, both Kirkland Signature and Member’s Mark face challenges and opportunities:
- Quality assurance: Maintaining consistent quality across all products is essential to maintaining consumer trust.
- Brand awareness: Member’s Mark needs to build brand recognition to compete effectively with the established Kirkland Signature.
- Market differentiation: Both brands will need to find ways to differentiate themselves further, attracting new members and retaining existing ones.
The future of private labels is bright, with both Kirkland Signature and Member’s Mark poised to continue their growth. The competition is intensifying, but ultimately, consumers will be the ultimate arbiters of which brand offers the best value and quality. As the battle heats up, the private label category will only become more dynamic and exciting, offering consumers a wider range of choices and more opportunities to save money.
