In Costco's annual report released in December, the retailer announced that sales of Costco's Kirkland Signature private-label brand grew to $39 billion in 2018, up from $35 billion in 2017. That's good for a sales growth rate of more than 10%, slightly higher than the sales growth rate for all Costco merchandise. It also means that Kirkland accounted for nearly a third of all Costco's sales.
Customers see the brand as a blend of quality and value, and it gives shoppers a unique reason to go to Costco that other retailers can't match online or off.
"Kirkland is a brand in its own right," Karen Short, a retail analyst at Barclays, told CNN . "It is one of the reasons people go to Costco. That's not necessarily something you can say about many private labels."
But competing brands might see it as a threat. That could mean lower prices for customers, as other brands position themselves to better compete with Kirkland.
"When a traditional brand is losing shelf space or market share, what do they do? They create a better value," Costco CFO Richard Galanti told CNN in an interview.
If Costco undercuts a brand it sells with a Kirkland item, it often forces that brand to lower prices as well. It has happened with Poland Spring water, when after Costco lowered the price of the Kirkland 40-pack of water, Poland Spring reportedly also lowered prices.
Competitors have taken note of Costco's success with Kirkland.
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