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Costco has two secret weapons: Kirkland, and a growing number of "home-lennials"

Snacks / Tuesday, June 22, 2021
_The home-lennials are coming [Klaus Tiedge/Corbis via GettyImages]_
_The home-lennials are coming [Klaus Tiedge/Corbis via GettyImages]_

Return of the samples... Nothing sweeter than a free Lindt chocolate. While Amazon Prime Day(s) are in full swing, Costco is still winning over hearts and shopping carts with its old-school approach. Online sales make up only 6% of Costco's total, because shoppers dig the in-store "treasure hunt" (come for the TP, leave with a foldable grill). Now, the Disneyland of bulk retail is increasingly appealing to Millennials — especially first-time home buyers:

  • 2M+ Americans bought homes for the first time last year. Nearly 40% of those were Millennials, the most of any generation.
  • Costco is catering to Millennial homebuyers with a fresh offering of "healthy" options to stock their starter houses. Think: almond flour and organic applesauce for Baby #1.

Signature rosé... for the Millennial mom. Costco has a secret weapon that other food retailers envy: Kirkland. The private-label offers everything from vodka, to eggs, batteries, and toilet paper. Most Kirkland products are made by third parties. Read: shoppers can sneakily get brand names at off-brand prices. Kirkland coffee = Starbucks, Kirkland diapers = Huggies, Kirkland cran juice = Ocean Spray.

  • Bigger than Coke: Kirkland did $52B in sales last year — nearly $20B more than Coca-Cola, and double Kraft-Heinz's annual sales.
  • Bigger than cable: Costco memberships now exceed cable TV subscriptions in the US. Kirkland is a key driver of that success.

Home-lennials could be Costco’s 10-year growth driver... Older Millennials are moving to the 'burbs. Read: first baby, first home, empty cupboards. Read again: prime targets for Costco memberships. More than one-third of Millennials renting city apartments are considering moving away. The median age of a Costco shopper is 43. That's currently Gen X — but in a few years, it'll be Millennial. The suburban migration could have Millennials swapping Amazon carts for Costco ones.

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