Last week, while checking out groceries at my local supermarket, I decided to play a little game called “How much will all of this cost?”
Now I’ll admit that mental math isn’t necessarily my strong suit. But when my fairly modest grocery haul came to $104, as opposed to the $65 I’d calculated in my head, I figured I’d made a mistake and perhaps scanned a few items twice.
Nope.
Groceries really are that expensive these days. And it’s not just groceries. Just about every product under the sun seems to have a higher price tag attached to it. And I know it’s not just in my head.
The reality is that the impact of tariffs is already starting to take a noticeable toll. The Federal Reserve Bank of St. Louis found that as of October, tariff measures were exerting “measurable upward pressure” on consumer prices. You don’t need an economics degree to know that that’s not good.
Worse yet, consumers are already bearing as much as 55% of the cost of tariffs, according to Goldman Sachs research cited by NBC News.
Costco, however, has a pretty solid strategy it’s using to keep prices down for members. And it’s a strategy that gives the company a massive edge over its competitors.
Costco’s Kirkland brand comes to the rescue
As retailers scramble to mitigate the impact of tariffs, Costco has one major weapon in its back pocket – its Kirkland Signature brand.
Through the years, the Kirkland name has become synonymous with quality. Whereas other retailers have taken to introducing different brand names for different products and product tiers, Costco’s approach is to offer all of its private-label products under the same Kirkland name.
Related: Watchdog group warns Costco members to avoid popular product
It’s a strategy that’s worked well for the company through the years, as well as very recently.
During the company’s Q4 2025 earnings call, CEO Ron Vachris said, “Kirkland Signature sales penetration continued to increase, bringing an even more high-quality value to our members.“
It’s the store’s signature brand that’s allowing Costco to keep prices steady as other retailers pass the cost of tariffs along to their customers.
As CFO Gary Millerchip said, Costco has the “flexibility to change items” it perceives as offering less value to members due to the impact of tariffs. The company is also increasing its supply of domestically produced items – something it has the agility to do thanks to the way Costco manages its inventory.
Costco, unlike other retailers, typically limits its inventory to about 4,000 SKUs (stock keeping units). While that means that members often have to look outside of Costco for all of their household and grocery needs, it also gives Costco the ability to pivot as needed on inventory and negotiate better prices with suppliers.
Costco could be a haven for cash-strapped consumers
At a time when the Consumer Price Index is still up 3% year-over-year and many people are struggling to afford basic necessities, Costco is emerging as a safe haven for those willing to invest in a membership.
Of course, it’s not only the company’s signature brand that’s allowing it to keep prices down in the wake of rampant inflation and tariffs.
Related: Costco Executive members notice major early shopping problem
Costco gets a large chunk of its revenue from membership fees. The company can then use that revenue to offset its costs and accept lower margins on products individually.
But ultimately, Costco is doing a lot of things right with its Kirkland brand. In Q4, the company launched more than 30 new Kirkland Signature items, and it will likely continue to grow the brand as a way to combat rising costs.
Of course, for this strategy to work for Costco and consumers alike, there needs to be trust in the Kirkland brand. And there’s no question that Costco members see the value in Kirkland.
As Michael La Kier, retail expert and Founder and Principal of What Brands Want, LLC, commented in RetailWire, “Costco has strategically approached Kirkland Signature in a way most other retailers have not (or cannot). Costco is a shrewd operator that puts the member first.”
Maurie Backman owns shares of Costco.
