The Real Reason Costco's Bacon Is So Cheap
Costco's private-label brand Kirkland Signature is one of the most beloved brands the warehouse retailer sells. As the saying goes, the proof is in the pudding, and all you have to do is look at the numbers to see the veracity of the love in the amount of money Costco's members shell-out for products being sold under this marque banner. Costco's Kirkland Signature raked in $39 billion in revenue in 2018, which is approximately one-quarter of all sales for the warehouse giant. Pretty impressive. In fact, private labels have quietly become a vital part of the shopping canvas. A recent poll revealed that 46 percent of shoppers find these store brands to be "very influential" to their buying choices, with Kirkland leading the charge (via Motley Fool).
One of those private label items that Costco members love to buy is Kirkland bacon. It's easy to understand why. Bacon in bulk — 64 ounces to be exact, or four 16-ounce packages — can never be a bad thing, especially, at such a ham-tastic price. Depending on location, you can expect to pay anywhere from $10 to $16 which is approximately $1.50 cheaper per pound than other leading household name brands (via Consumer Reports). How can Costco sell their bacon for so much less than its competitors? We've scoured the internet to find out the real reason Costco bacon is so cheap.
Costco can sell its bacon at 20 percent less than competitors
According to a Wall Street Journal article, one of the reasons Costco is able to sell its bacon cheaper than competitors is because of how it determines what products to sell under the Kirkland brand. It has to be viable to sell it at 20 percent less than a comparable branded version without compromising profit or quality. But that's not the only reason. CNN Business suggests it is Costco's steady partnerships with vendors that helps the warehouse broker deals that allow the retail powerhouse to pass along a cost savings to their customers. This in turn moves a higher product volume, resulting in a sales boost for the partner.
However, it's important to point out that in recent months, there have been discussions on the Consumer Affairs website from Costco customers that are falling out of love with the Kirkland Signature bacon. One Seattle, Washington reviewer from January 25, 2020 wrote, "I've bought Kirkland bacon many times before with no problem, which is why I was so shocked that two of the four packages were full of very fatty, broken pieces, with not much actual meat." Another reviewer from North Hollywood share this sentiment writing: "The outside package is good, mostly meaty, but as you go further inside, it becomes white fatty, and slices are becoming so thin and cut small, that I can't properly cook them without them being burnt. Almost like a bait and switch."