Dive Brief:

• Online retailer Jet.com says it will gradually phase out Costco’s Kirkland-branded products from its selection, according to Bloomberg. The move comes nearly a year after fellow big-box competitor Walmart bought Jet for $3.3 billion.
• Walmart-owned Sam’s Club is working to build out its own private label brand, Members Mark. Walmart recently streamlined 21 different store brands under the Member Mark label.
• The Kirkland brand, which started in 1992 and was named for the former site of Coscto headquarters, saw significant sales through Jet.com. In 2016, according to Bloomberg, Jet accounted for 5.5% of Kirkland’s yearly funds.

Dive Insight:

Jet.com has sold Kirkland products ever since the site launched back in 2015. And while the beloved Costco brand, which carries everything from bourbon to golf balls, has been a strong seller, its appeal doesn’t outweigh Walmart’s competitive concerns in private label.

Walmart, which bought Jet last year for $3.3 billion, sees huge potential in the site, which appeals to a more affluent, urban consumer base. This is especially true in online grocery where reaching these dense markets can be very profitable. During the past year, Jet has been quietly growing its selection of fresh grocery items, which currently total close to 4,000 products.

While that total pales in comparison to what Walmart offers through its e-commerce platform, the Bentonville retailer has every intention of expanding Jet’s assortment as it seeks to enter more markets and do battle with the likes of Amazon.

Part of that growing product assortment will be Members Mark-branded items, which were recently updated as part of a strategy to streamline Walmart’s private label portfolio and improve overall quality. The Sam’s Club house label now includes upmarket selections such as salted caramels, all-natural honey and pulled pork created with the help of the Kansas City Barbeque Society. Walmart is adding 300 items to the Members Mark brand this year, with plans to add another 300 in 2018. 

This focus on private label is a departure for Walmart, long known as a mecca of national brands. With greater returns and increasingly sophisticated branding and formulations now available, the retailer is diving in. Coupled with its growing e-commerce footprint, store brands are shaping up to be a key strategy for the world’s largest retailer in the years ahead.  

According to Nielsen data, private label sales last year topped $150 billion, with significant growth coming from the club and dollar store channels. With more consumers turning away from national brands, Walmart is wise to embrace private labels wherever and whenever they can.