Costco recently let its members know that it is back in the peanut butter business. Pallets of Kirkland Natural Peanut Butter were absent from its warehouse club for almost a year because of a shortage of the Valencia peanuts critical to its beloved recipe. In response, Costco has worked directly with farmers to ensure an unbroken supply of the special peanuts going forward. As most retailers continuously challenge themselves with how to be brands and not just stores, Costco has just behaved like a truly amazing brand, just by being true to itself.
Peanut butter seems like an unlikely hero in a business the size of Costco, with the thousands of items it routinely stocks, but to US shoppers it is a fundamental ingredient of everyday living and they can’t be without it. Delisting a key SKU like peanut butter could mean losing not just a sale but an entire trip, as shoppers may substitute Costco with their grocery store, and pick up other items on their “Costco” list while there.
The future win outweighs the short-term loss. The peanut butter story will become lore for the Kirkland brand (which is a proxy for Costco) that is extendable across all Kirkland merchandise. It all must have be worthy of the same quality scrutiny, so shoppers will trust the brand when they are doing their laundry as well as when they are making their sandwiches.
At the core of Costco’s business success is its unwavering focus on creating member value. Costco’s focus on creating value beyond price is the ingredient that drives brand value for any great brand. It's doubtful that anywhere in a Costco internal marketing document, brand manifesto or operations manual it's stated that products should be discontinued if there is a potential reduction in the quality of the product experience; it’s just the Costco way.
Members may just love the taste of the Kirkland peanut butter, and not associate it with the small Valencia peanuts, and likewise, members may love Costco and not associate their feelings with all the seemingly small decisions Costco makes about their store and merchandise. Branding is a collection of smaller things that individually may seem not to matter, but collectively can add up to greatness.
For branding to be successful in any organization it cannot be seen as a tool to “manufacture” greatness, it must clarify and amplify what should already exist, or help uncover and activate what could be. For Costco, evaluating every decision in terms of its impact on member value is a reflex, like the muscle memory of a great athlete.
Bill Chidley is SVP, Executive Consultant, Interbrand Design Forum.