Name: Costco’s Co-Founder On Kirkland Signature Gasoline
Uploaded: 2025-04-16T04:01:00Z
Duration: 9 min 23 s
Description: Costco co-founder Jim Sinegal sat down with The Wall Street Journal to discuss how he built the $86 billion label Kirkland Signature and why he was so reluctant to get into the gasoline business.

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Costco co-founder Jim Sinegal sat down with The Wall Street Journal to discuss how he built the $86 billion label Kirkland Signature and why he was so reluctant to get into the gasoline business. Photo Illustration: Nikki Walker

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Costco co-founder Jim Sinegal sat down with The Wall Street Journal to discuss how he built the $86 billion label Kirkland Signature and why he was so reluctant to get into the gasoline business.

Costco’s Co-Founder On Kirkland Signature Gasoline

Anybody who is successful and doesn't understand that they had some good fortune somewhere along the way is a fool.

Narrator: Jim Sinegal, one of Costco's co-founders, has had a lifetime of good fortune starting in 1954 when he showed up to work as a college kid at the discount store FedMart.

It was a part-time job, only supposed to last that day as a matter of fact and wound up staying there 23 years.

Narrator: It's there that Costco's co-founder learned the retail market directly from industry pioneer Sol Price. Jim Sinegal sat down with the Wall Street Journal to discuss what made him go off on his own after three decades with Price, why he started Costco in 1983 alongside co-founder Jeff Brotman, and how all of this led to the creation of the $86 billion label Kirkland Signature.

You set off on your own to some extent with Jeff to start Costco in the early '80s. Where did you see the opportunity?

I went from FedMart to the Price Club. I saw how successful the business was becoming, and I was contacted by Jeff and he and I had a conversation and I thought to myself, you know, really, I'm not gonna be happy just doing what I'm doing here. I could do it in 6, 10 hours a week. I was trying to force myself to work and I said, you know, what are you doing? Give this thing a shot. And so we put the plan together, raised the money, and opened our first Costco in 1983.

How did those first few years go?

Fortunately, when we were getting started, the Price Club was very successful. So when we showed that as a model of what the potential was, it made it easier to raise the money, but it was not an overnight success. As you can imagine, we had to fight our way through this, convince people that they should pay a membership fee to shop with someone.

One thing that you made a call on fairly early in your history was how you were gonna think about private label. How did you think about private label at first?

Our biggest customers in those days at the Price Club and also at Costco when we started were other businesses. We never thought about private label at that time. And then we were seeing articles being written about what was happening with private label, what was happening with the cost of brands. You found crazy situations like the cost of the basic commodities going down and increases coming on the finished product. Made it pretty obvious. And so we just kinda dabbled a little bit. There was some reluctance on the part within our own company. Everybody's saying, you know, are we going adrift here?

Why was the reluctance at first?

Well, in all the years that I was at FedMart, we were very successful in private label. We used to call it the FM label. As time went on, all of these different businesses and supermarkets and others decided that they would have a top label and they'd have a middle label and then something that was like sea rations in a can and had a tendency to break down the enthusiasm for private label with a lot of people. And I think that probably some of our colleagues felt that was, you know, that was a potential bad path for us to be taking.

Because it had sort of been killed in the industry.

It had really been buried as a result of the poor performance on the part of a lot of people. And when we started to look in places like in Canada with a company like Loblaw and when we looked at the UK and studied Tesco and Sainsbury, we saw that they were putting a lot of time and devotion into private label. And we said, well, if we're gonna do this, let's have some standards. We looked at what kind of products are we gonna go after at that point. So the obvious ones were the things that you might suggest, you know, ketchup and mayonnaise and mustard. It's interesting that those are not the ones that were most successful. As a matter of fact, in many instances, we didn't do very well with them because the brand Best Foods Mayonnaise was so powerful and so prevalent that customers were not interested in it.

I've heard ladies' jeans too or something, you thought about it over the years, but decided not to do a Kirkland brand.

It's one thing to buy men's jeans, okay, and it's an another thing entirely to get saddled in there with ladies' jeans. I know my wife will only buy certain jeans because they seem to fit her and she likes them. If I tried to get her to buy a Kirkland Signature label, I don't think she would do it. But, you know, listen, we do everything. I mean, my shoes are Kirkland Signature, my socks are Kirkland Signature, my underwear, my shirt, my glasses are Kirkland Signature.

You're a believer.

I'm a little bit of an exception.

Narrator: Today, Costco carries over 350 Kirkland products and the label now accounts for about 1/3 of the retailer's total sales.

What role do you think it has played for Costco sort of holistically?

It's played a very important role. Is it the most significant thing? I'd certainly say it's up there with the top three or four. I think the culture of the company is very, very important. Our logistics I think are fantastic. So there's certain things that we've done. Gasoline, I mean, we were so reluctant to get into the gasoline business, you wouldn't even believe it. Two guys kept coming to me and wanting to get into the gas business. They wanted to test it. And, of course, it was a vertical business. The people that ran the oil companies ran the business all the way down through the gas stations. So the pressure on making a profit was always very difficult. They had to come to me eight times to get me to even tie one place with a test. They thought some things were changing in the business and I warned them, I said, you better watch these things. Well, they were right. It turned out that they were successful right off the bat. I had turned them down so many times I couldn't take credit for it.

Narrator: The gasoline business took eight pitches to get through Sinegal, and Kirkland products across the board can take years to develop, often going through multiple iterations before getting the final approval.

Really the idea of Kirkland was around doing a private label that was high quality. Over many years and many different humans involved, how do you maintain that quality? What's the process?

You work on it on a continual basis. I use an analogy, you can't say people are our most important product and hang signs all over the place that say people are our most important product and then treat them like shit. Excuse me. If you don't mean it, it's reflected very quickly. The same thing is true about the quality of the products you're selling. Your customers or your suppliers are gonna see that you don't really mean it when you let them down on the quality.

The green ink process, I think it's called, it's the final approval step.

Yes, yes. I always have a green pen. And so the final approval on the products would come to me and I would initial it in green ink. Those were known as Green Ink Meetings because they got the green ink to proceed with it. It was as simple as that.

Narrator: While Kirkland is seen as a shining example of what a retailer can do with its house brand, it's not the only successful private label on the market today.

I mean, you can look at competitors like say Trader Joe's that is also well known for having nearly all products are private brand and a strong customer affinity for those products.

Great company.

Do you shop at Trader Joe's?

I try not to. I go in there because I wanna see how many Costco customers are in there.

But they are pretty good with private label.

They're fantastic. They're a terrific company. You could identify a lot of different things that they do, including the culture of the company and see why they're successful.

Did you think about work-life balance when you were running Costco?

Well, you know, I think there are three things that you have to worry about. Worry about your livelihood, you gotta worry about your health, and you gotta worry about your family. Anything else you do is a bonus if you're able to sneak it in there. I think to be successful, you gotta be pretty focused.

So Costco was your hobby?

Absolutely, so was FedMart for a period of time, and so was the Price Club for a period of time. I always loved what I was doing.

Narrator: While Sinegal stepped down as Costco's CEO over a decade ago, at 89 years old, he still comes into the office some Tuesdays, a work ethic mirrored in his mentor Sol Price.

If you can find a mentor like I had, like Sol Price, it can make a significant difference in your life. I had a falling out with Sol and Robert at one point

Over what?

Because I left because we were gonna start Costco. He was not very happy with it.

But my memory is you offered to sort of do it in partnership with him to some extent originally, right?

He asked about that, but it was pretty obvious that it was not gonna work. We were never gonna have the latitude to start the business and do the business the way we wanted to. He was gonna always interject. So the conversation didn't take more than a day's worth of thinking. But we got back together. I had dinner with Sol just three nights before he died. And, you know, I have described Sol as probably the smartest person I've ever known. And I've been lucky enough in life to meet a lot of smart people and I would still rate him as the smartest.

Costco’s Co-Founder on the Making of Kirkland Signature’s Success

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