I think both. I think the private label or controlled label, as long as it’s quality, is going to become a bigger part of the business because I think, more and more, brands… not so much in the non-food that they’ll be big, because brands are still very important because there’s so much advertisement out there on brands.
Austin: On the foods end?
Jelinek: No, non-foods. But on the food part of the business, I think more and more if there’s trust in the house that sells it, there’ll be trust in the brand. I think that’s one of the things that we’ve got going for us, that we’ve got trust in there in the Kirkland Signature name.
If you look at that name, it’s just not in a few items. That Kirkland Signature is from diapers to luggage to meat to vitamins. It’s a pretty brand name that covers a lot of merchandise, so you have to be careful to make sure that you protect the integrity of every item that you sell, so you don’t lose the reputation on that Kirkland Signature brand.
Austin: Makes a lot of sense.
Jelinek: But we’ve been able to protect it, and I think there’s a lot of confidence in the Kirkland Signature. When we first went to it about 22 years ago, it was very slow, but now anything that we put Kirkland Signature brand on, people are not concerned about trying it.
Austin: Do you see any other big paradigm shifts in retail, that we didn’t talk about, just as you observe the landscape?
Jelinek: You know, like I said, I think you’re going to probably see a lot more organics. I think people, particularly depending on what economic level they are, are going to buy healthier, cleaner ingredients. I think organic produce is very big for us.
The problem is, if we just dealt in organic produce, we would never have enough produce to get by in a given week, let alone a year. It’s all about availability. I think over time you’ll see, probably, more production being shifted to organics, but that’s going to take time.
Austin: How do you personally evaluate the success of Costco?
Jelinek: I think there’s a couple things. You can evaluate… success is a lot of different things to a lot of different people. I think if you look at it, that if you can continue to provide value to the consumer, your business is going to continue to grow.
If your business continues to grow, you’re going to provide opportunity for your employees. If you can provide opportunity for your employees, your employees are also going to be able to grow, they’re going to be able to support their families, and enjoy a better quality of life.
If those things happen, you will just continue to reward the shareholders. Our whole view is, I want to be able to go in the food court, 25 years from now when I’m old with my walker, and sit down and say, “I remember you when” to some of our employees.
That’s very important, to be able to create a company long term that’s going to continue to grow and provide opportunities. Yet you’ll do that by taking care of the member and creating them great value.
Austin: In the evaluation of Costco from your perspective, are there any metrics that you look at that investors may not necessarily be aware of? Same-store sales is one of the obvious metrics to look at in retail, but what do you look at internally, in evaluating Costco’s success?
