Costco Gas
Costco’s iconic Kirkland Signature brand is now worth an estimated $86 billion, known for offering high-quality products at unbeatable prices. But what many don’t know is that one of its now-essential categories—gasoline—was something co-founder Jim Sinegal resisted not once, but eight times.
In a recent interview with The Wall Street Journal, Sinegal opened up about his decision-making process, the origin of Kirkland’s brand philosophy, and the pivotal choices that shaped Costco’s trajectory.
“I said no. Over and over.”
Despite being a trailblazer in retail, Sinegal was initially adamant about keeping gasoline out of Costco’s business model. “I said no the first time,” Sinegal recalled, “and then seven more times after that.” His reluctance was grounded in concerns over volatility, regulatory complexities, and whether selling gas truly aligned with Costco’s core value proposition.
“I just didn’t think it made sense at the time,” he said. “We were focused on what we knew best—high-quality merchandise at low prices. Fuel was a different beast.”
It took relentless internal advocacy and data showing that gas could drive membership retention and in-store sales to change his mind. Eventually, Sinegal greenlit the move, and Kirkland gasoline went on to become one of the most successful additions to Costco’s offerings.
The Rise of Kirkland Signature
Sinegal also delved into how Kirkland Signature came to life. Launched in 1995, the private-label brand was a response to growing vendor costs and a desire to give customers more value. The formula was simple but radical: offer national-brand quality—or better—at consistently lower prices.
“We don’t just slap a label on something,” Sinegal emphasized. “We travel to factories, we test products ourselves, we demand improvements.” Whether it’s the famous Kirkland vodka, cashmere sweaters, or now, gasoline, each product must meet Sinegal’s high standards.
Leaving FedMart and The Price Club
Before building Costco, Sinegal cut his teeth at FedMart and later The Price Club—both considered precursors to the modern warehouse model. He spent nearly three decades refining the idea of low-margin, high-volume retail. His departures from both companies were driven by disagreements over vision and leadership direction.
“I knew what I believed in—fairness to employees, honest pricing, and putting the customer first,” he said. “If I couldn’t do that, I wasn’t interested in staying.”
A Philosophy That Lasts
Even in retirement, Sinegal keeps a watchful eye on the brand he built. While he’s no longer in the executive seat, the principles he embedded—low markups, a relentless focus on quality, and employee-first culture—remain central to Costco’s DNA.
He’s also candid about work-life balance, an area he admits he didn’t always get right. “I worked hard—probably too hard. But I loved it. The key was surrounding myself with people who shared the mission.”
From Reluctance to Reinvention
Today, Kirkland Signature gasoline is a prime example of how sticking to a core philosophy—while still being open to change—can pay off. What started as a hard “no” from Sinegal eventually became a strategic yes that added billions in value.
In hindsight, even Sinegal admits it was the right move. “Turns out, I was wrong eight times,” he laughed.
