Daniel Schwartz

Schwartz highlights the "share gain of private label" and explicitly praises Costco's "Kirkland" as a fantastic brand that disintermediates suppliers. This is the inverse of the KHC thesis. Retailers that own the customer relationship have immense pricing power and margin expansion opportunity by replacing branded goods with proprietary private labels. Long the disintermediators. As inflation presses consumers, the shift to private label (Kirkland/Great Value) accelerates, benefiting the retailers at the expense of the suppliers. Valuation concerns (COST is historically expensive); regulatory scrutiny on retailer pricing power.

Schwartz highlights the "share gain of private label" and explicitly praises Costco's "Kirkland" as a fantastic brand that disintermediates suppliers. This is the inverse of the KHC thesis. Retailers that own the customer relationship have immense pricing power and margin expansion opportunity by replacing branded goods with proprietary private labels. Long the disintermediators. As inflation presses consumers, the shift to private label (Kirkland/Great Value) accelerates, benefiting the retailers at the expense of the suppliers. Valuation concerns (COST is historically expensive); regulatory scrutiny on retailer pricing power.