Update 2/3/2017: Kirkland Signature 7.0 was recently released. Read reviews for the KS7 Costco hearing aids.
Costco has made a quiet entry into the Made-for-iPhone hearing aid market, selling its own Kirkland-brand iPhone-compatible hearing aids for $1,799.99 a pair. The new Kirkland Signature 6.0 hearing aids, utilizing technology from Big-Six hearing aid maker GN ReSound, can receive phone calls, music, podcasts and other audio directly from Apple iPhones, iPads or iPod Touch devices without requiring an intermediate streaming device.
With an aggressive price point for advanced iPhone-compatible features, the hearing aids are Costco’s latest move to expand its footprint in the global hearing-aid market. Once a provider of entry-level hearing aids based on older generations of technology, the “big box” retailer is now pushing up-market by offering higher performance products at attractive prices. Volume purchasing agreements and low-overhead “store-within-a-store” hearing aid centers have enabled Costco to gain market share by undercutting prices charged by independent audiologists.
It’s the second shoe to drop since 2014, when Costco disrupted the supply chain by inking a deal with industry leader Phonak to sell high-end hearing aids under a new Phonak Brio brand. Phonak experienced an immediate backlash from the independent audiologists accustomed to selling higher-priced Phonak hearing aids: in its 2014/15 annual report, parent holding company Sonova attributed a slowdown in first-half sales to loss of business from angry independents switching to Phonak competitors.
Sonova gave the issue special attention in its report to shareholders, stating that: “In the United States, sales in the commercial business initially slowed after the strategic decision to supply Phonak products to the innovative shop-in-shop concept at the retailer Costco, but then accelerated in the second half of the year to surpass the prior year’s level.”
Costco’s Made-for-iPhone hearing aids only went on sale in April, so time will tell whether independents will switch from ReSound as well. Industry expert Dan Schwartz, who was first to report on Costco’s ReSound iPhone deal, wrote that ReSound hoped to avoid a backlash by waiting until after AudiologyNOW 2015, the industry’s largest U.S. conference. But he predicted “an even bigger explosion than Sonova experienced last year” because the Costco hearing aids would be based on the same platform powering the highly popular ReSound Linx Made-for-iPhone hearing aids. He said ReSound’s recent Linx2 platform upgrade, now being sold by independents, does not provide enough of a performance advantage to compete effectively with the first-generation Linx technology that he said would be powering the Costco iPhone hearing aids.
Adding fuel to the fire, the $1,799.99 price Costco set for a pair of its Kirkland Signature 6.0 hearing aids is well below what many independent audiologists have been charging for the comparable first-generation ReSound Linx Made-for-iPhone hearing aids. And Costco is also offering at no extra cost its version of the slick ReSound iPhone hearing aid controller app — the Kirkland Signature Choice app — from Apple’s iTunes store.
Fear of a backlash from independent audiologists may be one reason Costco and ReSound decided to market the new hearing aids under the Costco Kirkland brand rather than under the ReSound brand name. And it may help explain why Costco is soft-pedaling the Made-for-iPhone features in Kirkland Signature 6.0 hearing aids. While ReSound trumpeted Made-for-iPhone as the most important feature of the new generation of hearing aids, Costco is marketing iPhone compatibility simply as a connectivity feature. It is not positioning the Signature 6.0 products as “Made-for-iPhone hearing aids” but rather describes their functionality on its list of features, then carries the small “Made-for-iPod-iPhone-iPad” medallion at the bottom of their marketing literature.
Downplaying Made-for-iPhone capability is a curious decision, as there is no doubt that the new technology is a great leap forward that has powered sales and growth in the industry. GN ReSound was first to market with Made-for-iPhone hearing aids and has attributed its recent financial success and market share gains to rapid acceptance of the new hearing aids, and it is clearly looking to Costco for future growth.
Only two manufacturers provide Made-for-iPhone hearing aid platforms, but both sell the technology through multiple brands. In addition to ReSound’s products, another GN ReSound subsidiary, Beltone, offers Made-for-iPhone hearing aids. The other Made-for-iPhone technology platform is from privately held Big-Six manufacturer Starkey Hearing Technologies, which sells through its Starkey, Audibel, Audigy, MicroTech and NuEar subsidiary brands. (Click here for a map showing all hearing aid manufacturers and brands.)
The Starkey Hearing brands, especially the popular Starkey Halo Made-for-iPhone product family, may stand to benefit from independent audiologists shopping for alternatives. But for now, parent holding company GN Store Nord is cashing in on GN ReSound’s Made-for-iPhone momentum, with fast organic growth rates driving its gains in hearing-aid industry market share.
“Q1 was a strong start to the year,” Anders Hedegaard, CEO of GN ReSound, said in the company’s financial report on April 29. “We were able to extend and strengthen our partnership with Costco and delivered 10 percent organic hearing instruments growth.”
And GN ReSound is expecting more to come. Calling Costco “one of the fastest-growing global hearing aid retailers,” the GN financial report said the transition from Costco’s Kirkland Signature 5 to the new Made-for-iPhone Kirkland Signature 6 was accomplished in all Costco’s stores, with Signature 6 stocking orders having a positive impact on GN’s financial results in the first quarter.