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Home » Commentary: Grainger Shakes Up Sales & Market Strategy

Commentary: Grainger Shakes Up Sales & Market Strategy

July 25, 2004
More about:  Facilities Maintenance (MRO),  Management/Strategy,  Sales & Marketing,  W.W. Grainger
W.W. Grainger is focused on changing the way it has traditionally done business. It has announced a few key areas where it sees gaining competitive advantage. Primary targets are the customers of independent distributors in what it has identified as high-potential markets. St. Louis and Tampa are the current beachheads. See page 6 in this issue for details on how it plans to grab some share through a rejuvenated salesforce and branch support.

The company is putting money where its mouth is. Grainger has invested $200 million in its distribution centers and network over the past few years. It added one million additional square feet in capacity. Nine distribution centers now replenish branches daily and ship product to customers same day for next-day delivery. The company says it ...

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W.W. Grainger is focused on changing the way it has traditionally done business. It has announced a few key areas where it sees gaining competitive advantage. Primary targets are the customers of independent distributors in what it has identified as high-potential markets. St. Louis and Tampa are the current beachheads. See page 6 in this issue for details on how it plans to grab some share through a rejuvenated salesforce and branch support.

The company is putting money where its mouth is. Grainger has invested $200 million in its distribution centers and network over the past few years. It added one million additional square feet in capacity. Nine distribution centers now replenish branches daily and ship product to customers same day for next-day delivery. The company says it allows them to give better service to customers more efficiently.

Grainger says improvements to the new logistics network enabled it to take more than $100 million in inventory out of the system, with higher turns and improved product availability. Grainger's goal isn't to have the most products, but solve the most problems with the fewest products. Grainger anticipates seeing a $10-million operating earnings benefit this year, or a $25-million improvement over 2003, and another $10-million improvement next year. Cash flows from the project are expected to be positive by the end of 2005. Grainger says it is already seeing a 25 percent improvement in productivity and expects to see a 50 percent total improvement for the project overall.

The devil is always in the details, but there are signs that some culture shifts are taking place at a company that has traditionally played it safe. It's worth watching how their efforts play out in its selected markets.

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