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Home » Blogs » Management & Strategy » Grainger Growth Plans and Patterns
Thomas P. Gale

Grainger Growth Plans and Patterns

By    Thomas P.  Gale 
September 10, 2009 Comment (1)
More about:  Distribution Management & Strategy,  Facilities Maintenance (MRO) Distribution,  MDM Blog,  W.W. Grainger
Grainger is setting the example for distributors looking to shake off defensive mode.
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This part of the business cycle historically is where we see distributors shake off defensive mode and stake out their market plans. For MDM, it tends to be a great time to gain visibility into how top management is reading market opportunities and the areas they plan to focus on for growth. Expect to see much of our coverage the next six to 12 months focus on how distributors in the different verticals are refreshing their strategy and execution.

Case in point: W.W.Grainger recently held a distribution center tour in New Jersey. Some comments were outlined by BB&T Capital Markets analyst Holden Lewis and his team in their weekly newsletter. (Get on their mail list for some great insight on industrial and commercial equipment markets as well as a select group of distributors they cover.)

Among the interesting insights in this report, which can be downloaded below:

  • Grainger is benchmarking other distributors, some of which have 500,000 SKUs, to explore further product expansion. BB&T notes it is contributing 200-300 basis points to annual sales growth.
  • Grainger's global sourcing is now 11 percent of sales and rising.
  • E-commerce is now 24 percent of sales with potential for eventual 40 percent.
  • Managed inventory programs (both vendor and customer) are small but growing.
Remember when Grainger threw millions of dollars in the 1990s into producing the first large-scale catalog on CD-ROM? Feels like ancient history perhaps, but little more than ten years later their e-commerce sales are about a quarter of their business. That tends to be higher margin and higher average order size business. Not a bad transition from a ten-pound catalog that cost a lot to get onto a lot of order desks in America.

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  • Alan September 16, 2009 9:22 AM
    Grainger also poured a lot of cash into e-commerce development during the same time they churned out that CD-ROM. P.S. Would be nice if the commenting system didn't display email address for spam harvesting bots. :-)
    Post a Reply   Report as Offensive
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