E-Commerce a 'Bright Spot' for Grainger's 2Q - Modern Distribution Management

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E-Commerce a ‘Bright Spot’ for Grainger’s 2Q

Grainger continues investing online, but closes 27 branches.

Grainger's e-commerce platform continued to be a bright spot in a "difficult industrial environment," according to Jim Ryan, president and CEO of the Chicago, IL-based distributor. As a result, investment in e-commerce – something Grainger has long been seen as a leader in – continues to be a high priority.

Grainger reported sales for the second quarter of $2.6 billion, a 2 percent increase over the same period a year ago. Profit decreased 22 percent to $173 million. Excluding acquisitions, organic sales decreased 2 percent.

Single channel online businesses saw topline growth of 34 percent, according to Ryan, “a bright spot for the quarter.” For the first half of the year, e-commerce represented 46 percent of sales, up from 40 percent a year ago.

"We're investing in our supply chain, our e-commerce capability, our onsite services and tools to make our sales force more efficient," said Laura Brown, senior vice president, communications and investor relations, in a call to discuss the second-quarter results. "In the United States, in the quarter, we launched a new inside sales team, which has 275 representatives calling on our medium-sized customers."

But in order to fund that investment, the company has also undertaken measures to streamline operations elsewhere. During the second quarter, Grainger closed 27 branches in the U.S.

"We initiated $6 million of restructuring costs in the United States," Brown said. Those immediate costs were offset by the sale of real estate associated with closed branches.

Beyond the industrial economic environment, Grainger's Canadian business, which operates under the Acklands-Grainger banner, saw negative impact from the fires in Fort McMurray, Alberta. Daily sales in Alberta, which accounts for about one-third of Grainger's Canadian sales, were down 28 percent in the second quarter.

Despite the challenges, Ryan remains optimistic about Grainger's trajectory, even as more competitors target Grainger's online stronghold. “What I don't worry about is our market, both in the U.S. and worldwide,” he recently told Crain's. “There's still share to be gained.”

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