It’s Top Distributors Week here at Modern Distribution Management — the week in which we air our webcast that analyzes our 2023 Top Distributors Lists, and when our accompanying feature goes live in both the web listings format and in the downloadable PDF format. Both are available for all readers to view at www.mdm.com/top_distributors/.
I hosted our Top Distributors webcast on June 8, and it was a fun hour diving into the methodology behind this massive project and analyzing what shaped this year’s lists that rank North America’s largest distributors of industrial, commercial and building supply products by their annual revenue.
I was joined on the webcast by guest analysts David Gordon of Channel Marketing Group and Craig Webb of Webb Analytics — who serve as valuable validation sources for our lists of Electrical, Data & Security products distributors and Building Materials & Construction products distributors, respectively.
The webcast also featured showing my short June 2 interview with Grainger Senior Vice President Paige Robbins, who is the President of the Grainger Business Unit. Grainger took the top spot on our Industrial Distributors lists for an eighth straight year and appeared on 10 of our 17 total lists in a showing of the distributor’s widespread scale in the markets that MDM covers. She touched on Grainger’s diversification strength and what the past year has been like for the company.
Our webcast included two-minute audio segments from MDM’s recent interviews with BlackHawk Industrial President & CEO John Mark and Kimball Midwest President Patrick McCurdy III, who both touched on their company’s major revenue jumps in 2022.
MDM CEO Tom Gale also provided his analysis of this year’s Top Distributors feature and key market factors.
If you weren’t able to tune in live, I highly encourage you to go watch the webcast on-demand, as it provides plenty of context that you will find helpful as you peruse our many rankings lists.
Below, I’ve included the Top Distributors introduction that you’ll find in our PDF feature. Likewise, it details our methodology and a few of the top market factors that shaped 2022 for these distributors, as our rankings reflect these companies’ revenue as it stood at the end of their fiscal 2022.
Questions? Comments? Don’t see a company on our lists that you think should be included? Feel free to let me know at firstname.lastname@example.org. In the meantime, go check out our Top Distributors lists, and I hope you find them to be a valuable snapshot into those industries’ biggest market movers.
MDM Executive Editor
Distributors Rode the Inflation Wave to Big 2022 Gains
Welcome to Modern Distribution Management’s 2023 Top Distributors feature, now in its 14th year. Here, you’ll find our rankings of North America’s largest distributors of industrial, commercial and building supply products, based on their 2022 fiscal revenue within 17 different industry verticals. More than 140 different companies are represented.
Before you dive into our rankings in the pages ahead, I want to set the stage for the key factors that shaped this year’s feature and key context you should know when perusing our lists.
Distanced from the physical danger zone of the COVID-19 pandemic during 2020 and 2021, distributors had to contend with several key market drivers in 2022. Supply chain pressures continued to improve, but were still far from the ‘normalcy’ seen pre-2020; the labor market remained very difficult to navigate, illustrated by commentary in MDM’s surveys that consistently noted only marginal improvements — if any — in distributors’ talent recruiting and retaining efforts; digital transformation remained in acceleration mode, with distributors navigating numerous technology tools, including artificial intelligence, to maximize efficiencies, improve the customer experience and do more with less.
While supply chain and labor were headwind factors, they were more than counterbalanced by a major tailwind: inflation. Inflation continued to rise throughout 2022, albeit at a progressively slower pace as the year went on. The U.S. Producer Price Index peaked in March 2022 at an 11.7% year-over-year increase and ended the year up 6.4%. Distributors were happy to pass along higher goods prices to customers, many of which expected such increases. This resulted in little friction between both parties, and distributors were happy to ride the inflation wave to considerable year-to-year revenue gains in nearly all industries we cover here at MDM.
2022 was a second-straight record year for distribution revenues. According to the U.S. Census Bureau, the overall U.S. wholesale trade sector had full-year sales of $8.0 trillion, up 13.1% from 2021’s $7.1 trillion and far ahead of the $5.8 trillion and $6.1 trillion seen in 2020 and 2019, respectively.
Of course, inflation played a major role in 2022’s year-to-year jump. Starting in August 2022, the Census Bureau began providing monthly “Real Dollar Estimates” of wholesale sales as an experimental product, with those figures factoring in price indexes from the Bureau of Labor Statistics to show estimated sales when inflationary pricing factors are removed. Their December 2022 figure showed total wholesale trade “Real” sales were $594.8 billion, compared to overall reported sales of $932.9 billion. This indicates that the reported total was about 36% “inflated” by the pricing environment at that time, though there are other factors in that.
Throughout most of 2022, distributors repeatedly heard economists voice concerns about a looming economic or industrial slowdown. But as we saw, any such slowdown on the industrial and commercial supplies side pushed further out, as most economists now expect a downturn to arrive in full around late 2023 and early 2024. One wholesale segment that did see a 2022 slowdown was building materials/construction supply, though not until late in the year, and it wasn’t enough to prevent distributors on our rankings list of that industry from seeing considerable revenue jumps vs. 2021.
While more executives, consultants and economists acknowledge they expect industrial demand to wane as 2023 moves on, there remains considerable market optimism at the mid-point of this year, as distributors continue to cite long backlogs and strong orders as we entered June.
But for now, this feature takes a look back at the year that was 2022 for distributors in the form of MDM’s 2023 Top Distributors lists. It’s a bear of an editorial research project, but one we look forward to producing each year for our audience. It serves as a valuable snapshot of who the top players are in the various distribution industries we cover.
We always strive to improve this feature every year, and while perfection may be unattainable, I think these are our most useful Top Distributors List yet.
Like last year, this is perhaps the most important part of this introduction. Starting in 2022, MDM put a heightened emphasis on ranking companies by their industry-specific revenues, rather than total revenue. Because of this, you’ll see some distributors with smaller total revenues ranked higher than others within the same industry.
Take Grainger, for example. By its total 2022 revenue of $15.2 billion, Grainger is North America’s largest industrial distributor by MDM’s definition of an ‘industrial’ distributor. But when digging into its financial reports and product sector breakouts, we find that it’s also one of North America’s top distributors of electrical, HVACR, plumbing, power transmission, fluid power, fasteners and safety products. This why Grainger ended up appearing on 10 of our 17 industry lists — the company’s revenue within each of those segments is large enough to warrant a spot. But while the revenue figure you see on our lists is the company’s total revenue, its ranking is based on its revenue within that specific industry.
That revenue breakout is the most painstaking part of our research process, as it involves a lot of hair-splitting and triangulation to find accurate revenue totals. It makes this feature all the more challenging, but we do it because it results in a more accurate list and levels the playing field.
This explains why you’ll find some companies charted on industry lists outside of their “core” offering. For example, Graybar is best known as an electrical products distributor, but its industrial products sales were large enough to chart at No. 20 on our Industrial list. It’s also why Ferguson appears on our lists for Industrial, Building Materials/Construction and Safety, besides its hallmarks of Plumbing, HVACR and Industrial PVF.
Data for MDM’s lists of Top Distributors were based on 2022 revenues, either reported or estimated by MDM’s researchers. In most cases, we used fiscal 2022 revenues, but in some cases, MDM uses calendar-year revenues for a more accurate comparison. To normalize the way we formulate the rankings, we include total company revenues, rather than break out individual sector revenues. Companies were asked to provide data about revenues, with information supplemented by SEC filings and publicly-available information. For companies that don’t share revenue data, MDM estimates their relative position in its list based on the best available industry resources and information. Trends summarized in this report were developed through a combination of MDM research, industry surveys and interviews with industrial distributors and their supply chain partners within the past six months.
Five of MDM’s Top Distributors industry lists are shown unranked and instead in alphabetical order: Safety, JanSan, Plastics, Gases & Welding and Specialty Adhesives. For many distributors, their revenue in these industries are either a small part of their overall revenue that they didn’t break out, or a lack of enough confirmed revenues would have made accurately ranking them too difficult. However, through consulting with industry sources and best available information, we were still able to identify the top companies in those categories.
Where’s Amazon Business?
MDM readers who have regularly seen our Top Distributors lists over the years may notice a key company that we didn’t include on our 2023 lists: Amazon Business. The B2B supplies marketplace appeared in the top six of our Top Industrial list since first appearing in 2018, including at No. 2 in 2022. Amazon Business has been the elephant in the distribution room ever since AmazonSupply launched in 2012. And while the platform is certainly competing directly with industrial, commercial and building supply distributors for market share to a tune of $35 billion in 2022 revenue, we made the decision to omit it from our lists due to Amazon Business’ very unique business model. It was the only company on our lists in previous years that couldn’t be described as a distributor. We do, however, include The Home Depot’s Pro Institutional unit, which directly operates via distribution sales, services and logistics.
Keep in Mind
As you peruse our Top Distributor rankings across 17 different verticals, it’s important to remember that the way we put them together is not an exact science and apples-to-apples comparisons are hard to come by in today’s age of diversification. While our editorial team made every effort to extract revenue information from the non-publicly-traded distributors listed here, many companies are understandably private with that information. We are happy to keep that revenue information strictly private and only use it internally for rankings, which an increasing number of companies opt for each year. So, when you see “NA” listed for revenue, it likely means that revenue figure was confidentially given to MDM and to not be published.
Even with that understanding, a smaller number of companies would rather not budge on sharing their revenue. Given the amount of large distributors that have been privately acquired in recent years, this isn’t a surprise. Once a distributor goes private, we know they’re likely to play their financials closer to the vest. In those cases where revenue isn’t shared, our team triangulates with respected industry experts and the best available information to estimate revenues and rank distributors appropriately.
As noted above, there’s no perfect way to do these rankings. I’m sure there are MDM readers who will disagree with where and how certain companies are slotted on our list, and that’s OK, especially given our focus on industry-specific revenue. I’m very open to comments and suggestions for how we can improve this feature going forward.
Modern Distribution Management