6309 Monarch Park Place, Suite 203
Niwot, CO 80503, USA
Phone (303) 443-5060
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Who's right? On the one hand, customers don't want to waste time on traditional show-and-tell sales calls. They don't need the same level or type of information and perspective that a good salesperson has traditionally delivered. So why is Grainger investing in getting up close and personal with customers in the face of a self-service trend that has moved from restaurants to gas stations to banks to' hardgoods distribution?
The three-year sales growth chart here tells the story. Grainger has grown its national and government accounts in the past three years. It has lost ground at its traditional local (i.e. small) accounts. This is a highly fragmented market. And on the industrial side it is getting smaller by the day in many U.S. markets. So Grainger can focus some sales effort to feed its user-friendly electronic presence, but not necessarily on traditional industrial markets. The commercial side has much more upside ahead.
So by throwing more feet on the street in a more targeted fashion, Grainger can shore up its share of mind with this fragmented segment by making its sales people a living, breathing extension of its catalog. Who ya gonna call? The odds get better if you increase your annual contacts with a customer.
Grainger historically has said its primary competition is the small independent industrial distributor. That will continue but this most recent realignment clearly refocuses into growth areas such as the insitutional and commmercial contracting markets. So a logical conclusion is that the competitive front is beefing up against the likes of Hughes Supply and Interline Brands.
Two big questions for Grainger as it shifts field sales focus. First, can it field the knowledgeable and consultative sales person who can compete with the local distributor who has had a much closer relationship historically with these small and mid-size customers? Second, are there enough customers to make this work? If this were a traditional recovery where all boats start rising, customers grow and markets get bigger, then the answer is yes. But this is shaping up (for 2004 at least) as a zero-sum gain recovery. Grainger and everyone else has to claw for market share from competitors. Raising the quality of customer service and the depth of the relationship is a great way to gain share.
But the key for any distributor ahead is in the quality of these customer contacts. Customers don't need sellers; they need solvers. That's a clich', but the meaning is shifting as markets shrink and companies look to do more with fewer employees. Do you field consultants who read a customer's pain points and have the flexibility and power to put together a different and better approach? That's where the competition is headed in local markets. Those who invest in training and tools for these account managers will gain share, regardless of size.
Grainger has the electronic, self-service and logistics pieces of the puzzle in place. They are pretty darn easy to order from and reliably get a broad product spectrum. Can it train 1,600 sellers to help customers solve problems with product recommendations from a catalog with 82,000 products? And for the growing numbers of customers who are e-savvy and want to self-serve, will they even want more contact if they are seeking lowest total procurement costs?