The competitive landscape for distribution is simultaneously becoming more and less crowded. Competitors from outside the industry continue to target the opportunities they see in the B2B space, as demonstrated by last week's announcement by Lowe's that it would acquire Houston, TX-based Maintenance Supply Headquarters, a distributor of MRO products to the multifamily housing industry.

The M&A market in distribution is active but attractive targets are becoming sparser in many sectors, according to David Gordon, president of Channel Marketing Group, in a blog on electricaltrends.com. "While most business are available for 'a price,' many of the 'acquirable' mid-sized ($100-300M) companies have been acquired," Gordon writes.

Last week's move by Lowe's is just the latest in a string of big-box store acquisitions. In February of last year, Lowe's announced it would acquire RONA Inc., a Canadian retailer and distributor of hardware, building materials and home renovation products. And then in November, it acquired Central Wholesalers, an MRO distributor in the Mid-Atlantic and Northeast.

In 2015, The Home Depot acquired Interline Brands, No. 16 on our Top 40 Industrial Distributors list at that time.

The wholesale distribution market in the U.S. (estimated at $5.3 trillion) remains highly fragmented. But that may be part of what makes it an attractive target for companies that have traditionally been focused on retail establishments like Lowe's and The Home Depot. Acquiring already established companies makes it much easier to hit the ground running.

Upon the close of the Maintenance Supply Headquarters transaction, combined multifamily MRO business for Lowe's will include 16 distribution centers throughout the nation generating more than $400 million in annual sales – placing it in the middle of our Top 40 Industrial Distributor list. (The 2017 list will be released June 25.)

Smaller companies may still find themselves targets of acquisition by the big fish in the market, but Gordon surmises that we may also start seeing a different trend: more mergers between smaller companies to create their own scale and expansion.

There's a lot of potential still in the market. Private equity buyers have capital to deploy, large distributors still want to acquire growth, and big boxes are not shying away from the B2B market. But smaller, more independent moves, such as the merger between Power-Flo Technologies and Auburn Armature (the case examined by Gordon in his blog), may alter the landscape, as well.