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Commentary: Market Leading Strategies for 2020

Commentary: Market Leading Strategies for 2020

August 26, 2019

Our latest issue of MDM Premium — exclusively for MDM Premium members — includes a snapshot of our annual ranking of the largest industrial and construction products distributors in North America (Top 40 industrial distributors), as well as five profiles of select distributors from this list – MSC Industrial, Graybar, Vallen Distribution, Global Industrial and Johnstone Supply

There’s a reason we combine the quantitative listings with more qualitative strategic profiles of how some of those on our lists are defining their success and framing their future. Revenues are an important gauge of success, but there are many paths to how lasting growth strategies are built. Both perspectives are important.

This is the 10th year we have ranked the top distributors, and this year includes more than 150 companies across 15 product categories. And as I note in the article on page 4, digital is shifting the landscape. While it’s easy to focus on the explosive growth of Amazon Business, I believe the more important trend beyond the continued expansion strategies — by product, territory and customer segments, largely through digital platforms — is how market leaders are strategically translating digital disruption into digital transformation.

Market Leader Profiles

As digital becomes a more critical competitive capability — particularly at the top end of the market — it’s easy to focus too much on the technology aspects, and not enough on the strategic underpinnings. The profiles in this issue have some common denominators that hold valuable lessons for distribution executives in any size company. You’ll see shared threads in the way these companies are moving sales models to more consultative roles to deepen customer engagement and fight commoditization. Or how they are building seamless customer experience as a competitive differentiator. Or customized service solutions in brutal commodity markets.

Perhaps most important, these companies have discipline around process, metrics and change management. These elements are the toughest to sustain in challenging times but are vital to long-term success. 

I expect our annual Top 40 list will hold some dramatic changes over the next few years — through consolidation, emerging disruptors and, in some cases, late adaption to disruptive market transitions. But as the profiles in this issue illustrate, market leaders have clarity about how to evolve and translate the historical value they have provided customers into a future growth strategy. That’s the true definition of market leadership that goes far beyond measuring the size of annual revenues.

Finally, as you view the top distributor lists, note that any ranking of distribution companies is a highly qualitative exercise. While there may be very similar product portfolio comparisons in any given product category, the broader list of the Top 40 industrial distributors needs to be viewed in a very broad context. There are many tangential competitors in the list. Just like the customer markets served, these top 40 compete across a lot of fragmented niches. It’s also important to note that the companies on our industrial list also appear in our other product category lists. For example, W.W. Grainger appears in multiple product category lists because of its scale of broadline product coverage.

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