The 2020 Mid-Year Economic Update_long

Commentary: Other Global Players Echo HD Supply Moves

Home Depot Supply’s results for the second quarter are wagging some tongues. The company’s wholesale distribution business is on pace to exceed $11 billion in sales in 2006. Its second-quarter sales were 13 percent of Home Depot’s overall sales of $26 billion for the quarter. The company’s goal is to reach $23 billion in wholesale sales by 2010.


These numbers are worth considering. For 2006, Home Depot is likely to post sales near $100 billion, with its wholesale distribution division contributing somewhere in the neighborhood of 15 percent. When you consider the vendor commonality between the retail and wholesale divisions, you start to redefine the meaning of leverage.


From a competitive standpoint, the scale and pace at which Home Depot is changing independent distribution channels is breathtaking. But we have to consider that as part of a global trend. Britain-based Wolseley, which owns Ferguson and Stock Building Supply in North America, doubled its sales since 2001 from $10.4 billion to $21 billion.


To put that in a little more perspective, for decades W.W. Grainger has been considered the dominant force, at least the largest in terms of revenues. Grainger’s $4.6 billion in revenues in 2003 still topped most charts in comparing the various MRO sectors industrial, construction, facilities maintenance and institutional.


How does all this change business for an independent distributor in 2007 and beyond? There will be fewer, bigger players, operating across oceans, and potentially more elbow room for those who offer unique value in the smaller niches of this world. Consolidation inevitably breeds service losses for some customers, and that in turn creates local opportunity. That won’t change.

About the Author
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

By subscribing, you are agreeing to MDM’s Privacy Policy.

0

articles left

This is your last free article

Subscribe to MDM Premium today and get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events

2

articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

1

article
left

You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.