You can generalize that consolidation has been the big story in 2006, with The Home Depot at center stage, but that would be missing the bigger picture. The real story is how quickly the world has become smaller, flatter how North American markets have been impacted by global shifts, induced by customers, competitors, suppliers, or all three.
Distributors have been in the best position to realize the observations of the best selling book of a few years ago that coined the term (Must read: The World is Flat: A Brief History of the Twenty-First Century, by Thomas L. Friedman.) Consider the rankings in the U.S. in 2003 and now.
London-based Wolseley, the $25-billion global distributor of building materials, plumbing and HVAC supplies, tops a list that a few years ago had Grainger as the largest, with about $4 billion in revenue at the time. This year Home Depot Supply will come in second with roughly half the revenues of Wolseley. Third is fastener distributor W
rth of Germany.
This has not happened overnight. There is a list of European distributors that have acquired and built their holdings in North American markets over a decade: Hagemeyer, Sonepar, Rexel in addition to those above. Truth be told, the rankings are more about perception and bragging rights in many ways.
The real stories, as noted in this issue’s lead article, take place in each individual market. That’s why MDM reports not just the deals, but what innovative distributors regardless of size are doing to adapt, to make their own rules, to gain competitive advantage. Battles for market share in 2007 will focus on how well suppliers can define their value for customers. There will be increasing opportunities to differentiate in markets that continue to consolidate.