This issue marks our annual update of the top 40 largest industrial distributors and the largest distributors in 11 other sectors. The big are getting bigger. That is not entirely surprising given the economic rebound. Predictably, those distributors dependent on the construction industry are having the hardest time regenerating their growth rate. Ferguson/Wolseley Canada, still No. 1 no the Top 40 list at $9.4 billion in annual revenues, saw revenues shrink by more than 7 percent. HD Supply, No. 2 with $7.5 billion in annual revenues, grew just over 1 percent.
More importantly, our report on the state of the distribution industry goes beyond revenue size indicators. How can you not go deeper when the primary descriptor for wholesale distribution is fragmentation? The findings in MDM’s annual landscape report – the first articles are in this issue – show how wholesale distribution is becoming more complex.
This year, we expanded our analysis of product sectors from eight to 12. They are industrial, electrical, power transmission/bearing, fluid power, HVAC/plumbing, building materials/construction supplies, fasteners, gases/welding equipment, safety, electronics, plastics and pharmaceutical distribution sectors. Find lists and reports at mdm.com/marketleaders.
We identify the largest companies in each individual sector, but we also profile key shifts. This includes product line expansion and channel convergence. Grainger (No. 3) continues to increase SKUs and is using acquisitions as a growth vehicle. Others, such as Motion and Kaman in power transmission/bearing, are acquiring industrial supply companies. Of course some distributors have gone the other direction, keeping a strict focus on core competencies in an attempt to differentiate.
Size will always be the easiest metric, but not always the most meaningful. The lessons of the past three years have made that painfully clear to every distribution executive. If there were a way to accurately rank this industry by profitability instead of revenue size, our list would probably look different and may not correlate directly to revenues. That’s not taking anything away from the achievements of those on our lists. The quality of a company – from the leadership to those on the front lines – is also measured by how customers vote where to spend their dollars. That is the ultimate reality show in distribution.
Our editors survey and interview hundreds of executives throughout the year assembling the data and insight for this annual update.Thank you to all who have generously shared your knowledge and insight.
