Grainger: 'Diversification Gives Us a Great Defensive Position' - Modern Distribution Management

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Grainger: ‘Diversification Gives Us a Great Defensive Position’

Grainger Americas Group President talks about the benefits of distributor's diverse end-markets.
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During Grainger’s Annual Analyst Day earlier this month, Americas Group President Court Carruthers said that despite the “difficult economic environment” over the past year, the distributor was pleased with its results. Daily sales were up 6.6 percent year-to-date in October.

The growth has been driven by strength in manufacturing, state and local government, commercial markets (mainly transportation) and natural resources.

About 17 percent of Grainger’s U.S. sales are to government, with 75 percent of that in state and local and 25 percent to federal.

“We have clearly had significant headwinds in the federal government given all the issues with sequester and shutdown,” Carruthers said. But state and local spending has offset that, he said.

Carruthers said that Grainger has been able to remain strong despite the ups and downs in the economy because it has purposely diversified its customer markets. “The benefit we have is because we have so much diversity in customer markets we have the ability to shift resources to those areas which are growing,” he said.

In 2009, the distributor dedicated a lot of resources to federal government sales but has since de-emphasized that in favor of manufacturing and state and local government markets in recent years.

“Diversification gives us a great defensive position,” Carruthers said.

By the same token, the distributor’s newly formed Americas business makes it easier for the different countries to share expertise in end-markets. For example, Grainger has brought experts from its Canadian business to the U.S. to aid in better serving the growing natural resources markets. And the U.S. business has historically done well with health care and hospitality, Carruthers said, so the distributor is focused on sharing that knowledge with other regions.

Grainger shared its end-market sales breakdown in the analyst day presentation:

  • Commercial – 20%
  • Heavy Manufacturing – 19%
  • Government – 17%
  • Contractors – 12%
  • Light Manufacturing – 12%
  • Retail – 6%
  • Resellers – 5%
  • Other – 5%
  • Natural Resources – 3%

Hear the full Grainger presentation at www.grainger.com.

Read about ongoing diversification across the wholesale distribution industry in this 2013 Trends Report article: Wallet Share, Demands Drive Accelerated Channel Convergence.

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