MDM spoke with Seth Erickson, vice president of product merchandising for Grainger, about the $6.4 billion facilities maintenance distributor’s product expansion and private label strategies.
Chicago-based Grainger continues to add product to its portfolio, a long-term strategy to provide one-stop shopping for its customers. The strategy, says Seth Erickson, vice president of product merchandising, is driven by customer requests.
We have found that in MRO efficiency is king, and the more efficient we can make our customers, the more valuable we are to them,” Erickson says.
In fact, he says that as the economy slows, distributors and their customers must become more efficient and strategically reduce costs by consolidating purchases. “We want to be in a position to help them do that,”he says.
Grainger announced last week it added 44,000 products to its 2008 catalog. In addition to 30,000 new products in existing categories, the product expansion includes power-transmission products such as bearings, couplings, linear motion products and belts; raw materials products (a new area for Grainger), including metal and plastic sheet, tube and rods, rubber sheet and strip, and felt discs, cord, sheet and strip; and fleet maintenance products, including lift equipment, battery chargers and accessories.
Grainger’s 2008 catalog features more than 183,000 facilities maintenance products. In 2007, the product line expansion program accounted for 2 percentage points of revenue growth in the branch-based segment.
So how does Grainger maintain service and knowledge levels while expanding its product lines?
“Training programs tie into these product launches,”Erickson says. “We spend a lot of time preparing our customer service and sales people.”
Much of the product is sourced direct from manufacturers, but in some cases Grainger sources through other distributors -for example in fasteners and in raw materials.
Along with its recent product expansion, Grainger has launched a new private label, Tough Guy, a professional cleaning supplies brand. The product category includes products such as degreasers, disinfectants, foam and lotion soaps and dispensers and polyethylene trash containers.
“We’re excited about Tough Guy,”Erickson says. “We wanted to put together a powerful and recognizable brand, and so far it’s been well-received.”
Grainger has private labels in most of its product areas, which comprise about 22% of its overall sales.
Erickson says Grainger chooses private label offerings that will complement its manufacturer brands.
“Either there’s a gap, or we could improve our offerings by offering more tiers,” he says. “We do private label when it’s truly going to help our customers.”
Grainger plans to continue looking for opportunities to build out its current private label product lines, as well as develop new ones. It will depend on customer feedback, Erickson says.
In addition, the distributor will continue adding product to its catalog. “The key is we’ve listened to our customers,” Erickson says. “They want to have a broad line of products, and we are well-positioned to do that.”