What Can Regional Distributors Learn from Grainger about Diversification?

In spite of an unstable economy in 2013, Grainger experienced a 6.6 percent increase in yearly sales, thanks to its strategy of diversifying distribution customer markets, according to an article in Modern Distribution Management.

As a local or regional distributor, it may be hard to compare your organization to Grainger, which has become more global and therefore, concerned with currency fluctuations and other variables that you may not have to worry about.  So what can you gain from understanding how Grainger is succeeding?

Well, the principle that has supported Grainger’s growth and profitability can be duplicated in any distribution company – that’s diversification.  Grainger’s diverse customer markets allow for the transfer of resources to areas of need.

If you are like most distributors, than your are expecting around 4 to 5 percent growth in 2014 along with slight price increases (1 to 2 percent) and slower growth in demand (2 to 3 percent).  In order to achieve sales increases beyond rising prices and rising demand, you will need to increase market share.  Diversification is a proven way to accomplish this.

That’s not to say that diversification isn’t a challenge.  The saying goes that it is four times harder to sell a new product line than one you’re already handling.  Grainger worked hard and invested much to achieve its well-diversified position.

If you need help assessing your distribution strategy to see where you might have some opportunities for diversification, request a Distribution Strategy Assessment today.