Industrial Supply Wholesalers Industry Profile

The US industrial supply wholesalers industry includes about 8,000 establishments (single-location companies or branches of multi-location companies) with combined annual revenue of about $50 billion. Major companies include WW Grainger, Applied Industrial Technologies, MSC Industrial Direct, McJunkin Red Man, and Industrial Distribution Group. The industry is concentrated: the 50 largest companies generate about 50 percent of revenue.

COMPETITIVE LANDSCAPE

Demand is closely tied to the level of US manufacturing production. Because many operating costs are fixed, profitability depends on operational efficiency, particularly inventory management. Smaller companies can compete effectively by providing specialized supplies or superior service (delivery service and product expertise). Large distributors with a network of warehouses and outlets can maintain a lower inventory/sales ratio. The industry is capital-intensive: average annual revenue per worker is about $700,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Industrial supply companies sell a large number of products that industrial customers use for maintenance, repair, operations, and production (the industry refers to itself as the MRO supply or MROP supply industry). Major products include abrasives, strapping, tapes, and inks (30 percent of sales); mechanical power transmission supplies (17 percent); industrial containers and supplies (17 percent); industrial valves and fittings (13 percent); and bushings and bearings (10 percent). Other products include tools, motors, fasteners, and cleaning supplies. Large distributors may carry 500,000 different items (stock keeping units - SKUs). Products are grouped into product lines. Wholesalers are often referred to as either "general line," meaning ...