Grainger is North America’s leading broadline B2B supplier of maintenance, repair and operations (MRO) products. With subsidiaries also in Europe, Asia and Latin America, the company serves more than 3.2 million customers worldwide with products such as safety gloves, ladders, motors and janitorial supplies, along with services like inventory management and technical support.
OPI’s Heike Dieckmann speaks to Deb Oler, Grainger’s SVP and President of North American Sales and Services about the company’s evolution, its business model and how it intends to remain the go-to choice for MRO products.
OPI: Who are your customers – predominantly?
Deb Oler: Our customers range from small and medium-sized businesses to large corporations, government entities and other institutions. The value they find in working with Grainger varies depending on the size of their organisation.
Large customers, for example, are traditionally complex and value Grainger’s multichannel model and high-touch service. Medium-sized clients want competitive pricing and a relevant product choice. As a result, Grainger recently developed new price, coverage and service offerings for this segment.
Small customers, meanwhile, tend to purchase similarly to individual consumers. They value a simple, web-based solution to quickly identify and buy items at a competitive price.
OPI: How has your business model and your route to market evolved?
DO: It certainly has changed. We know businesses and institutions today are focused on becoming more productive, and one of the primary methods for driving better productivity is to reduce process cost. Increasingly, businesses have shifted from ordering through our traditional channels – such as over the phone or at branches – to online and online channels like Grainger.com, electronic purchasing platforms (EDI/ePro) and inventory management systems.
We have anticipated and evolved with these changes in customer buying behaviour. As a result, in 2016, more than 65% of Grainger orders originated via a digital channel and more than 85% of orders were shipped directly to the customer or made immediately available through online services.
Customers today can place orders online, on mobile devices, through sales representatives, over the phone and at local branches.
OPI: Please tell me about your retail operation. The OP big boxes in the US have varying strategies for retail. What’s yours?
DO: We believe one of our competitive advantages is our multichannel model that integrates our sales force, branches and customer service networks, online services and channels to get our customers what they need, when they need it. They can opt to have items directly shipped to them or pick them up from a branch or will call.
OPI: How much is Grainger involved in government contracts?
DO: We have a robust and dedicated government sales team meeting a wide array of mission-critical needs of hundreds of government agencies. Last year, sales to government customers made up approximately 14% of our sales.
OPI: Who are your main competitors?
DO: The MRO market is highly fragmented, which means our competitors vary by industry segment. Our advantages stem from our strong track record of providing superior service, technical product expertise and support to our customers. We are a company that focuses on creating value and we do that by:
- helping customers better manage their inventory and costs;
- taking cost out of the purchasing process through digital solutions and order visibility;
- consulting customers around their needs to address safety and energy management;
- having superior technical expertise and fulfilment capabilities on a very broad product range;
- leveraging our scale to ensure our service gets delivered at a competitive cost.
OPI: Given that the office products sector is increasingly embracing adjacent categories such as MRO/PPE and safety, what impact has that had on Grainger?
DO: We haven’t seen an impact at this point. That said, our focus is on serving our customers in the best manner possible and, over the past three years, Grainger has invested heavily to configure its business to meet their evolving needs.
With a robust IT infrastructure and supply chain in place, in 2016 the company established strategic priorities for its five focus areas: US Large, US Medium, Single Channel, Canada and International. We are now well-positioned to create unique value for a broader set of clients. This results in stronger volume growth across more customer types and existing geographies and improves their experience through a competitively advantaged product offering and delivery, technical product expertise, an industry-leading digital experience and market-relevant pricing.
OPI: Talking of pricing, Grainger has been in the news quite a bit in the past few months with its pricing initiatives. What are the issues?
DO: In late 2016, Grainger initiated pricing changes that were fully integrated in 2017. These actions resulted in more competitive pricing, which will allow us to attract new customers and increase penetration with existing ones.
OPI: What kind of brands do you work with – A-brands, private label, own brand?
DO: Approximately 5,100 suppliers provide Grainger with more than 1.6 million products stocked in our distribution centres and branches around the world.
We also offer products carrying the Grainger Choice badge which recognises our exclusive brands, such as Dayton, Condor and Tough Guy, as well as unbranded products from Grainger-approved vendors. These items are designed to offer commercial-grade quality that customers demand, while also providing value.
OPI: In the office supplies sector, we hear a lot about the need for a one-stop shop for all of a business’s purchasing requirements. How much do you see that among your customer base?
DO: We always want to be the supplier our customers look to when they need help keeping their operations running and their people safe. By creating unique value through services, technical support and products; having a broad range of SKUs they need available faster than the competition every time; and offering a simplified, competitive pricing structure, we put ourselves in a favourable position when they think about consolidation.
OPI: On that topic, what are your thoughts on consolidation – in your own sector and also in the business supplies industry at large?
DO: We closely monitor all of the industries in which we compete, but our focus is on our business and continuing to provide unique value and an effortless experience for our customers.
OPI: Adjacent categories are becoming very important to what were formerly ‘pure-play’ office products resellers. What barriers do you think exist that prevent OP resellers from muscling in on your ‘patch’?
DO: Unlike suppliers from adjacent categories, Grainger is solely focused on MRO, and we continue to invest in our capabilities around exclusively serving the MRO needs of our customers. This includes having superior technical expertise.
From safety to metalworking, Grainger’s technical specialists consult with customers on specific needs and provide tailored solutions designed to save time and money, and keep facilities safe. This technical expertise is a value to customers and a clear point of differentiation for us.
OPI: How do you see the MRO/PPE market developing over the next five years?
DO: We know digital capabilities will be central to serving customers and creating a competitive advantage, and we are committed to having the best solutions in our space, designed to anticipate our customer needs.
We will also continue to build on our advantages around the right products and superior technical expertise, which sits on the foundation of our strong sales and service model and fulfilment capabilities.