W.W. Grainger Inc., long a pace-setter in B2B ecommerce, wants to take things up a few notches—and do that every year.
“Our top priority now is to drive profitability and sustainable growth in the United States with our Grainger and Zoro brands,” Grainger CEO D.G. Macpherson said today at an industry conference, adding: “Our goal is a 300 to 400 basis points gain in market share each year” in the $133 billion U.S. market for maintenance, repair and operations supplies and equipment that businesses use to operate and maintain their facilities. As of today, Grainger notes on its corporate website that it has a 6% share of the “highly fragmented” U.S. MRO market and 4% of the global $284 billion market. (A basis point is one-hundredth of 1%; a range of 300-400 basis points is equal to 3-4%.)
Targeting market share and profits
Macpherson, speaking at the Electrical Products Group Conference in Miami, said that, for now, Grainger—whose net sales grew 7.6% last year to $11.22 billion, including more than half through ecommerce—is “not where we want to be” but is focused on several growth initiatives. “We feel we can gain share consistently and add to our bottom line,” he said.
Macpherson laid out several steps for reaching those goals. They include:
- Improving and integrating product and customer data—with an influx of newly recruited technology talent—to help its customers on Grainger.com more quickly find the particular product they need from among the millions available on the ecommerce site.
- Increasing the SKU count on Zoro.com, its growing U.S.-based no-frills ecommerce site, from 2.5 million to as much as 5 million by the end of next year, eventually getting to about 15 million. Macpherson noted that Zoro is on course to do more than $650 million in revenue this year, as it continues to build an “endless assortment” model, following the lead of Grainger’s Japan-based MonotaRO.com. MonotaRO, with some 25 million SKUs, does more than $1 billion in sales and is growing at a rate of more than 20%, Macpherson said.
- Developing a more effective marketing strategy to go far beyond its traditional efforts of marketing through its paper catalog. “Marketing for us is a new skill,” he said, adding: “We are learning very quickly” in such areas as digital marketing, internet search media and mass marketing.
- Building a new 800,000-SKU distribution center in Louisville, Kentucky, to expand the company’s ability to handle expedited shipping.
Recruiting new digital talent
Macpherson said Grainger is cutting “bureaucracy” at the company to make faster decisions on products and service improvements, and recruiting new web technology talent with “great conceptualization skills” to help veteran Grainger product experts to improve online merchandising displays and provide for such improvements as more effective site search on Grainger.com. “We have really doubled down this year,” making sure the company has stronger merchandising capabilities and new talent, Macpherson said.
He noted that Grainger, headquartered in the Chicago suburb of Lake Forest, Illinois, has a new site staffed with more than 600 technology professionals at downtown Chicago’s Merchandise Mart, a business center known as a digital technology hub a few blocks from the city offices of Grainger’s e-commerce management team.
Other steps Grainger is taking include better organizing product category assortments in a “way that makes sense” for customers, and increasing its efforts to improve service tailored to specific markets, including hospitals, government agencies and public safety departments.
Macpherson said that, after adjusting its pricing in 2017 to be more competitive, the company, with some 3.5 million customers worldwide, is now well-positioned in terms of market prices and expects to remain competitive. He added that Grainger doesn’t expect to get hit much by rising tariffs on imported products, as it manages costs with suppliers and develops alternate sources.
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