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W.W.Grainger SWOT and PESTLE Analysis

ID : 52430053| Jul 2018| 15 pages

COMPANY PROFILE -W.W.Grainger

Business Sector :Industrial Products Distribution

Operating Geography :Chicago, United States, Global

About W.W.Grainger :

W.W. Grainger is an American company which operates in Maintenance, Repair and operating (MRO) products for businesses. It offers equipment’s such as motors, lightening, material handling, safety supplies etc. The company was founded in 1927, by William Wallace Grainger in Chicago. The company headquartered in Lake forest, Illinois, United States and operates in U.S, Canada, Europe, Asia and Latin America. It operates through two segments first one U.S and another Canada. The company has 24,400 employees and serves more than 3 million active customers as of 2018

W.W.Grainger Revenue :


$10.42 billion– FY ending December 31st, 2017 (y-o-y growth of 2.8 %)
$10.13 billion– FY ending December 31st, 2016

Ownership / Major shareholders :

The Vanguard Group– 10.31%, Longview Partners LLP – 7.3%, SSgA Funds Management – 4.93%, BlackRock Fund Advisors – 4.62%. (As of March 2018)

Competitive Analysis of W.W.Grainger

SWOT
PESTLE
The SWOT Analysis for W.W.Grainger is presented below.
Strengths
Weaknesses
1. E-commerce Leadership
2. Strong balance sheet and cash flow generation
3. Broad offerings of products
4. Strong supply chain management
1. Heavy reliance on U.S Market
2. Noncompetitive pricing of products
Opportunities
Threats
1. Potential in emerging markets
2. Leverage green brand image
1. Entry of ecommerce giant Amazon in the new industry
2. Global economic instability
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Detailed SWOT Analysis of W.W.Grainger

Strength

1. E-commerce leadership: W.W. Grainger is 11th largest retailer in North America as ecommerce retailer. The company started its e-commerce service in 1996 and it was the first commerce-enabled website in the industry. Out of total sales, more than 65% of the sales are channeled through its digital network which contributes to 57% of revenue generation from the USA. Grainger had more than 38 million online visitors in 2016 and its increasing day by day. Grainger focused on ease of searching for customers and created “search-and- select’ process with approximately 1.9 SKU’s available online in the USA. Grainger had created keepstock inventory management system and eprocurement system which will drive complex needs of large customers. Its MonotaRO 2000 and Zoro 2010 are online only businesses for small customers. The company uses its digital solutions to build a relationship. The company leverages digital marketing to boost the sales growth. E-commerce market is increasing worldwide and leveraging its stronghold would benefit the company in the long run.

2. Strong balance sheet and cash flow generation: W.W. Grainger has strong financial records with a current ratio (ratio of current assets to current liabilities) is 2:1 for last 3 years. This shows that W.W. Grainger is utilizing their financial capacity at optimum possible level. Cash flow statement of the company shows $1 billion income from operating activities which company is investing for future growth of the business. W.W. Grainger had generated free cash of $774 Million in 2016 which indicates the strength and ability of the company to generate cash. The strong cash flow equips Grainger with flexibility and liquidity for funding working capital needs and long-term cash requirement. Grainger used these strong cash flows for share repurchase and distributed the profit to shareholders by paying dividends. Grainger have continuously increased dividend pay-outs each year for last four decades and stands among 3% of S&P companies who does that.

3. Strong supply chain management: W.W. Grainger has world-class supply chain management. Grainger invested heavily in logistics facility and developing Distribution centre network. This robust and evolving Distribution centre network allows Grainger to manage 700000 stocked SKU’s (Stock keeping unit) in the USA. To increase the speed at which product move through supply chain Grainger continuously evaluates its 3000 key product suppliers and make them reliable to cater to expected service. They offer 99% same day delivery facility for in-stock items. The company provides 24 hours customer service with just a phone call. In 2015, Grainger focused on product procurement optimization through which they achieved right supplier mix to serve the customer. The company caters to their customers with the help of multichannel facility, specifically targeting high touch channel and also single channel online mode. Business has shifted from a traditional mode of visiting branch, telephones to the digital order by online and onsite platform, Grainger has anticipated and evolved its supply chain to accommodate these changes. 85% of the Grainger’s order were directly shipped to the customer or made available through onsite services. Grainger focuses on $127 billion MRO products markets in the US as of 2017, of which it has an estimated 6% market share. Thus a strong an efficient supply chain is critical for it to grow further and strengthen its business.

Weakness

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Opportunity

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Threat

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Major Competitors :

Arrow Electronics, Fastenal Company, McMaster-Carr Supply, MSC Industrial Direct, Systemax.

Major Brands :

Grainger, Acklands Grainger, Cromwell, Zoro, MonotaRO, Gamut, Dayton, Speedaire, Air Handler, Tough Guy, Westward, Condor and Lumapro

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Name
Business Segment
Year
Type
Objective/Synergy Achieved
CromwellMRO distributor2015Acquisition Grainger with its supply chain and e-commerce expertise will strengthen UK business as Cromwell is the largest independent MRO distributor in the United Kingdom
Alliance Energy SolutionsEnergy-efficient retrofit services2010AcquisitionThe deal will help in leveraging Grainger's sales network and Alliance’s unique service capabilities to serve more businesses and institutions
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in W.W.Grainger Analysis Report

1. Investor presentations, 2016,2017 http://invest.grainger.com/phoenix.zhtml?c=76754&p=irol-presentations
2. W.W.Grainger - http://www.graingercsr.com/
3. Annual Report - http://invest.grainger.com/phoenix.zhtml?c=76754&p=irol-reports
4. Fact Sheets 2017, 2016 http://invest.grainger.com/phoenix.zhtml?c=76754&p=irol-irfactbook

Copyrights and Disclaimer
W.W.Grainger SWOT and PESTLE analysis has been conducted by Aditya Limaye and reviewed by senior analysts from Barakaat Consulting.

Copyright of W.W.Grainger SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

W.W.Grainger SWOT and PESTLE Analysis
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