Another Look At The Big 50
A Closer Look with
Certainly one of the biggest trends seen among our 2016 Big 50 list of industrial distributors is the continuation of mergers and acquisitions — a trend
that has been hot for several years and apparently will
continue for many more.
But there has been a change in acquisition strategy.
For several years, distributors often bought competitors
that carried the same product lines, giving the acquirer
access to some new suppliers, expanded geography and
new customers. Today, many distributors are buying
others that carry complementary product lines, allowing
them to gain access to new customers, cross sell products
and expand market share.
Some larger distributors also say that with the industrial products economy stuck in a sharp downturn, M&A activity will increase. One CEO said that pressure will be put
on smaller distributors who will not be
able to keep as much
inventory on hand
as they have in the
past. This could mean
that larger distributors will be able to
pay lower prices for
companies and access
to new customers.
whether that comes
to fruition, M&A
activity is soaring particularly as larger distributors buy companies outside their
traditional product offerings. DXP Enterprises, a company
well-known for its pumping solutions and supply chain
expertise, last year purchased Tool Supply in an acquisition that brought a high level of technical expertise
within cutting tools and a unique business model.
We’ve seen companies like WESCO International,
known years ago primarily as an electrical distributor,
buying a safety distributor. Airgas, now owned by Air
Liquide, has made more than 450 acquisitions since 1986,
primarily small welding distributors, but has recently purchased safety equipment distributors as well.
Genuine Parts Company’s (GPC) industrial business,
Motion Industries and office supply segment S.P. Richards
purchased Rochester Midland Corp., a janitorial/sanitary
supply business. GPC most recently purchased The Safety
Zone, a direct importer and distributor of supplies and devices for safety, janitorial, medical, food service and food
“Some of the new product category focus that we have
gotten into in recent years — products like industrial
supply, safety supply, material handling equipment — are
performing well and are generating increases year-over-year,” said GPC’s CEO Paul Donahue.
One surprise was Fastenal, which traditionally grew
its business by opening stores at a rapid pace. Last
Fastenal also has an interesting new agreement with
Walmart, with a locker service designed to store online
purchases from retailers at a number of Walmart sites.
Shoppers who use the locker service will be notified when
and where their item arrives and use an access code to
open the locker. Walmart will store the items for about
two weeks after delivery.
Big box retailers are also buying distributors and
increasingly targeting the professional (pro) contractor
market, taking direct aim at construction distributors and,
in some cases, MRO customers.