Grainger SWOT Analysis
W.W. Grainger, Inc (GNG) was incorporated Illinois in 1928and sells a broad product line of maintenance, repair and operating (MRO) supplies. It sells to both retail customers, and businesses & institutions across United States & Canada. Over the last decade and half the company has extended its network in European Union & Eastern European countries, Latin America, and Asia. (W.W Grainger, 2017)
GNG uses a combination of single channel and multi-channel strategy to both source products from the manufacturers and distribute them to its clients. The company utilizes contact centers, sales representatives, direct marketing, catalog marketing, and ecommerce technology to serve its customers. GNG serves over 3 million…show more content… One of the reasons why the average customer invoice is higher than 300 USD annually is because the company is one stop shop for complex and diversified product needs. GNG eases the customer journey by answering not only simple sales calls but by meeting complex needs. The online platform provides higher personalization of the solutions to meet the specific needs. GNG is category specialist in numerous categories of products.
• Network Overstretch – The industry has recorded negative growth rate in 2016 which lead GNG to close 59 of its stores in Canada and 50 plus stores in United States.
• Increasing prices in suppliers’ countries such as China has led to increase in the base costs of the products and putting pressure on margins. The company doesn’t exert a great deal of control over the commodity prices as well as labor prices in supplier countries.
• Competitive pricing strategy leaves very little margins for the company that leaves it vulnerable to business cycles in the industry. For example the whole industry went through a downturn in 2016 and GNG also has its sales stagnated.
• High dependence on US and Canada market – More than 77% of the business of GNG is coming from US and Canada, which makes the company vulnerable to economic cycles in the following countries. International sales beyond US and Canada just contribute to 8-9% of the overall…show more content… It will put pressure on the company to drive sales by reducing the margins.
• The currency exchange risks are substantial for the company if US Federal Reserve decides to tighten its monetary policy. The company’s supply chain is paid in USD while the growth in prominent economies is slowing. (W.W Grainger, 2017)
• Increases in commodity prices and labor costs in emerging market will negatively impact the revenue model of the company.
• Transportation of products is one of the major cost components especially in the sales driven through online channel.
• Cannibalization of sales from e-commerce players such as Amazon is also a substantial threat given its cost structures and no profits policy. (W.W Grainger, 2017)
After carefully analyzing the internal and external factors, I have arrived to the following recommendations –
• Focus on Category Specialization - GNG strategy to be a category specialist is critical for its long term growth. One of the reasons for the success of its online platform is its ability to meet complex demands of the customers. It should put increasing focus on meeting the complex and holistic needs rather than catering to low volume