Grainger’s aggressive push into the world of workplace safety and health continues to evolve, as evidenced by the number of safety-related exhibit booths, safety seminars, safety resources distributed at the show, such as Grainger’s “Safety & Compliance Directory,” announcements about Grainger’s partnerships with the National Safety Council and the American Society of Safety Engineers, and tours of one of Grainger’s traveling shoemobiles – one of a fleet of mobile safety footwear stores acquired when Grainger purchased the Ohio-based safety distributor Safety Solutions ($53 million in sales) in 2013.
Broadening the scope of safety services
Grainger currently stocks 136,000 safety products, said Nino Granatiero, vice president of marketing and safety, at a press conference during the show. Categories include PPE, exits and fire protection, confined space, medical and first aid, ergonomics, safety communications, lockout-tagout, electrical safety, security and machine guarding. Grainger services include audits, risk assessments, training, and an online safety management consultative resource, drawing on a team of subject matter experts that were initially organized in a call center operation by Lab Safety Supply in Janesville, WI, which was purchased by Grainger in 1992.
Granatiero explained that Grainger’s reach into the safety marketplace extends upstream – where the emphasis is on engineering out hazards at facilities, and building safety cultures and employee engagement practices – to downstream, where frontline employees are equipped with PPE and the online safety manager program provides customers with safety administrative support.
Grainger now employs 53 safety specialists, up from 18 several years ago, according to Granatiero. Specialists consult with customers on the phone and in the field, complementing Grainger’s overall sales force of approximately 3,000 sales representatives. Grainger’s safety marketing also includes social media, highlighted by a series of three- to four-minute YouTube videos called “Everyday Heroes,” which Granatiero described as “authentic, positive safety storytelling” that engages customers. He said Grainger has found other social media platforms such as Twitter and Facebook to have limited appeal to safety managers, who are pressed by ever-expanding workloads and limited time.
The oil and gas boom
Grainger Chairman, President and CEO Jim Ryan told reporters at the show that safety products and services will account for 18 percent of Grainger’s 2015 revenues. Grainger had total global sales of about $10 billion in 2014. Ryan said the company expects its safety business to “grow fast,” in part due to the booming oil and gas sector in Canada and the U.S. The oil and gas market accounts for about four percent of total Grainger sales, Ryan said.
The Grainger chief said the number one agenda item for customers in 2015 is productivity and cost savings. Customers want to get costs out of their businesses and inefficiencies out of their processes, he said. Driving out costs and building efficiencies are the “great lessons learned” from the Great Recession of 2007-2009, according to Ryan. The recession drove customers’ revenues down — not five or ten percent — but 20, 30 and 40 percent down, and there’s “no going back” to pre-recession business models when bottom lines have been dealt such serious blows, said Ryan.
Saving time, squeezing costs
E-commerce is one efficient way of doing business in 2015, and Ryan said Grainger’s e-commerce sales total about $3.5 billion, representing more than a third of the company’s total sales revenue. In-plant vending machines and vendor-managed inventory programs are other means of saving time, money and employee “get up and go” unproductive motion, especially for customers with sufficient numbers of inventory turns, according to Granatiero.
Grainger has closed approximately 100 bricks and mortar branch offices in the U.S. in recent years, but Ryan told reporters the company is “absolutely committed to the branch business” model. He explained branch locations – Grainger has about 570 worldwide — offer 24/7 inventory and technical and application services such as product repairs and replacement. Grainger plans to “reconfigure” its branch network to put more of an emphasis on training and technical services, said Ryan.
Ryan is “cautiously optimistic” about sales growth in 2015 in the U.S. and Canada, which represent about 88 percent of total Grainger sales. The company expects three to seven percent sales growth, down from earlier estimates of seven to nine percent. The change reflects the current foreign currency translation effect on reported financial results due to further weakening of the Canadian and Japanese currencies since the company first issued guidance for 2015, as well as the deteriorating macroeconomic environment in Canada.