Industrial Supply Distributors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 5,800 industrial supply distributors in the US purchase maintenance, repair, operating, and production (MROP) supplies in bulk and resell them to customers in smaller quantities. Product categories include abrasives, strapping, tape, and inks; mechanical power transmission supplies; industrial containers and supplies; industrial valves and fittings; and welding supplies. Distributors may offer technical support, repair, or assembly services.
Offshore Production
Offshoring of manufacturing production to low-wage countries reduced demand for domestic industrial supply distributors.
Growth in Green
The growing interest in the environment and energy efficiency has created a demand for “green” products and expertise.
Industry size & Structure
A typical industrial supply distributor operates out of a single location, employs 18 workers, and generates $11-12 million annually.
- The industrial supply distributor industry comprises about 5,800 companies that employ 105,000 workers and generate $64 billion annually.
- Customer categories include manufacturers (OEMs), institutions, government, utilities, construction, and mining.
- Large broad-line distributors carry over 1 million SKUs purchased from thousands of suppliers.
- Large domestic companies include W.W. Grainger, HD Supply, and Airgas.
Industry Forecast
Industrial Supply Distributors Industry Growth
Recent Developments
Dec 8, 2024 - Record High Prices
- Producer prices for machinery and supply wholesalers climbed to a new high in September, rising 2% compared to a year ago, according to the latest US Bureau of Labor Statistics data. Sales for machinery and equipment wholesalers were up 5.2% in July year over year and 3.8% versus June, according to the Census Bureau. Meanwhile, inventories are near record highs. Employment by industrial supply distributors grew 1.4% in September YoY, while average industry wages climbed 5.1% over the same period to $29.30 per hour, BLS data show.
- Activity in the US manufacturing sector contracted in November for the eighth consecutive month and the 24th time in the last 25 months, as reported by US supply executives in the latest Manufacturing ISM Report On Business. The Manufacturing PMI registered 48.4% in November, 1.9% higher compared to the 46.5% recorded in October. The Supplier Deliveries Index signaled faster deliveries, registering 48.7%, 3.3% lower than the 52% recorded in October. (Supplier Deliveries is the only ISM Report On Business index that is inverse; meaning a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.) Meanwhile, the Inventories Index registered 48.1%, up 5.5% compared to October. Demand remained weak in November as companies planned for 2025 in the aftermath of the election. Tariffs, threatened by President-elect Trump, may spur reshoring benefitting industry supply distributors.
- US wholesale prices rose by a larger-than-expected 2.6% in June from a year earlier, a sign that some inflation pressures remain elevated, according to the Labor Department. The June rise in wholesale prices was the sharpest year-over-year increase since March 2023 and comes at a time when other price indicators show that inflation has continued to ease. Month over month, the producer price index rose 0.2% in June versus May. The June increase in wholesale inflation was driven by a 0.6% rise in services prices, led by higher profit margins for machinery and auto wholesalers, according to the Labor Department.
- May was a busy month for distributor dealmaking activity, according to Modern Distribution Management (MDM). Deal volume, as tracked by MDM, spiked to 40 in May, the most distribution deals – pending or completed – tracked by MDM since at least the start of 2023 that involved at least one distributor. May’s total was a significant increase relative to the first four months of 2024, during which deal volume averaged 25 transactions per month. Ferguson accounted for four of the deals with four bolt-on geographic and capability acquisitions. In total, the company has closed on eight acquisitions this fiscal year (ends July 31, 2024) with aggregate annualized revenue of approximately $350 million. Home to many small players, the industrial distribution market is ripe for consolidation. Technological advancements are driving consolidation. Companies with solid ecommerce platforms and effective digital channel deployment are becoming increasingly prized, Supply House Times reports.
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