Here’s some economic context that shaped MDM’s rankings in 2024, and an overview of how the rankings work.

NORMALIZATION AND TOUGHER COMPARABLES

After riding the inflation wave in 2021 and 2022, distributors found 2023 and 2024 to be far less advantageous from an economic tailwind perspective. While inflation persisted throughout 2023 and has since, it leveled out throughout the year and led to far tougher year-over-year financial comparables. Meanwhile, publicly-traded distributors began to mention demand softening as early as 1Q23 quarterly earnings reports, with that ramping up as the year progressed and well into 2024.

Disinflation and lower volumes resulted in the U.S. wholesale distribution sector finishing with 2023 annual revenues of $7.887 trillion, according to the MDM Forecast. That was down 1.8% after soaring 14.8% and 20.5% in 2022 and 2021, respectively.

But, it’s important to keep in mind the context that while 2023 was a downstep in overall revenue, that was compared to a record-setting and inflated previous two years. Far removed from direct impacts from the COVID-19 pandemic, 2023 may be remembered as the first “normal” year since 2019 in terms of supply chain conditions and escalating inflation.

The vast majority of the distributors on our lists posted modest annual sales gains or declines in 2023, while pockets of others outperformed their competition or were hit hard by market-specific factors. That’s continued through the first half of 2024, with firms still facing tough comps versus the first and second quarters of a year earlier.

INDUSTRY-SPECIFIC REVENUE

Like for the past several years, this is the most important part of this overview of MDM’s Top Distributors feature. Starting in 2022, MDM put a heightened emphasis on ranking companies by their sector-specific revenues rather than total revenue.

This also explains why you’ll see some distributors with smaller total revenues ranked higher than others within the same industry.

Take Grainger, for example. By its total 2023 revenue of $16.5 billion, Grainger is North America’s largest industrial supplies distributor. But when digging into its financial reports and product sector breakouts, we find that it’s also one of North America’s top distributors of electrical, HVACR, plumbing, power transmission, fluid power and safety products. This is why Grainger ended up appearing on 10 of our 20 sector lists — the company’s revenue within each of those segments is large enough to warrant a spot. And this is why Watsco is ranked No. 1 in HVACR and Grainger is No. 5 despite Watsco’s $7.3 billion in 2023 revenue being much smaller than Grainger’s $16.5 billion — Watsco’s HVACR revenue was much higher than Grainger’s.

This explains why you’ll find some companies charted on industry lists outside of their “core” offering. For example, Graybar is best known as an electrical products distributor, but its industrial products sales were large enough to chart at No. 20 on our Industrial Supplies list. It’s also why Ferguson appears on our lists for Industrial Supplies, Building Materials/Construction and Safety, besides its hallmarks of Plumbing, HVACR and Industrial PVF.

But while our rankings are based on 2023 revenue within each sector, the revenue you see displayed on our lists is overall revenue. Why? Quite simply, while many privately-owned distributors elected not to publicly share their total revenues, far fewer still elected not to publicly share their sector-specific revenues. If we displayed the sector-specific revenues of those that gave us the OK to, they’d be few and far between. The overall revenue figure gives us something to show for the majority of companies on our lists.

That sector-specific revenue breakout is the most painstaking part of our research process, as it involves an incredible amount of hair-splitting and triangulation to find accurate revenues. It makes this feature all the more challenging, but we do it because it results in a more accurate list and levels the playing field.

OUR TOP DISTRIBUTORS RESEARCH PROCESS

MDM’s Top Distributors Lists were based on 2023 fiscal revenues within industry sectors, either reported or estimated by MDM’s editorial team and sector validators. For distributors that don’t follow a January-December fiscal calendar, we’ve noted that with an asterisk and a footnote. To normalize the way we display the rankings, we include total company revenues, rather than break out individual sector revenues. Companies were asked to provide data about revenues, with information supplemented by quarterly fiscal reports, SEC filings and publicly available information. For companies that elect to not share revenue data, MDM estimates their relative position in its sector list based on the best available industry resources and information.

Note: Companies that operate primarily as master distributors are not eligible for Top Distributors inclusion.

KEEP IN MIND

As you peruse MDM’s rankings across these different verticals, (www.mdm.com/top_distributors/) it’s important to remember that the way we put them together is not an exact science. While our editorial team made every effort to extract revenue information from the non-publicly-traded distributors listed here, many companies are understandably private with that information. When you see “N/A” listed for revenue, that likely means that revenue figure was confidentially given to MDM but not to be published.

Mike Hockett is executive editor of Modern Distribution Management. He can be reached at mhockett@naw.org.

INDUSTRIAL SUPPLY MAGAZINE

The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.