Lehman Brothers Collection - Contemporary Business Archives

Harvard Business School Baker Library Historical Collections

Lehman Brothers Collection

Twentieth-Century Business Archives

W. W. Grainger, Inc. - Lehman Brothers Collection

W. W. Grainger, Inc.

List of Deals

W.W. Grainger was incorporated in Chicago in 1928 by William W. Grainger. Grainger was a motor designer, salesman, and electrical engineer; he wanted to tap a segment of the market for wholesale electrical equipment sales. His company sold goods primarily through MotorBook, a catalog that would become the backbone of the company's name recognition. During the 1920s and 1930s the market for electric motors was so expansive that many companies developed with it.

Grainger established its first branch in Philadelphia in 1933. Atlanta, Dallas, and San Francisco branches opened in 1934. Sales in 1932 fell below the previous year's, to $163,000, the first of only four years where sales would not increase. In 1937 the company had sixteen branches in operation and sales of over $1 million. That same year it began merchandising selected products under the Dayton trademark, Grainger's first private label. To stimulate summer business, a line of air circulators and ventilating fans was designed and offered for sale in 1938.

The complexity of the industry allowed Grainger to decentralize marketing efforts and strengthen its regional presence by adding an outside sales force in 1939. During World War II, the company acted as a distributor of electric motors for government use. With its normal market disrupted, Grainger offered furniture, toys, and watches through MotorBook for a brief period of time. Grainger continued expansion during the war as sales grew from 1941's $2.6 million to $7.8 million in 1948. From 1948 to 1952 sales more than doubled. By that time, a single sales representative could no longer serve an entire branch, and in 1948 Grainger expanded the sales force for the first time.

Beginning in 1953 the company created a regional warehousing system that replenished branch stock and filled larger orders. Called regional distributing centers, they were eventually located in Chicago, Atlanta, Oakland, Ft. Worth, Memphis, and Cranford, New Jersey. As alternating current became standard in the United States, Grainger's market changed. No longer processing large orders, the company intensified its focus on the secondary market that existed throughout the country—small manufacturers, servicers, and dealers who purchased with high frequency but low volume. Expansion continued through the 1950s and 1960s at a consistent pace. By 1967 the company operated ninety-two branches.

In 1966 sales were nearly doubled to $80.2 million. Automation helped build the company's reputation as a reliable supplier and brought in accounts with bigger clients. Average branch sales grew from $596,000 in 1962 to over $2.1 million in 1974. In 1966 Grainger acquired those shares of Dayton Electric Manufacturing Company that it did not already own. The company acquired a producer of home accessories in the 1960s, which was divested in the 1970s. In 1967 the company went public. Two years later Grainger purchased Doerr Electric Corporation, a manufacturer of electric motors, and three Doerr affiliates. In 1972 Grainger acquired McMillan Manufacturing, another electric motors manufacturer. By 1974 sales had more than tripled. Brands exclusive to Grainger—Dayton, Teel, Demco, DemKote, and Speedaire—accounted for about 65 percent of the company's 1975 sales. As the company's branches became larger, the need for a centralized stock diminished and the company eliminated the regional distribution centers by the mid-1970s. It discontinued its McMillan Manufacturing operations in 1975.

Harvard Business School Harvard Business School Baker Library Histrorical Collections