Lab Safety Operations to Merge With Grainger’s

Nov 25, 2008 9:23 PM  By

Industrial safety supplies distributor Lab Safety Supply will combine its warehouse/fulfillment and back office operations with those of its parent company, facilities maintenance supplies distributor W.W. Grainger.

The move will reduce operational costs and improve service; Grainger spokesman Robb Kristopher says it will also “rekindle growth” at Lab Safety Supply, which has seen its sales stagnate in the past year. He says Chicago-based Grainger hopes to bolster LSS’ sales by bringing its products closer to its customers—especially on the two coasts—which will help speed delivery times, reduce shipping costs and boost customer service.

“LSS has one primary distribution location in Janesville [WI], and essentially operates with a direct marketing model—whereas Grainger has a multichannel approach” that includes a sales force and branch locations, he explains.

Kristopher says initially some of Lab Safety’s products will be distributed through Grainger’s DC in Mira Loma, CA, and Greenville, SC, but ultimately the plan is to have all of LSS’ products available through all of Grainger’s DCs and service branches. He says for now the company has no plans to close or downsize LSS’ Janesville operation, which employs about 900 people.

During an investor’s call last week, Grainger president Mike Pulick said the company expects to realize $70 million to $100 million in incremental revenue during the next 18 months as a result of the move – and another $20 million to $30 million in cost savings.

Since Grainger acquired it in 1992, Lab Safety Supply has acquired numerous other brands, including library supplies marketer Highsmith, forestry supplies mailer Ben Meadows, outdoor work supplies dealer Gempler’s, fleet maintenance products distributor AW Direct, and testing and inspection equipment merchant Professional Equipment. All of these brands have been maintained and operated as separate businesses.

But there is more to the plan than just piggybacking Lab Safety’s fulfillment operations onto Grainger’s supply chain: Grainger also plans to bring some of LSS’ merchandise into its own product line. Kristopher says which products will be included, and how many, will be determined both by demand and what makes sense.

“In time, you can expect tens of thousands of LSS products to make their way into the Grainger catalog,” he says, adding that LSS will likely include some of Grainger’s products in its catalog as well. “It’s all about getting the right portfolio of products for those customers.”

So is Grainger planning to eventually fold Lab Safety Supply into Grainger altogether? The company won’t confirm or deny it. When asked whether or not this move is a prelude to any future plan to consolidate the brands, Kristopher would only say: “That’s not part of this announcement.”