Facts and Financials about W.W. Grainger

1. Beyond the Box
2 012 FACT BOOK

2. About the Company
W.W. Grainger, Inc., with 2011 sales of $ 8.1 billion, is North America’s leading broad-line supplier of
maintenance, repair and operating (MRO) products, with an expanding global presence.
Grainger is a business-to-business distributor of products used to maintain, repair or operate a facility.
Millions of customers worldwide rely on Grainger for pumps, motors, hand tools, janitorial supplies and much
more. These customers represent a broad collection of industries including healthcare, manufacturing,
government and hospitality. They place orders for Grainger products at local branches, online, via fax or over
the phone. More than 3,500 manufacturers supply Grainger with approximately one million products that
are either stocked in Grainger’s distribution centers, available online or available through sourcing. These
industrial products are shipped either directly to customers or to Grainger branches for local availability.
For more information on Grainger, visit www.grainger.com/investor.
Contents
Beyond the Box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 A Great Company to Work For . . . . . . . . . . . . . . . . . . . . . 23
Fast Facts: Beyond the Numbers . . . . . . . . . . . . . . . . . . . 2 Building Strong Supplier Relationships . . . . . . . . . . . . . . . 24
Delivering Shareholder Value Beyond Expectations . . . . 4 Consolidated Statements of Earnings . . . . . . . . . . . . . . . 25
Leveraging Scale with the Foundation . . . . . . . . . . . . . . . 6 Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . 26
Investing for Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Consolidated Statements of Cash Flows . . . . . . . . . . . . . 27
Gaining Share in the United States . . . . . . . . . . . . . . . . . . 10 Historical Financial Summary . . . . . . . . . . . . . . . . . . . . . . . 28
Gaining Share in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Executive and Operating Management . . . . . . . . . . . . . . 30
Gaining Share in Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Compensation Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Accelerating Growth in Asia . . . . . . . . . . . . . . . . . . . . . . . . 16 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Accelerating Growth in Latin America . . . . . . . . . . . . . . . . 18 Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Going Above and Beyond for Communities . . . . . . . . . . . 20 Company Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Forward-Looking Statements
The 2012 Fact Book contains statements that are not historical in nature but concern future results and business plans, strategies and objectives, and
other matters that may be deemed to be “forward-looking statements” under federal securities laws. Grainger cannot guarantee that any forward-looking
statement will be realized, although Grainger does believe that its assumptions underlying its forward-looking statements are reasonable. Achievement of
future results is subject to risks and uncertainties which could cause Grainger’s results to differ materially from those which are presented.
The forward-looking statements should be read in conjunction with the company’s most recent annual report and Form 10-K as well as other reports filed
with the Securities and Exchange Commission containing a discussion of the company’s business and of the various factors that may affect it. Caution
should be taken not to place undue reliance on Grainger’s forward-looking statements and Grainger undertakes no obligation to publicly update the
forward-looking statements, whether as a result of new information, future events or otherwise.

3. Beyond the Box
From Hawaii (pictured here) to Hong Kong,
millions of customers rely on Grainger
for their MRO needs.
W hen Bill Grainger delivered a motor to his first customer 85 years ago, he knew there was more inside that
box than just a product; it was a promise. It was his family’s name, reputation and everything they stood for:
service, reliability and expertise.
Today, Grainger continues to deliver on that promise, but the world looks considerably different than it did in 1927. Many forces,
including globalization, technology and increased competition, are forcing businesses and institutions to think and act differently
and ultimately, do more with less. In response, Grainger is playing a vital role in helping customers drive out unnecessary cost,
reduce inventory and be more sustainable in order to compete in a dynamic world. At the same time, companies like Grainger are
being held accountable not only for industry-leading customer service, but also for positively influencing local communities and
committing to high standards of ethics and governance. To compete globally and continue to meet customers’ evolving needs,
Grainger has to do more than just ship products; it has to go beyond the box.
But going beyond the box involves more than customers. Grainger’s stewardship extends to a series of key stakeholders by providing:
CUSTOMERS WITH: SUPPLIERS WITH: COMMUNITIES WITH:
• The broadest product selection in • Access to a world-class supply chain • Millions of dollars to local charitable
the industry and distribution network causes through team member contributions
• Multiple channels that make it easier • Access to approximately two million active and a matching gifts program
for them to cost-effectively manage businesses and institutions worldwide • More than 1,400 trained volunteers
their maintenance, repair and operating for disaster relief and emergency
TEAM MEMBERS WITH:
(MRO) supply needs preparedness and response
• An award-winning culture
• Exceptional service in person, over • Hundreds of scholarships to trade school
• Opportunities to learn and grow
the phone or online students and veterans pursuing careers
• Exceptional benefits in the skilled labor force
• A variety of product-related services
• Sustainable solutions, products and SHAREHOLDERS WITH:
services for their MRO supply needs • Strong, steady financial performance
• Consistent, top-quartile returns
• 40 consecutive years of dividend growth
W.W. GRAINGER, INC. AND SUBSIDIARIES 1

4. Fast Facts:
Beyond the Numbers 38% 21,446
40 years total shareholder team
(TOTAL COMPANY, AS OF 12/31/11) return in 2011
of consecutive members
dividend increases
Grainger’s performance goes beyond the numbers. It’s an
extension of the company’s global brand that is focused
on service and stewardship – to shareholders, customers,
team members, communities and suppliers. Take a look.
711
branches
$8.1billion
in sales in 2011
1 million
shares repurchased
in 2011 (approximately
2011 Sales 20% Commercial 1 percent of shares
16% Heavy Manufacturing outstanding)
by Customer 15% Government
Category 12% Contractor
10% Other
(TOTAL COMPANY) 9% Light Manufacturing
7% Retail/Wholesale
6% Natural Resources
5% Reseller
$9.07 28
15th largest 2011 earnings per
distribution
e-retailer in the share (diluted) centers
16% U.S. and Canada
2011 Sales Safety and Security
11% Material Handling
by Product Line 10% Metalworking
(TOTAL COMPANY) 9% Cleaning and Maintenance
8% Pumps, Plumbing and
Test Equipment
8% Hand Tools
7% HVAC
7% Electrical
6% Lighting
Grainger’s common stock
4% Specialty Brands is listed on the New York
4% Other
3% Power Tools and Chicago stock
3% Fluid Power
2% Motors exchanges under the
2% Power Transmission ®
trading symbol
Grainger’s Minooka, Ill.,
distribution center is home
2011 Awards
• No.1, America’s Most Admired Company, Diversified
to the largest LEED
Commercial Interiors
Platinum facility in the world.
GWW
Wholesalers — Fortune
• No. 100 on the Fortune 100 Best Companies to
Work For® list
• No. 2 among large companies on the Chicago Tribune’s In 2011, Grainger
Top Workplaces list outperformed the
S&P 500 by
• Named one of the Best Places to Work in Information
Technology — ComputerWorld
• Platinum Level – Canada’s 10 Most Admired Corporate
36%
and the Dow Jones
CulturesTM Award Industrial Average
• Ranked No. 8 in HR Executive Magazine’s Most Admired (DJIA) by
for HR list
30% 1,000,000+
PRODUCTS AVAILABLE
2 W.W. GRAINGER, INC. AND SUBSIDIARIES

5. United States Europe Global Trend:
MRO* market size: > $114 billion (Belgium, Czech Republic, France, GLOBALIZATION
Hungary, The Netherlands, Poland,
Market share: < 6 percent Portugal, Romania, Slovakia, From Tokyo to Toronto, when a
Next-day delivery: United Kingdom) factory’s main assembly line shuts
98 percent of customers As known as: Fabory Group† down due to a faulty part, time is of
Branches: 368 the essence. Grainger customers
MRO* market size: > $175 billion
want fast, effective service regardless
Distribution centers: 15 Market share: < 1 percent
of where they operate. In response,
Websites: Branches: 137 Grainger has invested in Latin
www.grainger.com
2 MILLION www.imperialinc.com
www.supplylink.com
Distribution centers: 2
Website:
America, Asia and now Europe,
finding ways to leverage the
www.experiencedone.com www.fabory.com (Multilingual) company’s existing supply chain and
ACTIVE CUSTOMERS
Customers served in 2011: Customers served in 2011: purchasing power for the benefit of
IN 157 COUNTRIES Approximately 1.6 million customers, More than 100,000 in the local and multinational customers.
who primarily represent industrial, machine building, automotive and Using multiple channels, Grainger’s
commercial and government metalworking industries.
customers are able to solve their
maintenance departments. † ALTHOUGH FABORY GROUP IS
HEADQUARTERED IN EUROPE, IT ALSO HAS unique issues quickly and in the
LIMITED OPERATIONS IN NORTH AMERICA
language that is most suitable
AND ASIA.
for their workforce.
Canada Latin America Global Trend: Asia
(Colombia, Costa Rica, Dominican SUPPLIER CONSOLIDATION (China, India, Japan)
MRO* market size: > $13 billion
Republic, Mexico, Panama, Puerto
Over the last several years, Doing business as: Grainger China,
Market share: < 8 percent Rico,** Trinidad)
Grainger Industrial Supply India
Next-day delivery: businesses worldwide have been
MRO* market size: > $35 billion Private Limited, MonotaRO Co., Ltd.
95 percent of customers forced to cut budgets, reduce
Market share: < 1 percent MRO* market size: > $200 billion
Branches: 172 overhead and increase productivity.
Branches: 33 In order to do more with less, they’ve Market share: < 1 percent
Distribution centers: 6
Distribution centers: 2 relied on suppliers to help identify Branches: 1
Website:
Websites: opportunities to take cost out while Distribution centers: 3
www.acklandsgrainger.com
www.grainger.com.co gaining efficiency. Grainger’s value
(English and French) Regional warehouses: 18
www.grainger.com.mx proposition has never been more
Customers served in 2011: www.grainger.com Websites:
More than 41,000 businesses relevant. By helping businesses www.grainger.com.cn
Customers served in 2011: across the globe examine their
and institutions, which primarily www.graingerindia.com
More than 45,000 customers,
represent the mining, oil and gas, MRO spend, Grainger has assisted www.monotaro.com
primarily in the hospitality,
forestry, construction, manufacturing many customers in dramatically Customers served in 2011:
manufacturing, and oil and
and other commercial industries. More than 350,000 customers,
gas industries. consolidating their MRO suppliers,
**ALTHOUGH PUERTO RICO IS A U.S. TERRITORY, saving them both time and money. primarily in the manufacturing,
THE COMPANY MANAGES ITS BUSINESS THERE contractor and automotive
AS A PART OF LATIN AMERICA. aftermarket industries, the
majority in Japan.
* Maintenance, repair and operating supplies
W.W. GRAINGER, INC. AND SUBSIDIARIES 3

6. Delivering Shareholder LONG-TERM VIEW
Company Initiatives for 2012 and Beyond
Value Beyond Expectations • Help customers manage MRO inventory.
• Make it even easier for customers to do business with
Grainger, anywhere at any time.
Grainger is focused on delivering shareholder value that
goes above and beyond other industrial distributors. • Add locally relevant products to drive growth.
• Improve customer coverage.
• Improve eCommerce capability to drive rapid growth.
F or Grainger shareholders, growth was a key theme in
2011. Not only did shares of GWW reach new all-time
highs several times over the course of twelve months,
the stock outperformed the S&P 500 by 36 percent and the
• Expand the capacity of the global logistics network globally.
• Continue to extend Grainger’s reach in targeted
international markets.
• Leverage Grainger’s systems and scale to better serve
DJIA by 30 percent.
customers and improve cost.
GWW performance versus S&P 500 and DJIA
• Continue to foster a culture of continuous improvement
PERIOD GWW S&P 500 DJIA across the business.
1 year 36 percent 0 6 percent
5 years 168 percent -11 percent -2 percent Financial Targets (2014 – 2016)
10 years 290 percent 10 percent 22 percent
Organic Sales Growth
7 –11 percent
So what is the key to Grainger’s success? Grainger’s relentless
Operating Margin
focus on the customer, coupled with its financial strength, has
15 –17 percent
enabled the company to invest in growth initiatives such as
product line expansion, sales force expansion, global supply
chain enhancements, eCommerce, MRO-related services and
international expansion over the last several years. This in turn
helped the company gain market share at a time when the majority Grainger’s ability to gain market share, coupled with effective
of competitors worldwide were pulling back on growth investments. product cost management below the rate of inflation, growing
private label brands and leveraging operating expenses, will enable
Emerging Stronger Than Ever Grainger to continue to deliver top-quartile shareholder returns.
GWW U.S. Organic Sales Growth (Real) U.S. Industrial Production Grainger shareholders have historically seen approximately
12 Coincident 1-year recovery two-thirds of cash from operations returned to them through
8 share repurchase and dividends, while one-third has been
Percent, Y-O-Y change
4 reinvested in the business for future growth. In 2011, the
0 company’s management team reiterated their intent to grow
(4) the dividend at a faster rate than earnings growth over the
(8) next three to five years.
3 years lagging recovery
(12)
Cash Generation/Deployment (2007–2011)
(15) 1 year lagging recession
Dollars in millions
1995 1999 2003 2007 2011
Cash from Operations Uses of Cash
Grainger’s U.S. performance improved versus U.S. Industrial Production (IP) in the $6,000
most recent global recession. SOURCE: FEDERAL RESERVE BOARD AND COMPANY INFORMATION.
Investing in the foundation of the business has led to Grainger’s Share
Repurchases
improved execution and enhanced financial performance. Over 4,000
67 percent
returned to
the past four years, Grainger has demonstrated how it is best shareholders
positioned to gain share before, during and after a recession. In
contrast, Grainger’s growth during the 2001 recession was soft Dividends
2,000
and lagged the economy as it launched into the recovery phase. Acquisitions
However, Grainger’s execution during the 2008 – 2009 downturn
Capital
and 2010 – 2011 recovery enabled the company to return to Expenditures
pre-recession performance faster than the overall economy.
4 W.W. GRAINGER, INC. AND SUBSIDIARIES

7. MRO Market Opportunity Sales Operating Margin
Dollars in billions (USD) Dollars in billions Percent
6.4 6.9 6.2 7.2 8.1 10.5 11.4 10.7 12.0 13.0
Europe
> $175B North Asia
> $160B
North America
> $140B
Latin America
> $35B South Asia
Middle East > $40B
and Africa
> $25B
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Earnings per Share – Diluted Return on Invested Capital
Worldwide Market Dollars Percent
> $575B
4.91 5.97 5.62 6.93 9.07 28.5 29.8 24.9 29.8 31.9
Generating cash isn’t the only way the company is creating
value. Grainger’s global sourcing capability is a perfect
example of how the company is improving its financial
performance through gross margin expansion. Approximately
25 percent of sales of products listed in the U.S. catalog are
higher margin private label products. Roughly half of these 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
sales involve products sourced by Grainger from lower cost
Global Sourcing — External Sales Working Capital
countries and carry margins typically 50 percent higher than Percent of Total Company Sales Dollars in billions
the company’s average gross profit margin. 7.3 8.2 8.8 9.4 9.9 .97 1.38 1.35 1.37 1.31
Grainger’s Global Sourcing (GGS) arm spans approximately
300 manufacturers in 24 countries worldwide and is a
significant contributor to gross margin expansion. Customers
continue to look to Grainger for quality products at a variety of
price points. The company is aggressively growing its direct
sourcing business and diversifying its supplier base into new
geographies in Latin America and Asia, as well as partners in
the U.S. (See page 7 for more detail on GGS.) 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Another way Grainger is expanding margins is through operating
expense leverage. The company has harvested the results of
investments over the last few years, lowering operating expenses
as a percentage of sales (with the exception of 2011, when
Grainger made multiple investments in the company’s five
growth drivers – see pages 8–9). While delivering some of
the best working capital management in the industry, Grainger
has also made steady progress increasing cash flow from
operations. The combination of improved margins and strong
inventory and receivables management has enabled the
company to generate significant cash flow.
In 2012, the company will continue to invest aggressively
in sales force expansion, eCommerce and supply chain
enhancements to continue to drive growth. Grainger added
more than 1,300 new jobs in 2011 in the sales force,
distribution centers and support function areas.
Investors have historically viewed Grainger as a strong, steady
and reliable investment, due to the dependable nature of its
returns. However, given the company’s focus on aggressive
market share gains and global expansion, investors are taking Grainger’s relentless focus on the customer, coupled with its financial strength, has
a fresh look at Grainger as a growth opportunity. enabled the company to invest in growth initiatives including global supply chain
enhancements, like the new 850,000 square-foot distribution center pictured here,
in Patterson, Calif.
W.W. GRAINGER, INC. AND SUBSIDIARIES 5

8. Leveraging Scale
with the Foundation
Grainger’s success is built on a foundation of scale
advantage and superior supply chain execution. These
components enable the company to do more than just
deliver product – these foundational elements allow
Grainger to go beyond the box to provide the best possible
customer service at the lowest total cost. The company is
continuing to take actions to make sure its foundation
provides a powerful platform for profitable growth and a
competitive advantage that others cannot easily replicate.
G rainger’s foundation allows it to provide the right
products, at the right time, from the right place, for
all of its customers. Below is a look at some of the
company’s foundational advantages.
Product Breadth and Availability – Having the right products
available to meet customer needs is central to Grainger’s
foundation. The company continues to aggressively expand • The company is preparing to relocate its central stocking DC
its product line to capture even more of its customers’ MRO in the Chicago area to a new facility in Minooka, Ill. The move
spend. For example, in the United States the company’s product will increase storage capacity and allow Grainger to deliver more
line has more than quadrupled over the past five years and in products next-day to customers in the Midwest.
Mexico it has doubled. By leveraging its efficient inventory
• In January 2012, the company relocated its DC in Saskatoon,
management and deployment practices, Grainger is able to
maintain product availability and inventory turns while Saskatchewan, to a new, larger facility that will house nearly
continually adding new products. 50,000 products to meet the needs of this province’s expanding
customer base.
Distribution Center Network – Grainger is making
investments in its logistics network to put more products Purchasing Leverage – Grainger works closely with its
closer to its customers than the competition. This includes suppliers on product costs as well as service enhancements
the recent reconfiguration of the Distribution Centers (DCs) such as shorter lead times and cycle time improvements. As
in Greenville, S.C., and Monterrey, Mexico, to improve both Grainger aggregates more of its product purchases across
service and efficiency. The company is also investing in more the globe, it is realizing even greater scale advantages. The
capacity to meet future growth needs. acquisition of Fabory Group in Europe is a perfect example;
Grainger is leveraging Fabory Group’s fastener purchasing
• In late 2011, the company expertise to create synergies that benefit the entire company. In
began shipping from its 2011, the company conducted more than 20 global line reviews
new DC southeast of San to drive improved cost and service for all of its businesses.
Francisco. This 820,000
square-foot facility will stock Information Technology – Grainger’s IT platform underpins
up to 350,000 items and the company’s foundation, providing real-time information and
provide improved next-day tools for all of the company’s businesses. Grainger plans to
service to customers on the migrate all of its businesses in the Americas to a single SAP
West Coast of the United platform based on the company’s current U.S. installation. These
States. The new DC will also lower transportation costs changes will be phased in over the next several years and will
and improve service by serving as a regional hub for globally allow the company to further leverage its scale while improving
sourced products. operating efficiency for its growing international businesses.
6 W.W. GRAINGER, INC. AND SUBSIDIARIES

9. North American Distribution Network
Continuous Improvement (CI) Culture
Edmonton For Grainger, execution matters. A hallmark of Grainger’s operations
ouve
Vancouver kato
Saskatoon is its focus on engaging team members closest to the work in
p
Winnipeg continuous improvement efforts. In the Distribution Centers, this
mout
o
Dartmouth
approach has resulted in substantially improved inbound and
ond
Richmond Hill outbound cycle times and dramatically improved space utilization
Janesville
Cleveland Robbinsville
within existing buildings. The company’s continuous improvement
San Francisco Chicago approach also emphasizes cross-functional participation and
(Relocating in 2012)
developing standard work processes to drive results.
Kansas City
Los Angeles
Greenville
Dallas Memphis
Continuous improvement learnings and best practices are
Jacksonville consistently shared across all of Grainger’s businesses, resulting
in service and productivity improvements. For example, by
Monterrey
leveraging a small team of network and space planning experts,
the company is able to ensure all of its businesses have access
KEY
to the best thinking in areas such as product management,
Mexico City Super Regional DC inventory planning, transportation, and DC operations.
Regional DC
Moving in the Right Direction
(defect rate) (minutes) ($ per line) ($ per team member)
Order defects Outbound cycle time Packaging costs Productivity
8.5 million 250+ ~61,000
Number of square Number of U.S. Number of Grainger
feet of distribution leaders trained in Global Sourcing
space Grainger CI problem solving products offered
has worldwide in 2011
2007 2011 2007 2011 2007 2011 2007 2011
Grainger Global Sourcing
As Grainger continues to drive profitable growth, adding more
private label products is a key priority. These products –
which include the Dayton,® Condor,® Westward,® LumaPro®
and Tough Guy® brands – offer customers high-quality, low-
cost products and typically carry higher gross profit margins.
The engine behind much of the company’s private label
offer is Grainger Global Sourcing (GGS), which works
with 300 suppliers in 24 countries to provide Grainger’s
businesses access to high-quality products. To reduce
cycle time and ensure quality, GGS continues to build
product engineering and inspection capabilities closer to
its Asian supplier base. At the same time, GGS continually
evaluates its supply network to minimize risk and ensure
access to low-cost products throughout the world.
In 2011, GGS introduced a low-cost tool line for Mexico
under a new brand, Contender,® and provided a new entry
level Dayton® motor program for India. Both illustrate how
the company consistently identifies new opportunities to
leverage GGS purchasing scale and capabilities to provide
locally relevant products.
Grainger’s foundation allows it to provide the right products, at the right time, from
the right place, for all of its customers.
W.W. GRAINGER, INC. AND SUBSIDIARIES 7

10. Investing for Growth [2] eCommerce
Technology continues to change the way customers want
to purchase and manage their MRO supplies. Grainger
customers want:
• A best-in-class online experience
• Easy online search and real-time availability
Grainger’s strategy goes beyond execution. It employs vision, • Access to Grainger through their existing desktop and
creativity and a willingness to invest in future growth so the mobile systems
company can deliver service that surpasses customers’ • Consistent experience across channels
expectations, while outpacing traditional and nontraditional • Personalization and customization
competitors. In order to allocate the right resources to
initiatives that drive the greatest return, Grainger continually eCommerce is a powerful eCommerce Revenue
Percentage of total company sales
listens to customers’ needs while scanning the competitive element of Grainger’s
15 27 40–50
landscape. The result: aggressive investments in the five multichannel strategy,
core growth drivers listed below that have yielded impressive growing at twice the rate of
returns over the last several years. other U.S. channels. It is the
most profitable arm of the
business, creating a huge
opportunity for sales and
earnings growth. Grainger has
[1] Product Line Expansion been a pioneer in business- 2005 2011 2015E
In 2006, Grainger began a multiyear product line expansion to-business eCommerce,
(PLE) program to broaden its offering worldwide. Prior to this, launching the Grainger.com® website in 1995. Today, more than
the company didn’t have the extensive breadth of products 27 percent of the company’s annual revenue is generated
that customers were looking for. So Grainger embarked on through electronic channels, representing $2.2 billion in sales
an aggressive program to add new product lines and extend in 2011. Based on Internet sales revenue, Grainger ranked 15th
existing lines both in the United States and internationally. in the U.S. and Canada on the Top 100 e-retailers of 2011.
®
(SOURCE: INTERNET RETAILER’S TOP 500 GUIDE )
A broad product line and
greater availability are In 2012, Grainger’s U.S. websites will continue to be enhanced to
competitive advantages and a provide a fresh, new customer experience. An improved search
high priority for Grainger. Fast engine will improve search results and quickly guide customers
moving products are stocked to the right solution. Customers can expect new capabilities on
closest to the customer in Grainger.com® that will offer more targeted search functionality
local branches, while new or and a more personalized online experience. These enhancements
less commonly used products are stocked in distribution centers will continue to expand the gap between Grainger and the
(DCs) and shipped directly to the customer. competition, both traditional and web-based distributors.
Today, Grainger offers more than one million products through [3] Inventory Management
multiple channels. Both the website and the catalogs include Grainger has 85 years of inventory management experience
product sourced by Grainger from lower-cost countries. The and is now making this expertise available to customers.
company plans to add thousands of new SKUs over the next few In addition to consulting ®
years as PLE has been key to driving share growth worldwide. with facility managers and
KeepStock Accounts – U.S.
On average, product line expansion has delivered 200 – 300 purchasing departments 14,000 45,000
basis points in incremental sales each year. on how to take cost out of
their business, Grainger also
Product Line Expansion — SKUs in U.S. catalog
Thousands offers a suite of inventory
82 115 139 183 233 307 354 413 500 management services.
This suite of solutions, called
the KeepStock® service, allows
customers to manage their 2011 2015E
own MRO inventory or have Grainger manage it for them.
Grainger team members can fill customer bins or vending
machines, provide on-site customer service or run on-site
2005 2006 2007 2008 2009 2010 2011 2012 2015E
branches at customer locations. Customer managed options,
8 W.W. GRAINGER, INC. AND SUBSIDIARIES

11. such as vending, labeling and scanning, are also provided through
the KeepStock® service. By utilizing the KeepStock® service,
customers can free up working capital and manpower to address 21 27%
core business needs. Countries where Grainger Total company sales
has brick and mortar operations from eCommerce
Grainger now accounts for KeepStock® services based on the
number of customer locations, versus number of customers, as
many customers have multiple sites with multiple installations.
Today, a KeepStock® service is present at more than 34,100 specific product categories most relevant to the local market, such as
Grainger customer locations in the United States, Canada, tools and safety. With this size of facility, Grainger can enter markets
Mexico, China, Puerto Rico and Panama, and the company at a lower cost and grow revenue over time. Grainger’s 2011 entry
expects the number to grow at a rate of more than 20 percent into the Dominican Republic is an example of this approach.
annually. Product sales to customers using inventory management
JOINT VENTURE/ACQUISITION
solutions grow an average of two to three times faster because
Acquisitions help Grainger enhance growth in new and existing
Grainger is embedded into the customer’s daily operations.
markets and enable the company to accelerate entry and gain
[4] International Expansion local market knowledge when entering new markets. In countries
The global MRO marketplace holds approximately $575 billion where it already has a presence, Grainger is focused on acquisition
in opportunity. There is plenty of room for Grainger to leverage targets that help build out a product line or service, capture a niche
its purchasing scale and expand in these emerging markets. customer segment or extend its geographic reach.
For multinational customers, finding reliable MRO products in
In countries where it doesn’t already have a presence, Grainger
far-off regions of the world can be difficult and expensive.
is targeting acquisitions or joint ventures to enter markets that
Customer demand, combined with fast growth in emerging
are complex but highly attractive. For example, in Europe,
markets and increasing opportunity from small and medium-
Grainger acquired Fabory Group to further penetrate the Central
sized local customers, has served as a catalyst for Grainger’s
and Eastern European markets and leverage the company’s
international strategy.
fastener expertise.
As Grainger expands globally, it is focused on Latin America
Market Entry Continuum
and Asia. Opportunities outside these regions will be pursued
Investment scaled to market based on attractiveness
if they present a strong, strategic fit, as was the case with the
Fabory Group acquisition in Europe in August 2011. The
Joint Venture Acquisition
Market attractiveness
emerging market opportunities in Central and Eastern Europe,
Start-up: Small Branch
combined with the opportunity for purchasing synergies, made
Fabory Group an ideal candidate for acquisition (see page 14 Authorized Reseller
for more on Fabory Group). High-growth markets like Asia, Trading Desk
Latin America, and Central and Eastern Europe provide the right Local Seller
combination of size, competitive landscape, business and Level of Investment
political risk and supply chain leverage.
[5] Sales Force Expansion
EXPORT Complementing product line expansion is sales force expansion
Grainger’s export business started in 1984 and today serves and the launch of the Territory Sales Representative (TSR)
customers worldwide through a combination of a local, dedicated program. While many competitors cut back on customer-facing
sales force and its reseller program, including authorized resources during the recession, Grainger continued to add
resellers in countries such as Guam, Singapore and Qatar. sales representatives, hiring more than 500 TSRs in the United
The export business serves a range of customers from the U.S. States since 2009. The TSR program is designed to prospect
military to large multinational companies to local businesses. for new customers and grow existing small to medium-sized
TRADING DESK
customers. TSRs are located in more than 30 markets including
The trading desk is a new, small-market concept where Grainger Los Angeles, Calif.; Dallas, Texas; and Washington, D.C. Beyond
handles the product needs of local customers, including duties the United States, Grainger added approximately 200 sales
and freight, in local currency. Grainger opened its first trading representatives in Canada, Latin America, Asia and Europe
desk in Trinidad in 2010 to serve the oil and gas, manufacturing in 2011. Increasingly, Grainger’s sales representatives are
and tourism segments. becoming subject matter experts in areas such as manufacturing
and healthcare to gain greater customer intimacy and provide
START-UP: SMALL BRANCH the best solution possible. This vertical segment approach is
In markets with midsize MRO potential, Grainger’s strategy includes built off of Grainger’s past success deploying a dedicated
establishing a local presence through a smaller branch and carrying government sales force.
W.W. GRAINGER, INC. AND SUBSIDIARIES 9

12. Gaining Share in the
United States
Grainger is the leading distributor of MRO products in
North America and the largest MRO supplier in the United
States. For 85 years, the company has delivered products,
services and solutions that drive cost savings, efficiency and
productivity above and beyond customers’ expectations. In
the United States, this ranges from inventory management
solutions and safety products to eCommerce and a variety
of options in between.
e Commerce is just one way Grainger is gaining
share in the United States. As customers migrate
to purchasing even more online, their consumer
website experiences and expectations transfer to the B2B
• Real-Time Product Availability (RTA) – RTA answers
commonly asked customer questions, such as: Do you have it?
How do I know? When can I get it? Where can I get it? Customers
now have visibility into real-time shipping information and local
arena. Grainger is improving its best-in-class website and has branch product pickup availability so that they can make an
made significant enhancements to the user experience, informed purchase. Imagine a contractor in need of a part –
both online and mobile, to make it faster, easier and more quickly! They log on and know exactly which branch to visit
personal, including: for the product.
• Customer-Focused Design – 2011 put the customer in • New Platform – Grainger’s new platform provides a fresh look
focus on Grainger.com.® Comprehensive product information, and improved functionality to Grainger.com.® In 2011, Grainger
detailed photos and easy-to-access account management began a staged migration of its U.S. customers to the new site.
tools on every page are just a few of the enhancements that The new platform makes it easier to implement enhancements to
make the site more intuitive for customers. It’s easier than ever the site. Grainger can execute changes in minutes, which makes
to buy on Grainger.com.® it easy for the company to respond quickly to customer needs.
• Click to Call/Chat – The new “Click to Call/Chat” feature • Grainger.com® Mobile – Order Fulfillment Migration
layers the great service provided to customers on the phone Grainger’s new mobile website, As a percent of total U.S. sales
and in the branches into Grainger.com.® If a customer has a launched in December 2011, is Picked up Shipped
100%
question when shopping on the site – about products, technical accessible from ANY smartphone.
specifications, or account information – a knowledgeable Customers now have access to 75
representative is just a click away. Customers can chat an optimized Grainger.com® no
instantly online or enter a phone number for immediate dial matter the location: job site, 50
back for a live conversation. truck, plant floor, garage or
maintenance shop. Using the 25
new mobile website, customers
can log into their accounts, view 1985 2000 2010
To optimize its footprint and reallocate resources to higher pricing, confirm local product availability, approve pending orders,
growth opportunities, Grainger closed 35 branches in the and check out – with the product ready for pickup at a Grainger
United States in 2011. The company has also invested more in branch or shipped directly to their office or job site.
Grainger.com® and inventory management services, hired more
Time and technology, combined with a need for more efficiency
sales representatives, and retrained team members for new
and productivity, have shifted the ways in which customers want to
roles in customer service, KeepStock® services and eCommerce.
do business with Grainger. Customers want to spend more time in
During this change, both customer satisfaction levels and team
their facilities and less time out of the office. They want suppliers
member engagement survey results increased.
to bring the products to them. So they are ordering online,
Despite this shift, Grainger branches will remain a crucial part installing an inventory management solution, or having products
of Grainger’s go-to-market strategy as customers continue to delivered directly to their site. As a result, Grainger’s local footprint
demand same-day service for their just-in-time and emergency is evolving to become more relevant to customers’ needs while
MRO needs. ensuring the greatest return on investment for the company.
10 W.W. GRAINGER, INC. AND SUBSIDIARIES

13. 2011 Sales by Customer Category —
United States
22% Commercial
17% Government
17% Heavy Manufacturing
12% Contractor
10% Light Manufacturing
7% Other
7% Retail
5% Reseller
3% Natural Resources
2011 Sales by Product Line —
United States
13% Safety and Security
13% Material Handling
10% Pumps, Plumbing and
Test Equipment
9% Cleaning and
Maintenance
9% HVAC
8% Electrical
7% Lighting
7% Metalworking
KEY
7% Hand Tools
5% Specialty Brands
Branch 4% Fluid Power
Distribution Center 3% Motors
(As of 12/31/11)
3% Power Tools
2% Power Transmission
Innovation
Innovation continues to play a key role in Grainger’s success. Dozens of ideas, ranging from customer-facing mobile applications to
showroom design to customer inventory management solutions, have moved through the company’s innovation pipeline over the last
several years. The innovation team takes ideas from hypothesis to launch in a four-step development process that first prototypes the
idea with customers and then rigorously tests the idea’s operational and financial validity.
Here’s a recent example: A large property management firm wanted to apply the same inventory management approach used in its tool
cribs to the vans its technicians drive every day. Thus, the idea of KeepStock Mobile® was born. Working with the customer, the Grainger
team developed a mobile application that allows a maintenance technician to simply scan shelf labels inside their van with their smartphone.
A replenishment order is then automatically sent to Grainger. The idea has since been scaled across all major mobile device platforms
and adopted by many customers as a fast and easy method for reordering frequently used items.
Sales Force Expansion
MRO is a relationship business and Grainger has continued to “Marc told me he was unhappy with the level of customer service
strengthen and deepen its customer ties through the addition of from his current MRO supplier. They were never available when
sales representatives such as account managers and territory sales he needed them. Marc was looking for a supplier that would come
representatives (TSRs). Grainger’s territory sales representative on-site and be available when called upon. I proceeded to explain
program is one example of how an idea successfully moved my role as a TSR. After a month of showing him how Grainger can
through the innovation pipeline. The program looked very different take time and money out of his procurement process, he was sold
in pilot stage and has morphed to include a new hiring profile on Grainger. He now looks to me not only for day-to-day needs
and new geographic territories, among other changes. These but as his first resource
refinements have helped decrease the payback period, making to help solve problems.”
TSRs cash flow positive in approximately 20 months. Will has had tremendous
success, growing the
Today, more than 500 TSRs are serving small and medium-sized
relationship with Sumter
customers in more than 30 markets across the U.S., and they are
Coatings 94 percent in
having great success. Take Sumter Coatings, for instance, a mid-size
one year.
business in Sumter, S.C., focused on providing its customers with
premium industrial coatings for steel, iron, propane, sinks, tubs and
TSRs serve small and medium-
more. Maintenance Director Marc Molyneau had been working with sized customers in more than
another supplier when TSR Will Eckhardt came calling on his facility. 30 markets across the U.S.
W.W. GRAINGER, INC. AND SUBSIDIARIES 11

14. Gaining Share in Canada
Going beyond the box extends across borders as well.
Acklands—Grainger has been serving the MRO needs of
Canadian customers for more than 120 years and is the
largest industrial and safety distributor in the country. The
company is focused on gaining share and accelerating
profitable growth.
W hile eCommerce and sales force expansion
are also at play in this established market,
Acklands—Grainger has gained a strong foothold
and customer following through its KeepStockSM inventory
management service. For more than 20 years, the Canadian
team has been providing customers with a suite of inventory a local branch), the customer has realized cost savings and
management solutions, ranging from on-site branches to vending reduced consumption.
machines. In fact, Canada’s best-in-class inventory management
Over the last five years, the Acklands – Grainger catalog
program provided the foundation for the KeepStock® service in
offering has more than doubled, from 41,000 to 110,000 SKUs.
the United States.
Sales of private label brands, which represent a lower-cost,
One such example is higher-margin product offering, continue to grow from C$51 million
Acklands–Grainger’s in 2007 to C$95 million in 2011 with plenty of room for growth.
KeepStockSM service for These products provide additional price points for the cost-
one of the largest mining and conscious customer and have been very successful in the
metal companies in the world. Canadian market. The growth of the Condor® safety line is one
Acklands–Grainger has such example. Acklands—Grainger grew Condor® revenues
been working with this large more than 60 percent to more than C$10 million in 2011 and
customer to provide their safety, will continue to leverage the brand through collaboration with
industrial and material handling Grainger Global Sourcing.
products for many years. The
The business in Canada has also taken an aggressive stance
customer mines for alloys,
on acquisitions to grow and gain share. Over the last two years,
coal, copper, nickel and zinc
Grainger has acquired five companies in Canada, including:
thousands of meters below the
earth’s surface, and finding a way to stay on top of their just-in- • K&D Pratt, Industrial Division, to expand in Atlantic Canada;
time MRO needs has been critical to the business’ success. • Ranson Industrial and Safety Supplies, Inc., to expand the
To meet the customer’s unique needs, Acklands–Grainger has safety offering;
implemented the following inventory management solutions: • Solus Sécurité, Inc., to expand the safety product and
• Dedicated, branded vehicles that deliver original equipment services offering;
manufacturer (OEM) materials from surface level to underground • Woseley Industrial Products (Amalgamated) Inc., to further
• A fully staffed mobile maintenance warehouse 7,500 feet penetrate the Nova Scotia and New Brunswick markets;
underground • Fercomat, to further serve Quebec’s natural resource
• Automated dispensing machines installed at the surface, 4,600- customer base.
foot level, and 7,500-foot level to provide real-time access to high
In 2011, the successful integration of these acquisitions contributed
volume safety supplies, hand tools and other industrial equipment
3 percentage points to the top line. The Acklands–Grainger team
Through the use of automated dispensing solutions and is also continuously reviewing an active pipeline of new targets
projects such as the off-site Personal Protection Equipment that could help the company expand its geographic coverage,
(PPE) Program (where miners pick up their safety supplies at customer segments and product and services offering.
12 W.W. GRAINGER, INC. AND SUBSIDIARIES

15. 2011 Sales by Customer
Category — Canada
31% Agriculture
and Mining
17% Contractor
9% Transportation
9% Retail/Wholesale
8% Heavy Manufacturing
8% Commercial
7% Government
7% Other
4% Light Manufacturing
2011 Sales by Product
Line — Canada
35% Safety and Security
17% Metalworking
15% Material Handling
15% Hand Tools
8% Cleaning and
Maintenance
5% Power Tools
3% Electrical Key
1% Fluid Power
1% HVAC Branch
Distribution Center
(As of 12/31/11)
Over the last five years,
the Acklands – Grainger catalog
offering has more than doubled,
from 41,000 to
110,000 SKUs
Acklands—Grainger grew Condor®
revenues more than 60 percent
Acklands–Grainger has more than 170 branches across Canada. to more than C$10 million in 2011
Local Presence
The Canadian team is focused on opening small branches in select markets to take
advantage of growth opportunities and expand its local presence, as well as serve 8% 20+
the natural resource market. For example, in 2011 the company opened locations in Acklands–Grainger’s Number of years
market share in Acklands–Grainger
Petawawa, ON, to support the local Canadian Forces base there and Smithers, BC, to the Canadian MRO has been serving
space, making this customers with
serve the mining and forestry sectors. Acklands–Grainger plans to open 4–5 small- business the leading inventory management
format branches annually in order to meet these customers’ growing MRO needs. MRO distributor in services
the country
W.W. GRAINGER, INC. AND SUBSIDIARIES 13

16. Gaining Share in Europe
Now Grainger is delivering service and results beyond its
traditional geographies.
I n August 2011, Grainger announced its acquisition of
Fabory Group, a Europe-based fastener distributor. This
business is enabling Grainger to accelerate its growth
in both mature (Western Europe) and emerging (Central and
Eastern Europe) markets, while gaining more scale and
relevance in fastener purchasing and distribution.
With an MRO market size of $175 billion and a fastener market
size of $1.9 billion, there is much potential in this area of the
world. Central and Eastern Europe in particular pose an
attractive growth opportunity.
Throughout Europe, Fabory Group is known as the Masters in
Fasteners.® Since 1947, Fabory Group has been serving small
businesses, MRO professionals, original equipment manufacturers
and technical wholesalers across Europe. Over the last several stainless steel fasteners. European legislation regarding steel
decades, Fabory Group has expanded its geographic reach construction has also been a catalyst for the addition of structural
through limited operations in North America and Asia and bolting products in 2012. With the global footprint and scale of
now operates more than 130 locations in 15 countries, with Grainger, Fabory Group is also planning to add private label
headquarters in the Netherlands. brands such as Condor.® In fact, prior to the acquisition, Fabory
Group was a reseller of Grainger’s private label brand Westward.®
Fabory Group’s products and services range from standard
and specialized fasteners to tools and industrial supplies. The As a part of Grainger, Fabory Group has seen increased
company’s product mix is weighted differently than Grainger’s, purchasing leverage with suppliers and is able to buy more
with more than 65 percent of sales from higher margin fasteners, effectively than ever before. Another reason Fabory Group has
producing gross profit margins in excess of 50 percent. been so successful is its vendor managed inventory (VMI)
Fabory Group’s highly trained workforce and A2LA (American program. Since it was developed more than 20 years ago,
Association for Laboratory Accreditation) accredited laboratories Fabory Group’s VMI systems have helped thousands of
provide technical support, logistics solutions, inventory customers manage their inventory. Today, more than 2,500
management and much more. Customers have access to customers use Fabory Group’s VMI systems, and 75 percent
more than 80,000 products in Fabory Group’s offering through of Fabory Group’s 250 OEM customers are on VMI.
a variety of channels, including its 130+ shops, more than Value added services like VMI make Fabory Group a partner,
250 sales representatives, and a multilingual website. giving the company the added advantage of close and
Fabory Group is expanding its shop presence over the next continuous interaction with its customers. In return, customers
several years, focusing on high-growth emerging markets such are able to benefit from the ongoing developments by Fabory
as Romania, Hungary and Poland in Central and Eastern Europe. Group’s supply chain specialists, like the recent introduction
The combination of services, high-quality products and know- of its Optical Bin service.
how make it easy and convenient for customers to get what
Fabory Group’s Optical Bin system makes use of special
they need, when they need it.
shelving racks that contain sensors for each bin location. Each
Similar to other Grainger markets across the globe, Fabory sensor monitors whether a space on the shelf is filled or not
Group is focused on product line expansion as an additional and determines if the stock level is sufficient or requires
driver of growth. In 2011, Fabory group added several new attention. This information is sent to a customer-specific Optical
product categories: woodscrews, hole saws, anchoring products, Bin website, showing the real-time status of each individual
hose clamps (from private label brand MaxxFast®), and additional location in each rack and on each shelf.
14 W.W. GRAINGER, INC. AND SUBSIDIARIES

17. 2011 Sales by Customer Category —
Europe
35% Heavy Manufacturing
22% Other
18% Light Manufacturing
13% Retail
12% Contractor
POLAND
UNITED
KINGDOM
NETHERLANDS
BELGIUM
CZECH SLOVAKIA
REPUBLIC 2011 Sales by Product Category —
Europe
FRANCE HUNGARY
84% Metalworking
ROMANIA 6% Other
5% Hand Tools
5% Power Tools
PORTUGAL
KEY
Branch
Distribution Center
(As of 12/31/11)
Stork Technical Services relies on Fabory Group
Stork Technical Services (STS) is a worldwide knowledge-based organization which
ensures that companies in the chemical, oil and gas, and energy industries as well as other
production sectors can operate successfully without interruption. STS services vary from
installation, maintenance, consultancy and technical management to highly specialized
activities such as the production of turbo components or the overhaul of gearboxes.
High Quality Standards
“Our focus is serving the chemical, oil and gas, and energy sectors. If a customer’s installation
stops, the effects are enormous,” says Christel Rosbag, Advisor, Marketing & Communication
Fabory Group’s Optical Bin system makes use of special
for STS. “Therefore, our people must be able to use the best possible materials. We need a
shelving racks that contain sensors for each bin location.
fastener supplier that can meet our high quality standards – a supplier who can deliver our
orders promptly, regardless of the location where we are working.”
Perfect Logistical Performance
“I view Fabory Group more as a partner than as a supplier,” states Rob Hogeveen, Senior
Contract Manager at STS. “Their logistical performance is perfect. We can even call them 89,000 3.10.47
on the weekend if we need some stud bolts urgently. Fabory Group suits us perfectly. Date J.M. Borstlap
Number of products and his sons went
They are reliable, they think along with us and deliver quality.” in stock at into business as
Fabory Group Borstlap & Sons,
selling fasteners and
Attention to Detail
MRO products
Rien van IJzendoorn, responsible for
purchasing at STS, is happy to order with
Fabory. “Fabory Group has an eye for detail,”
he explains. “We use a lot of metal end studs.
Many suppliers deliver them full of the razor
sharp metal chips that result from the
production process. Fabory Group washes 2,500 137
Number of Fabory branches and
these metal end studs first. This may seem Group customers who
trivial, but for the people who work with Rien van IJzendoorn, Rob Hogeveen and Christel
utilize the Vendor
Managed Inventory
2
distribution centers
them this is extremely important.” Rosbag of STS. program (VMI)
W.W. GRAINGER, INC. AND SUBSIDIARIES 15