Industrial Equipment Wholesale: Investing Essentials

If you want to know where the economy is headed, keep a close eye on the industrial equipment wholesale industry. When the economy is growing, industrial companies increase production rates and start ordering more from equipment wholesalers such as Grainger , Fastenal , HD Supply , and MSC Industrial . Conversely, when the industrial economy slows, the wholesalers will be the first companies to feel the pain of a slowdown from its industrial customers.

The industry is also facing some significant changes in coming years. The larger wholesalers are seeking to gain market share by expanding store numbers, introducing initiatives such as vending machines, and using information technology and e-commerce to improve efficiency and generate new sales. It's an exciting industry to follow and deserves a close look.

What is the industrial equipment wholesale industry?

The industry supplies the manufacturing and construction sectors with everything they need to run their day-to-day businesses. In industry terms this is called maintenance, repair, and operations, or MRO. Products range from items as mundane as adhesives, faucets, and paper towels, toward more heavy-duty goods such as plumbing equipment, industrial fasteners, electrical products, power tools, and safety equipment.

Source: Fastenal

The plan is to use online expansion in order to increase their product offerings, and ultimately their customer base. In addition, Fastenal and MSC Industrial have aggressively expanded the rollouts of in-store vending machines -- an operation that has seen Fastenal increase profitability.

All told, the industrial equipment wholesale sector is still a play on global growth. However, the industry is undergoing some significant changes that create secular growth opportunities for the larger wholesalers. As a consequence, potential investors should look at the sector as being capable of outpacing growth in the industrial economy overall.

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The article Industrial Equipment Wholesale: Investing Essentials originally appeared on

Lee Samaha has no position in any stocks mentioned. The Motley Fool recommends MSC Industrial Direct. The Motley Fool owns shares of MSC Industrial Direct. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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