Des Plaines, IL-based Journal & Topics reported Wednesday that Grainger officials confirmed plans to close corporate office locations in the northwest Chicago suburbs of Niles and Northbrook. The closures will move about 500 employees a short ways north to the company's corporate headquarters in Lake Forest.
The report cited Grainger media relations manager Tony Macrito saying that all Niles location employees will be transitioned to Lake Forest by the end of 2017, while Northbrook employees will be transitioned by July 2018. The vast majority of the employees will be from the Northbrook location, with less than 100 moving from Niles — with their positions said to be IT and finance.
The report cited a Niles Exit Timeline document from Grainger stating that the Niles exit will begin on Oct. 2.
The news follows Grainger's consistent statements for more than the past year that it plans to considerably reduce its cost structure across the company as most of its customers now buy products via e-commerce. In a stock conference on June 14, it said that it plans to take $100 million to $125 million of cost out of the business. In the U.S., Grainger expects to take out $80-95 million of cost out of the business and corporate functions, including contact center consolidation. In Canada, it expects to take $20-30 million of cost out, including reducing its branch count there by 59 from 144.
Grainger ended its fiscal Q2 (June 30) with 598 branches worldwide, with 286 in the U.S. It has 33 distribution centers worldwide, including 18 in the U.S. and five in Canada.
In Q2, Grainger's total sales of $2.62 billion were up 2.0 percent year-over-year. Restructuring costs led to a 43 percent decline in profit, to $98 million. Excluding restructuring, total profit decreased 10 percent year-over-year, with operating profit down 9 percent.
During the company's annual Grainger show this past March, CEO D.G. Macpherson said the company had gone from 420 U.S. branches down to 250 at the time.
“If you go back to the conversation of how much e-commerce plays a role today, we’ve had to rationalize our branch footprint,” Macpherson said then. “The 250 branches we have now are performing well. We really like the footprint we have.”
Macpherson also stated that e-commerce now comprises more than 60 percent of Grainger's total sales and that he’d be surprised if that figure isn’t at 80 percent within five years.