Slower growth. Total sales for the 250 largest electrical distributors increased by 7 percent to an estimated $39.7 billion. The relatively small increase is probably a reflection of the softening economy that distributors experienced toward the latter part of .

The number of employees in Top 250 companies increased slightly to 82,541 and the number of branches that the Top 250 operate jumped by 100 locations to 4,609 branches.

While the sales increase in this year's Top 250 pales in comparison to the 15.6 percent sales increase that the Top 250 registered a year earlier over 1998 total sales, it pushed the Top 250's market share of total sales through electrical distributors over the 50 percent mark for the first time. This important milestone is a clear indication of the increased pace of consolidation in the electrical wholesaling industry. But it's important to remember that there are probably at least 4,000 other distributors of electrical supplies that account for at least $39.2 billion in sales. (According to EW's Market Planning Guide, electrical distributors forecasted $78.7 billion in total sales for .)

The industry continues to consolidate faster each year, but at the current rate it will take many years to approach the consolidation in the electronics or pharmaceutical distribution industries, where a handful of companies account for the vast majority of sales.

Consolidation. If you are searching for a measure of consolidation in the electrical wholesaling industry, look no further than this listing. In less than two years, at least 25 companies from EW's Top 250 listings in and 2001 have been acquired (see chart on page 22). The U.S. or North American subsidiaries of Hagemeyer NV, Naarden, Netherlands; Rexel SA, Paris; and Sonepar SA, Paris made 17 of these acquisitions, as well as several acquisitions of smaller companies.

Werner Electric Supply Inc., Neenah, Wis., also made acquisitions of Top 250 companies, with its purchases of Northland Electric Supply, Minneapolis, and Van Meter Industrial, Cedar Rapids, Iowa.

While no market areas are untouched by consolidation, some felt it more than others. For instance, since 1998 the Baltimore-Washington metropolitan area has seen the acquisitions of the Branch Group, Upper Marlboro, Md.; Capital Lighting and Supply, Alexandria, Va.; Commerce Electric Supply, Linthicum, Md.; Lee Electric Inc., Baltimore; and Tristate Electrical and Electronics Inc., Hagerstown, Md. Not too far south, Richmond, Va., has also seen a lot of acquisition activity, with the purchases of Dixie Electric Supply by Sonepar, Control Corp. of America by WESCO and Commonwealth Controls Corp. by Graybar.

With the purchase of Northland Electric Supply by Werner Electric and the purchase of Viking Electric Supply Inc., St. Paul, Minn., by Sonepar, the Minneapolis market has a new look, too.

National chains continue to grow. Another measure of industry consolidation is the market share of the national chains. The industry's national chains, Graybar Electric Co. Inc., St. Louis; WESCO International Inc., Pittsburgh; Consolidated Electrical Distributors Inc., Westlake Village, Calif.; and GE Supply Inc., Shelton, Conn., are the four companies with branches in all regions of the United States. In , their combined sales volume was $13.9 billion, and their combined market share was over 17 percent. In comparison, these companies' 1999 combined sales volume was $12.4 billion -- about 16 percent of total industry sales.

Although Rexel doesn't have the locations in every region or major metropolitan area necessary to be considered a national distributor, the company is quickly blanketing the United States with branches, and this year the $2.477 billion in sales of its U.S. operations made it the fourth largest full-line electrical wholesaler, moving past GE Supply.

Methodology. To qualify for a spot on the 250 Biggest this year, a firm had to have $15 million or more in electrical product sales for at wholesale. That includes sales of products a typical electrical distributor handles, such as lighting fixtures sold at retail in a lighting showroom and voice/data communication products. It does, however, exclude revenues from motor repair, plumbing supplies, mill supplies and the like. This year's cutoff dropped from the previous year's $22 million; as larger firms moved off the list due to acquisitions and mergers, it resulted in more room on the bottom.

The firms in the listing rank by dollar sales volume insofar as possible. To place a firm on the list, we estimate its sales if the distributor did not provide it, using publicly available information and our own records of comparable company and geographic area data. Both full-line and specialized electrical distributors qualify for ranking, as well as companies that have multiple types of businesses.

The electrical distributors who provided both a sales figure and a total number of employees had a sales per employee figure of $421,000, a decent increase over the $408,000 sales per employee in last year's listing.

The 250 Biggest provides an overview of activity among the companies at the top of the electrical distribution industry. It also serves as a guide to the entire industry's size and structure. Most important in this time of industry change, it provides a reality check on the status of the electrical distribution industry's consolidation. The business remains highly fragmented, with some movement toward consolidation.