A few thoughts on what makes Sherwin-Williams great - a 690 bagger since going public in 1980, or 17.75% CAGR.

Sherwin Williams does development, manufacture, distribution and sale of paint, coatings and related products to professional, retail customers. Largest provider of architectural paint in the United States.

The Americas group has 4 758 company-operated specialty paint stores. Each store is engaged in servicing the needs of architectural and industrial paint contractors and do-it-yourself homeowners.

Their most valuable asset is their extensive North American network of stand-alone stores and reputation as an expert among professional painters.

The secret to its rapid growth even in developed markets: continually stealing market share from smaller rivals as it rolls out nearly 100 new stores each year throughout the Americas. And professional painters are the main target for Sherwin, NOT the end consumer.

Ask any painter – they’ll tell you they prefer Sherwin Williams’ paints because they value brand, quality and store proximity.

Its value proposition for contractors: $SHW offers job-site delivery, in-app ordering and a capacity for high-volume orders, all of which save time for customers and allows for premium product pricing.

Sherwin-Williams also charges a premium for its paints (think $XPEL). Of painting contractor costs, most of it is labor, and a small minority are costs are the actual paint costs (10%), and so painters aren’t particularly sensitive about their paint costs.

If anything, because Sherwins’ paints are so high-quality, it decreases preparation and application time, which saves painters labor costs. This means Sherwin has pricing power, which also helps to transfer raw material costs on to customers.

Value-add to homeowners: they view repainting as a low-cost, high-return way of increasing the value of their home.
Their distribution network of stores is also a competitive advantage.

Their branded products are sold through the chain of more than 4000 company-operated stores, while the other brands are sold through mass merchandisers, hardware stores, etc.

Physical availability is key, as 90% of contractors have said they prefer to buy their paint at physical stores given the high level of complexity that goes into choosing and mixing paints.

So Sherwin’s scale is what allows it to offer low-cost on site delivery, service national accounts and manage raw material inputs.

They also have a lot of store density - more than even Home Depot or TJ Maxx.

That means painters will pass by many Sherwin stores before another hardware store that sells paints.

There’s also a large space for $SHW to keep on growing: the professional painter share was 40% of the industry 20 yrs ago and is now 60% of the paint market today. Room to grow!

In sum, what makes up Sherwin-Williams' greatness: a wide distribution network, the best product for the professionals because of quality + convenience and the subsequent pricing power.