Photo: Tractor Supply Co.
How is Tractor Supply acing the pandemic?
Through a special arrangement, presented here for discussion, is a summary of Steve Dennis’ recent Forbes article. Steve is President & Founder of SageBerry Consulting and a senior Forbes Contributor. His first book — Remarkable Retail: How to Win and Keep Customers in the Age of Digital Disruption — came out earlier this year.
Despite the relentlessly bleak news of sales declines, store closings and retail bankruptcies, Tractor Supply Company (TSC) not only just reported strong second-quarter sales, it also announced plans to open 75 to 80 new brick-and-mortar locations.
Concluding that the retailer was merely in the right place at the right time would be wrong. In addition to pursuing a large “white space” opportunity (largely below Wall Street’s radar) for many years now, TSC’s management has understood that, done right, physical stores can be assets, not liabilities.
TSC was ramping up innovation efforts well before the pandemic began spreading, largely by embracing the blur that shopping is today and seeing the customer as the channel. Importantly, it had several key initiatives, including an improved e-commerce platform, enhanced mobile-enabled shopping and expanded delivery options, ready to expand once the impact of the crisis became clear. Having already implemented buy online pickup in-store (BOPIS) years earlier, curbside pickup became a comparatively trivial roll-out, as was expanding ship from store in support of the explosive growth of online shopping in recent months.
There are a few takeaways from the arc of Tractor Supply’s success over the years that many retailers should take to heart.
First, having clarity around which customer segments and purchase occasions you wish to own — and driving relentlessly against becoming more intensely customer relevant — provides a powerful strategic “true north.”
Second, it’s critical to realize that it is not about brick and mortar and e-commerce as distinct channels but rather understanding how all touch points in the customer journey can work in concert to deliver a remarkable experience in the moments that matter.
Third, building a culture of experimentation and being fundamentally more agile is critical to surviving in the brave new world of intense digital disruption that has emerged over the past decade or so. Increasingly, particularly in our current highly uncertain environment, this radical agility may well determine the difference between the winners and those lost to history.
Discussion Questions
DISCUSSION QUESTIONS: What lessons does Tractor Supply Company’s quiet success over the years and its ability to adjust and thrive amid the pandemic offer to other retailers? What common attributes are shared by retailers that have relatively smoothly navigated COVID-19’s fallout?
Poll
BrainTrust
Michael La Kier
Vice President, Brand Development - IGA, Inc.
Zach Zalowitz
Founder, Salient Commerce Consulting
The common attribute is a proactive investment in technology and people to handle cross-channel commerce. REI is another great example, and so is Ulta. These companies realize where the puck is going to be and they skate to the puck. The ones that haven’t fared well were mired in internal politics, took an incredibly long time to deploy their technology and under-invested in the right human capital.
Here’s the lesson: sexy does not always sell. Smart operators who understand their business and are adept at meeting their shopper needs will always win. Pandemic or not.
I bet you that, to their customer, that store is sexy (attractive) enough to want to visit, even he/she is not buying.
How about they just really, really, really know and understand their customers’ needs and wants? Focus and discipline. Great listening and adapting to shifting customer habits. Plus a lot of free standing, well-placed, right-sized stores and a less intense competitive environment than the malls.
Your assessment covers it. Those concepts are fundamental but not always clearly understood by a business. When management has a grasp of this and a desire to pursue these concepts, the business succeeds.
Jeff you are spot on. Their new commercials reflect this as well. Get in , get what I need and done.
Well for one thing they have every reason to crow at being so customer-focused. I’ve seen this story picked up widely. Steve made great points about why they aren’t a fluke — they were prepared. It also helps they were deemed essential and did not have to close.
Tractor Supply’s success is directly attributable to having a laser focus on the customer experience and truly adapting their go-to-market strategies around the needs and wants of their audience. There are no shopping channels in today’s retail universe, and the consumer remains the single and only channel that needs to be addressed.
The company has fulfilled its brand promises and has pivoted its operating models to become more agile, flexible, and responsive to its target customer’s needs. Without allowing legacy strategies or infrastructure to hinder their innovation, Tractor Supply’s digital-first strategies have proven to be very successful and have helped to lay the foundation for future growth.
Tractor Supply isn’t the only rural lifestyle/expanded hardware retailer that’s doing very well this year. Both Harbor Freight and Family Farm & Home are growing rapidly. There are a few commonalities between the three. First, leadership at each has made a concerted effort to communicate directly with customers during the pandemic, offering a mix of comfort, support and “do-good” marketing. Also the assortment at each centers on items for the home and it doesn’t hurt that each sells a good amount of what can be called survival gear. Next is their use of sophisticated technology for demand forecasting, which helps keep them in stock on things like masks and gloves. Last, each has avoided controversy so far, whether it’s over masks or protests. I fully expect this retailing trend to continue well beyond the pandemic.
Tractor Supply is an exceptionally well-run company with intense loyalty and buy-in from its leaders in and out of the executive suite. Its culture honors individual contributions, helping TSC weather the pandemic successfully.
TSC’s secret is keeping the customer at the heart of their business. That’s not really a secret, but few businesses practice it with the dedication of Tractor Supply.
Tractor Supply has shown that retailers can survive and prosper in today’s world, not be starstruck by Amazon and perform both online and in-store. Yes, it has helped that they are in a sector that will benefit from people being at home with more leisure time during the COVID-19 pandemic lockdown but it is way more than that. Tractor Supply has been agile in the way they have developed, created lots of different opportunities for the consumer to shop with them and most importantly provided a real experience that shoppers can enjoy. It has not gone into its shell given the stiff competition from pure online retail but caught the wave and made the whole customer experience a comprehensive one that customers appreciate. Lots of other retailers could do well to look closely at what they have achieved and how — instead of simply saying that they cannot fight the move to online, Amazon and COVID-19 all at the same time.
Smart management and a strong business model. TSC has managed to operate in almost all U.S. states offering a rural lifestyle business and providing critical services and products to the rural farmer and for neighborhoods that face fewer threats from the pandemic due to lower density populations. Almost half of their business is in livestock and pet feed- making it as important as grocery. Combine that with relentless focus on the customer and high importance to employee well-being and the business is slated to succeed in today’s climate. They’ve done a fantastic job with their top management as well. CEO Hal Lawton (big fan, I’ll admit it) brings experience from Macy’s and eBay to provide exactly what is needed in an omnichannel world. Imagine the only general store in a small town – decked out with top quality people and technology.
This is the type of story you normally hear when the founder or their heirs are still running the business and keeping close to the customer. Surprisingly, TSC has been publicly traded for over 60 years with many senior management changes during that time. However one year after another TSC keeps finding ways to deliver value to their target market – because the culture is strong and the employees have similar profiles to their customers. I believe the simplicity of the experience and honesty of the merchandise and promotions makes people want to belong to that rural community and TSC delivers on that lifestyle promise day after day and from store to store.
Their NPS score last year was 40 — five points above Amazon and only beaten by Costco. This is very high for retail and signifies a bright future if the new CEO (from Macy´s) doesn’t screw it up.
Tractor Supply operates in smaller markets, not so much in major metro areas except out at the edges of them. They cater to a blue collar/working class customer with a more rural mindset. These areas have not really been impacted much by Coronavirus or the various other events that have been impacting retail in recent months. Given they are a hardware store/pet store they are considered an essential business and have remained open in most if not all states through Coronavirus.
No word on their Petsense format … would like to see some combination stores.
This is a product of their more conservative market and more conservative working customer base.