Inside the Tractor Supply Company Success Story
In a session during the National Retail Federation's (NRF) inaugural Retail Converge event last month, Hal Lawton, president and CEO of Tractor Supply Company (TSC), discussed how the company is planning to be an even more integral part of its customers’ lives through its Life Out Here strategy. In addition, Lawton addressed TSC's recently relaunched loyalty program, Neighbor's Club.
Lawton was interviewed by Courtney Reagan, senior retail reporter, CNBC, during a keynote session on the final day of the week-long digital event. Here are several highlights from their conversation.
Success Seen During the Pandemic
Lawton noted that TSC has had a track record of success that long pre-dates his joining the company in January 2020. In fact, the retailer of home improvement, apparel and gear, agriculture, lawn and garden maintenance, livestock, equine and pet care products has posted 26 straight years of positive sales growth. This growth wasn't slowed during the pandemic.
"All of the trends that were either created or exacerbated by COVID — pet ownership and adoption, immunization of pets, rural revitalization, self-reliance and the orientation toward homesteading, the adoption of digital — really benefited us as a company.
"Our focus over the last 15 months has been first and foremost the health and safety of our team members," added Lawton. "We literally spared no expense on that. And then investing in our team members, recognizing that they were really the ones on the frontlines out there every day taking care of our customers. And then the second thing has really been leaning into the business. That meant buying inventory to fulfill increased sales; hiring over 12,000 team members in the last 12 months; introducing new technology such as curbside pickup, same-day and next-day delivery; and the launch of our first mobile app."
Consumers' growing adoption of digital shopping methods has been seen within TSC's business. Online sales accounted for 3 percent of the company's total sales pre-pandemic; that number has jumped to nearly 7 percent. Furthermore, TSC has posted four consecutive quarters of 100 percent growth in online sales. And 75 percent of the company's online sales are picked up in-store, speaking to the viability of TSC's omnichannel offerings.
A New Strategical Approach
As TSC seeks to continue the positive momentum it has created during the pandemic, and really the years that preceded it, it has introduced a new internal strategy that it is calling Life Out Here.
"We feel that right now is a great time to invest from a position of strength," Lawton told Reagan. "There's significant opportunity out there for us. We participate in a $110 billion market; it's fragmented and growing significantly. Last year in October we announced our intent to invest $200 [million] to $300 million more into the business each of the next several years for the Life Out Here strategy. We're early days into the execution of that strategy, but a number of those investments are already paying off, including our 'Fast' program, the rollout of our new Neighbor's Club, and all of our digital investments."
Engendering Customer Loyalty
With so many of TSC's products consumable and ripe for repeat purchases, such as pet food, the retailer has devoted resources to relaunching its loyalty program, Neighbor's Club. The free program currently boasts over 20 million members, who account for roughly 60 percent of TSC's sales.
"In April, we rolled out an update to the Neighbor's Club program where we created three tiers: Neighbor, Preferred Neighbor, Preferred Plus Neighbor," noted Lawton. "We're doing a lot to leverage the program and deliver a fantastic experience for our customers — reward them for their loyalty. It's a very integral part of our business."