Tractor Supply: Amazing Growth Through Good Times and Bad
The beginning of the recession made its true impact somewhat suddenly and U.S. retailing was hit hard. Following in the steps of the subprime debacle, our industry was stunned more than most. Many retailers had to act fast to combat the economic horrors faced by their clientele as they contemplated changing pricing and product schemes, as well as issues involving real estate, often in survival mode.
In researching the Chain Store Guide series on recession busters, it becomes clear that many of the retailers which actually thrived through the recession, had been operating through what proved to be recession-proof agendas, many of which had actually been conceived much earlier, during generally affluent times. Many of these retailers did not have to strategize a reaction to incredibly tough times. They simply and cautiously proceeded with their respective game plans which had been drawn up years before hints of a recession had appeared on the horizon. Of course they tweaked agendas as a response to customer spending constraints and harshly affected communities.
Tractor Supply is a fine example of a company which has grown aggressively through the recession years, even after most of this industry was devastated by the just earlier subprime scandal. The company’s remarkable growth during and after these consecutive crises was based on a plan which was devised long before either of these essentially worldwide financial catastrophes even began to appear as a concern.
Two decades ago, more than a decade before either the subprime crisis or the recession actually hit, the Tractor Supply board, under the inspiration of Chairman, CEO Joe Scarlett, conducted a vital series of planning meetings. These were designed to plot a successful course for the company to achieve a transformation, with the goal seeking to achieve years of solid long term growth and financial success.
The participants probed every aspect related to the company’s business, beginning with a dissection of the company’s customer base. To this they sought to determine any tweaks or changes they might employ to increase their attraction to what had been a loyal base, seeking to significantly increase growth for the future. The planners also sought to expand its customer base by altering its merchandising and real estate practices once new, attractive customer types were determined. This ultimately resulted in a focus on a new type of customer, the gentleman or weekend rancher. The planners estimated this to be a growing and very affluent group to target.
Next, the planning committee sought to determine which products needed to be added or adjusted from the corporate arsenal in order to alter the merchandising mix to keep traditional, loyal customers happy, while attracting their prized new, affluent target audience. To this the planners studied future real estate options, again seeking to accommodate the new customer type, while not overlooking the enhancement of its relationship with its long-term customer base.
These meetings resulted in somewhat of an overhaul of the company’s product mix. One of the key changes here was a significantly enhanced apparel selection. This proved to be an immediate hit, especially with the younger members of shopping families. In fact the youth market grew substantially for Tractor Supply as a result of its new apparel offering. After the recession hit, this trendy, yet practical garb became all the more a customer magnet with its affordable pricing and wear.
After a decade of consistent, gradual growth, Tractor Supply reached the billion dollar mark in annual sales in 2002. Actually, in that year sales rose to just over $1.2 billion, from a previous high of just under $850 million, an increase of 42 percent. Sales for 2013 came in at an impressive, though unsurprising, $5.2 billion.
Corporate store expansion has paralleled annual sales. At the end of 2002, the company operated 425 stores. At the end of 2013 the Tractor Supply boasted a total of 1,276 locations. Through all these years of this century, the company’s smallest annual store increase was a comfortable 27 back in pre-recessionary, 2003. The worst years during the recession saw an increase of a solid 75 new locations in 2009, followed by an expansion of 71 new locations during 2010.
For all the company’s stunning growth and success, the company is far form resting on its laurels. Recently, entering the company website, visitors were hit by an imposing graphic inviting them to an event termed, Purina Days- Your destination for Quality Pet & Animal Nutrition. The copy went on…’ Join Us For Great Deals, Activities & Giveaways! Sale May 28th-June 1st –Main Event May 31st Purina Dog Food Purina Livestock Feed Purina Cat Food
This was clearly a clever cross promotion with pet and animal industry giant Purina. One might have thought such a promotion worthy of a pet supply chain, however for Purina the key was likely the livestock feed promotion. Here, a retailer which may not be the first to come to mind when considering the Purina brand, cleverly showed its corporate muscle. The day after this promotion ended the website lead with a bold, Shop Our Father’s Day Gift Guide.
The decade and a half prior to the recession, were nothing short of boom years for the home center/hardware industry. However, virtually all aspects of this market were savaged by the combination punches struck by the subprime crisis followed almost immediately by the recession, save its farm and home segment. Here Tractor Supply was by far the greatest winner.
The years after Tractor Supply’s planning meetings in the late 90’s, actually proved to be more uncertain for the company’s growth than the recessionary years. Very smart planning more than a decade before the recession simply proved to be recession-proof. Many financial institutions and retailers wish they had had the recessionary durability which Tractor Supply has demonstrated.