Source: Tractor Supply promotional video
Tractor Supply gets Millennials who say goodbye to city life
Tractor Supply never had to “go country” because it’s always been that way. That doesn’t mean it doesn’t welcome former denizens of the nation’s cities as customers when they move to the rural and exurban markets the retailer serves.
The retailer, with over 1,900 stores in 49 states, bills itself as the largest rural lifestyle retailer in the U.S. Hal Lawton, Tractor Supply CEO, said last week at the NRF Retail Converge conference that the inside joke at the company is that it doesn’t “have a store within an hour’s drive of New York City but we have three within 20 minutes of Odessa, Texas.”
Rural lifestyle and, consequently, Tractor Supply’s business are constantly evolving, according to Mr. Lawton. Management is seeing developments resulting from gains the chain has made in attracting Millennials to shop in its stores and via its app or website.
“We had a four point change in the Millennial customer penetration in our business in the first quarter this past year,” he said. That includes some who live in cities and suburbs who adopt elements of rural living in their current locations and order online. Others, who moved from more densely populated areas during the pandemic, are now living in exurban and rural communities and investing in their new homes or engaging in activities such as growing their own vegetables and raising chickens.
Mr. Lawton said that mobility and housing data from June continues to show Millennials moving to markets his company serves. This is taking place even as cases of COVID-19 have fallen with increased vaccination rates.
The retailer’s Neighbors Club free rewards program has also been key to its success with over 20 million members representing about 60 percent of the chain’s sales. Tractor Supply rolled out a three-tier rewards structure for the program in April. The first group of Neighbors Club members earn a point for every dollar spent. Those who spend between $1,000 and less than $2,000 move up to Preferred Neighbor status and earn two points. Customers who spend two grand or more become a Preferred Plus Neighbor and can earn up to five points if they use the retailer’s TSC Personal Credit Card. Mr. Lawton said Preferred Plus members get free shipping on online orders, access to one same-day free delivery a quarter and a free trailer rental once a quarter.
Discussion Questions
DISCUSSION QUESTIONS: Do you see demographic mobility trends continuing to favor Tractor Supply? What sets the chain apart in your mind?
Poll
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Carol Spieckerman
President, Spieckerman Retail
Paula Rosenblum
Co-founder, RSR Research
Tractor Supply has been quietly going about its business for many years, delivering results that are the envy of the industry. The fact that the retailer has remained off-radar has been a blessing, since they have resisted jumping on the latest fads. They focused on delivering products customers need with great service. TSC was already a very successful operation, and the demographic mobility trends will further accelerate and extend their reach. I think TSC will become a truly stand-out retailer over the coming years and as long as they hold true to their values, I see nothing but upside.
Fundamentals in their brand values are directly tied to Tractor Supply’s loyalty and growth. As “city folk” started to make the moves into the burbs during the pandemic, the demographic slowly shifted to a younger customer but they haven’t lost their loyal fans and that’s the secret sauce.
Tractor Supply was the winning retailer no one was paying attention to. Now, its success is a model for the industry, largely due to what the company decided not to do. Tractor Supply hasn’t over-stretched into non-core categories, it hasn’t spread its brand all over the place through others’ marketplaces or diluted its premise by welcoming all comers on its e-commerce platform. In other words, Tractor Supply has maintained its focus on, and confidence in, what the brand stands for and invested in technology to support it. Doing so has allowed the company to become more relevant to Millennials without reinventing the wheel.
Totally agree, Carol. Staying true to a core positioning seems to be the most difficult task for all marketers and retailers are no exception. TSC is one of the best remaining examples. I’ve noticed you often write about Walmart doing a better job than most at this. I often reference L.L.Bean in the same vein. But TSC is the gold standard.
Yes! More than anything, Walmart has done a great job of expanding its core through mutually-reinforcing technologies, solutions, and services. L.L.Bean has as well (with awesome storytelling thrown in for good measure) and the company still enjoys enviable customer loyalty. Isn’t it great to have more than a couple of examples of retailers that are expanding without flailing?
For the first time ever I’ve seen Tractor Supply TV commercials over the past year or so. I was surprised, since they’d always been so low profile. Known in the industry, but definitely not a name that rolls off the lips frequently.
I think the demographic shift to the exurbs is a lucky happenstance as they were trying to raise their profile already.
So they’re primed, they’re ready, they have always been very good with using technology (which is how I heard of them in the first place) and now, the stars are aligned.
Well done!
The direction is now easier, there is less stress and there is a move to go rural as a lot of work will continue to be remote. Tractor Supply has been a steady retailer for a long time and they are making changes to accommodate that customer (assortment, curbside, etc.). .
I love this. Tractor Supply are really grasping the very difficult challenge of addressing the requirements of a demanding demographic. Their agility, energy, approach and can-do attitude is what makes them different and why they are continuing to win applause from so many quarters.
Tractor Supply has always had a clear vision of both their customer and their brand proposition, as evidenced by their consistent and continued success. When I lived in a rural community I loved Tractor Supply for garden supplies and pet food, and miss it now that I live in an urban city. I have long wished Tractor Supply would develop a small urban format for city slickers like me, but know they are right to maintain their rural exclusivity. I think life will continue to feel chaotic and uncertain so as remote working becomes mainstream and widely available, Tractor Supply will continue to grow their market share across all demographic groups.
TS was smart to invest in its loyalty program so recently. When done right, loyalty programs are fantastic at allowing a brand to penetrate a different demographic while maintaining its typical target customer base. TS was also very strategic with its app, using it to support Buy Online Pickup Onsite services. By bolstering the omnichannel retail experience with an app, consumers end up in a stronger relationship with the brand.
Tractor Supply has been a go-to retail staple in our house forever. But yes, the customer base is shifting slightly, expanding to include shoppers who have either moved to a less urban area or want to look like they have moved to a less urban area. There is a class of brands — Tractor Supply, Dickie’s, Carhartt — who, with apparently little initial effort, have become fashion — or maybe it’s “anti-fashion” brands of choice for younger shoppers looking for everyday wear. We’ve seen this before in apparel. Look no further than Dr. Martens’ therapeutic shoes for lower working class British feet becoming Doc Martens, the footwear of choice for classic rock ‘n rollers, punks, protestors, and young people of all stripes. What sets Tractor Supply apart? Like Carhartt, it’s the real deal – authentic workwear. Hopefully these brands will resist the temptation to stay too long at the ever changing fashionista fair.
Good that Tractor Supply is respecting this. In terms of style, though, they’re late to the game. Years ago Carhartt cracked this code — offering alternative fashion commonly worn in the city as well as by those who do work for a living in rural and remote areas.
What sets the chain apart? They should stay focused on their real strength: location. Their rural style comes because they really do exist in rural locations. That means they should focus primarily on the goods needed to serve those areas — they are a critical service in those towns.
I’m not really familiar wit the chain — heck, I’d never heard of it — and I’ll confess since I equate “rural lifestyle” with economizing rather than spending money, I had doubts. Then I looked at the website, and memories of those Connecticut-set “I Love Lucy” episodes — or better yet, “Green Acres” — came back to me, and I think they may have found their niche: city-slickers who think the livestock is going to be impressed by the brand of shoes you wear. It’s sure to be a lucrative and growing market … at least until people find out they have a septic system and head back to the urban jungle.
There has been a huge interest, given recent events, for many to look to smaller towns and the rural lifestyle away from the city. It can simply be stated: moving from condensed variety (the city) to vast simplicity (of the country). To many that means small farms (20-50 acre tracts). TSC positioned itself years ago to be there. They offer everything from clothing to sweet feed and much more. It is the farmers outfitter of choice. TSC’s focus on rural and the staples of that life sets it apart, and thank goodness.