Tractor Supply Boosts Retail Tech Investments as Sales Soar During Covid-19
Tractor Supply Co experienced “unprecedented sales” during its second quarter of 2020, as the COVID-19 pandemic had a significant impact on consumer demand across all of the rural lifestyle retailer’s major product categories.
As customers focused on the care of their homes, land and animals, Tractor Supply reported second quarter sales soared 35% and same-store sales jumped 30.5%. Tractor Supply president, CEO & director Harry Lawton noted the retailer had “consistent, elevated levels of sales each week, and record growth across all channels, product categories and geographic regions,” during the company’s earnings call. In addition, its e-commerce sales experienced triple-digit sales growth.
“The work we did in the quarter to improve our e-commerce capabilities has certainly resonated with our customers,” Lawton said.
Tractor Supply relaunched its website, and rolled out curbside pickup, and both same-day and next-day delivery during the quarter. In early July, it launched its new mobile app, which allows for greater customer convenience and integration with its Neighbor's Club loyalty program.
“We've seen acceleration in adoption rates of technology initiatives with multiple years of consumer adoption being compressed into 10 or 12 weeks' time,” Lawton noted.
The triple-digit e-commerce growth included buy-online-pickup-in-store orders.
“This sharp acceleration in consumer shopping preferences is becoming ingrained in our customers' behaviors,” he continued. “And we're fostering this relationship in a digital way through frequent communications, whether it's digital marketing or in e-mail, and we're accelerating our focus on the transformation of our digital platforms and services.”
Looking ahead, the retailer raised its capital expenditures to be approximately $300-$325 million compared to its previous range of $225-$275 million for fiscal 2020. The vast majority of the capital spending increase is attributable to new in-store initiatives and supporting technology.
“Our technology capabilities are becoming a strategic advantage for Tractor Supply,” Lawton said.
To support this, the retailer is rolling out contactless payment at registers in stores and expanding its in-store WiFi capabilities from two to five access points in each store. This is tied to supporting contactless payments and Tractor Supply’s mobile point-of-sale hardware that it doubled the capacity of earlier this year. Tractor Supply is also enhancing ship-from-store online fulfillment and increasing delivery capabilities, and adding subscriptions at the point-of-sale in stores.
In addition, the company is working on the ability to drive higher sales per-square-foot in stores by reworking the side lot space at stores. The side lot of Tractor Supply stores boasts 15,000-20,000 square feet of space, which typically holds the retailer’s agricultural products. This year it plans to “radically transform” the side lot in 75 stores and is beginning some tests in the third quarter.
Lawton said the retailer is dedicating staffing for outside and adding new Theatro headsets in all of the stores.
“So that, that way, our team members can talk to each other and manage what will be really, in essence, move from a 15,000-18,000-square-foot store to a 30,000-35,000-square-foot store,” he explained. “The side lot will now be covered going forward, much like what you might see in some of the larger mass and home center stores.”
He also noted the stores are opening up drive-throughs with automatic gates so shoppers will be able to drive-through to collect digital orders and won’t have to wait out front.