Tractor Supply Seizing On Soaring Sales with Store Clustering & Remodel Initiatives

Lisa Johnston
Editor-in-Chief, CGT
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Tractor Supply Company is implementing a store and channel clustering initiative that will help it optimize inventory at the store, category and SKU level across is 1,900-plus fleet. 

The company reported yet another surging quarter, with year-over-year net sales growth 31.4% in the Q3, to $2.61 billion. Comp-store sales increased 26.8%. E-commerce now represents nearly 6% of its business, while buy-online-pickup-in-store (BOPIS) and Ship to Store represent more than 80% of online sales.

Tractor Supply’s retail tech investments have positioned it well during the health crisis — more than 10 million new and re-engaged customers have shopped with it since the start of the pandemic —  and the company laid out plans for additional digital and in-store improvements. 

Its new mobile app lets further personalize customer experiences and receive customer insights, while machine learning is ID-ing shopping trends and needs to make product, fulfillment and content recommendations.

The company is also digitizing the layout of its stores to drive improvements in sales per square foot, increase associate efficiencies, and provide way-finding to customers.

“Imagine a customer who dwells in front of a riding lawn mower outside the store for several minutes. We can message them with a compelling financing offer or offer assistance through our mobile app, allowing them to notify an in-store team member that they have a question,” said Rob Mills, executive VP and chief technology, digital commerce and strategy officer.

It’s also investing in intelligent assistant devices for all store associates, enabling instant communication to reduce wait times and improve customer experiences.

Channel Clustering

As part of this, the No. 43 retailer is implementing new channel-clustering and assortment-optimization tools that incorporate a variety of data sources, combining with overall merchant product strategies to generate product recommendations.

“We believe these new capabilities will result in growing market share, achieving higher profit margins with improved inventory precision, and supporting more regional and localized assortments to be the dependable supplier for our customers, all of which will drive greater sales per foot and store productivity,” said Seth Estep, executive VP and chief merchandising officer.

It’s implementing seasonal division store clustering that combines stores with similar customer demographics, POS purchasing data and other data points to optimize its seasonal product assortment. The systems being implemented are being done at both the micro and macro level, Estep said, and the company is currently going through all of its line review processes for store clustering and assortment optimization.

“The Blue Yonder tool that we've been implementing is space aware, so it's integrated throughout all of our merchandising processes and systems. That really allow us to get smarter, better, more scientific and apply the merchandising art to that as well on each individual micro, call it, planogram space within the store,” he said.

The next step will be macro store clustering on a local and regional levels for tailoring space accordingly and/or opening new stores. The company has also integrated in more than 500 stores site-level CAD systems that identify “flex spaces” in stores with lesser planogram visibility.

Project Fusion & Side Lot Transformation

Tractor Supply’s Project Fusion store remodel initiative is updating stores with new fixtures, layouts and products that enhance the customer shopping experience. Site-level space is analyzed by category, with merchandise allocated to align with current strategies and drive space productivity.

The company intends to execute Project Fusion across 60% to 70% of its store base over time. It’s targeting 75 stores by the end of this year and up to 200 stores next year.

Its Side Lot Transformation initiative, meanwhile, is leveraging the stores’ underutilized outdoor space to be an authority in the lawn and garden category. This will be accomplished through a new 4,000- to 5,000-square foot garden center in the side lots, as well as implementing a drive-thru pickup lane for BOPIS orders.

The company intends to transform the side lots of 55 to 65 stores by the beginning of 2021, either completely or under final construction, and will add up to 200 stores next year. It will also open up new stores with this new side-lot prototype in the second half of 2021.


Tractor Supply’s FAST (Field Activity Support Team) initiative, launched last month, creates elevated in-store experiences through merchandising execution. John Ordus, executive VP and chief stores officer, cited significant year-over-year improvement in planograms during the first four weeks, leading to higher sales and better shopping experiences.

“We now are executing planograms at over 95% compliance, which is 40-plus percent better than last year,” he noted. “This is an industry-leading best practice that we will continue to leverage.”

As the program matures, the company intends to bring it to such things as assembly, top stock, recovery, promotions, physical inventories and more.

Tractor Supply also intends to provide one-day delivery to 99% of its customers while improving profitability, and it’s investing in systems and AI that will help it leverage its store network for last-mile delivery.

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