Tractor Supply Plows Ahead With Plans to Redouble Digital Sales

Having already doubled its digital sales in the past two years, the self-titled “rural lifestyle retail leader” is out to double them again.

Less than two weeks after reporting record Q4 and full year results, Brentwood, Tennessee-based Tractor Supply Co. is moving ahead with plans to push its digital sales above $2 billion by 2026, or more than 15% of total revenue.

To do so, CEO Hal Lawton said the operator of 2,000 stores in 49 states intends to increase its digital investments to help convert customers into “power users,” who can seamlessly browse, order, pay, pick up, deliver, check inventory, make appointments and more no matter if they’re in-store, online or using the mobile app.

To that point, the retailer announced Tuesday (Feb. 7) that it was teaming up with Germany’s Software AG to integrate systems and deploy advanced mobile solutions that will allow Tractor Supply’s customers to “make purchases faster” by “connecting customer experiences across the store, mobile and click-and-collect channels.”

“What became clear was that in the ‘new normal,’ integration and forming a fluid flow of data between systems would be key to maintaining strong relationships with our customers,” Rob Mills, chief technology, digital and strategy officer at Tractor Supply, said in the announcement.

“It’s not just a question of can we build an app or add more functionality to our website,” Mills continued in the joint statement, “the biggest change is being able to easily exchange data between our systems in real time, making sure that we can adapt to the changing needs of our customers quickly.”

Not All That ‘Out There’

For a company that has trademarked the term “Out Here” as its core branding slogan, the increased embrace of digital tech to streamline and enhance the customer experience is anything but far-fetched or out there.

Although Tractor Supply caters to rural hobby farmers who raise their own chickens and like to work on their properties with the right tools and clothing, its customers are actually among the most digitally active in the industry.

“1 in 5 — or 20% — of our new customers came to Tractor Supply through our digital channels in the fourth quarter, reinforcing the importance of the investments we are making in this area,” Lawton told analysts and investors last month (Jan. 27) on the company’s Q4 earnings call.

In fact, the company also said that visitors to its website and mobile app rose nearly 20% last quarter with roughly 1.4 million first-time customers being attained through digital channels.

Despite these gains, and the fact that 2 million people downloaded its app last year, Mills said “there is still a tremendous opportunity ahead of us compared to other hardlines and specialty retailers.”

In particular, a recent company presentation laid out three key areas of digital focus to help customers experience “frictionless shopping — anytime, anywhere, anyway,” including increasing mobile engagement, connecting customers with care for pets and animals, and advancing the omnichannel delivery experience.

Low Tech and Loyalty

Besides its latest investment in IT integration and other recent digital and logistical upgrades, the retailer, which was founded in 1938, says it will continue to invest heavily in its “Neighbor’s Club” loyalty program and its 24 million members via new benefits and unique experiences.

“The response to our Neighbor’s Club enhancements continues to be overwhelmingly positive,” CMO Christi Korzekwa told investors during the company’s Enhanced Earnings Event, noting increases in both customer retention and market share with over 4.6 million members added in the last 12 months.

“Our [loyalty] members represent 70% of our sales, they shop more frequently, and they spend three times more than non-members,” Korzekwa added.

In closing his remarks, Lawton — who previously served as the president of Macy’s before taking the top job at Tractor Supply 25 months ago, just prior to the start of the pandemic — said the rural lifestyle retailer was “supercharging” how it serves customers with an emphasis on convenience and meeting them how and where they want to engage.

“We are experiencing more customers shopping with us than ever before. They are visiting us more frequently. And when they come to shop with us, whether it’s in our stores or online, they are spending more money per trip,” Lawton concluded, while promising to deliver more.

Shares of Tractor Supply are up roughly 53% in the past year, and 190% from the March 2020 lows, lifting the retailer’s market value to over $25 billion.