Tractor Supply (NASDAQ: TSCO) beats Amazon to the heartland

INNO

What an interesting company..


Isolation is different on a farm; it’s not all sweatpants and sourdough.

The animals still need to be fed, the fences mended and the machinery maintained. It generates a strange, slow drip of a shopping list, full of things that are tough to find on Amazon. Bezos and co. may have disrupted diapers, but horse vitamins, bee-keeping equipment and barbed wire are still up for grabs.

This has long been the sweet spot for Tractor Supply Co. and a host of smaller, independent feed and grain—or “ranch”—stores. “Tractor,” as they call the company in its Tenn. headquarters, saw Covid-19 coming early and got serious. Unlike a host of elected officials, it assumed lockdowns would spread quickly to the hinterlands, from Manhattan, NY to Manhattan, KS, and it quickly retooled its shopping logistics, adding curbside pickup and expanded delivery.

A few days ago, the final Tractor Supply store—No.1,863—began offering same-day delivery for orders that come in by noon, a feat that e-commerce giants are still struggling to pull off in big cities, let alone the Heartland.

“We’ve been working on this for the past couple of years, so we had infrastructure in place that allowed us to scale,” Robert Mills, Tractor Supply’s strategy and technology chief, told me.

To pull it off, Tractor Supply partnered with Roadie, an Atlanta-based delivery platform with deep inroads in rural America. Roadie relies on an Uber-like crowd of contract drivers and calls its model “on the way” delivery. It is to farm country what DoorDash is to the Westchester Whole Foods set. Tractor Supply customers pay a flat rate starting at $15, based on the size of the load; ride-on mowers, fence posts and other things that require a flatbed trailer command the top fee, $70.

While Tractor Supply declined to share numbers, it said digital orders have spiked in recent weeks. And 80% of those transactions are either being delivered or picked up curbside. The orders going out for delivery, meanwhile, are monsters—almost three times the average ticket.

The company has had no problem matching order demand with driver supply, according to Mills. No doubt, the Roadie delivery ranks have swollen now that one in five U.S. workers is looking for a job.

What emerges is a retail playbook of sorts for a post-pandemic world.

The narrative, of late, has been that the big will get bigger. In a socially distanced world, shook shoppers will flock to Prime memberships and Walmart.com.
Everyone else is in for a tough slog. Consider J. Crew preparing bankruptcy paperwork and department stores being given last rites. Discount outlets and chains like TJ Maxx, which rely on “a treasure hunt” in-store experience, are facing a particularly grim future. But there is a lot of gray area between a brick-and-mortar store and an online order. The best retailers will figure out creative ways to wedge into that space.

A few days ago, Tractor Supply CEO Harry Lawton touted the company’s new socially distant shopping and digital chops with a succinct message for Wall Street: “Our goal is to make sure we come out of this pandemic stronger.” —Kyle Stock

Eric S, Guest blog

 

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