NRF RETAIL CONVERGE — While many retailers struggled to stay afloat during the pandemic, Tractor Supply gained millions of new customers in the last fiscal year. The challenge now is keeping them, CEO Hal Lawton said during an NRF Retail Converge panel on Friday.
"We do feel like we're doing a nice job retaining them," Lawton said. "But we're investing heavily in that we've pivoted a lot to digital marketing, we've increased our national television advertising. Interestingly, our brand awareness in the beginning of 2020 was 34 points — it's now 51 points."
The company garnered 14 million new customers in the last five quarters, said Lawton. Its first mobile app has surpassed one million downloads, he said.
"We're seeing that in our customer base it's evolving," Lawton said. "We had a four-point change in the millennial customer penetration in our business in the first quarter of this past year."
Millennials, age 22 to 40, make up the largest share of first-time homeowners, according to a 2021 report from the National Association of Realtors. That trend led to higher demand for pet products, gardening and livestock products, according to Lawton.
So far, the company has been seeing some success with retention, with 20% of new customers returning to shop at Tractor Supply again within 30 days, Lawton said.
Lawton, a former Macy's exec, took the reins as Tractor Supply President and CEO in January, just weeks before the pandemic disrupted the retail industry. Since then, he has rolled out initiatives that lean into trends exacerbated by COVID — a move that allowed the company to see strong sales growth in the last fiscal year and attract new customers.
"Just about any trend that has been created or exacerbated by COVID, we've been fortunate to have benefited from, have leaned into," Lawton said. Tractor Supply added new loyalty program perks, began offering on-demand pet prescription services, and in its first quarter earnings this year, announced 150 to 200 "Side Lot transformations" as well as 150 to 200 store remodels as part of the company's "Life Out Here Strategy."
"The challenge of all retailers is to stay ahead of their customer needs and at Tractor Supply, we have really a track record of that but this has really evolved over time," Lawton said. "We started as a catalog distributor. We then rolled out brick-and-mortar retail, we evolved the business into animal feed over time, then evolved the business in pet food and evolved into a lifestyle retailer."