Tractor Supply Proves Physical Retail Is Very Different, But Far From Dead
Despite the relentlessly bleak news of sales declines, store closings and retail bankruptcies, Tractor Supply Company not only reported strong quarterly sales but announced plans to open 75 to 80 new brick-and-mortar locations. While clearly benefitting from some of the profound shifts and spending distortions brought on by the pandemic, TSC continues to be one of the many retailers that failed to get the retail apocalypse memo.
The “retail apocalypse” narrative has been one of the more pervasive in recent years, amplified even more loudly by the COVID-19 pandemic. Before the crisis, those that advanced the notion that physical retail was dead or dying conveniently ignored the fact that lots of retailers, big and small, were continuing to open quite a few new locations, that sales consummated in brick-and-mortar stores had grown every year for more than a decade, and that a brand’s physical presence often played an important role in driving e-commerce and growing overall customer lifetime value.
What is undeniably true is that the United States is absurdly over-stored (and over-malled) and that a harsh reckoning has been long overdue.
It has also been clear for some time that the boring and unremarkable middle was collapsing, which goes a long way to explaining why the vast majority of store closings in recent years were concentrated among a relatively small group of long suffering brands.
Moreover, as e-commerce growth accelerated and more shopping became digitally-enabled (which is Essential #1 in my “8 Essentials of Remarkable Retail” innovation framework), the role of physical stores has been evolving, often quite dramatically. The retailers that offer a remarkable, intensely customer relevant, well harmonized and memorable customer experience are not, for the most part, closing vast numbers of stores. The current economic situation is not likely to meaningfully change this. Yet almost everything that was important immediately pre-crisis-much less years earlier-is being vastly accelerated.
Tractor Supply’s more recent success-and decision this past week to up the pace of store openings-is clearly amplified by consumer spending shifts occasioned by the coronavirus outbreak. Yet concluding that they were merely in the right place at the right time would be wrong. In addition to pursuing a large “white space” opportunity (largely below Wall Street’s radar) for many years now, TSC’s management has understood that done right, physical stores can be assets, not liabilities.
The company was ramping up innovation efforts well before the pandemic began spreading, largely around embracing the blur that shopping is today and seeing the customer as the channel. Importantly, it had several key initiatives, including an improved e-commerce platform, enhanced mobile-enabled shopping and expanded delivery options, ready to expand once the impact of the crisis became clear. Having already implemented buy online pick-up in store (BOPIS) years earlier, curbside pick-up became a comparatively trivial roll-out, as was expanding ship from store in support of the explosive growth of online shopping in recent months.
While the pace and magnitude of retail recovery remains murky-and it’s mostly anyone’s guess which consumer behaviors that are being distorted today will persist-there are a few takeaways from the arc of Tractor Supply’s success over the years that many retailers should take to heart.
First, having clarity around which customer segments and purchases occasions you wish to own-and driving relentlessly against becoming more intensely customer relevant-provides a powerful strategic “true north.”
Second, it’s critical to realize that it is not about brick and mortar and e-commerce as distinct channels, but rather, understanding how all touch points in the customer journey can work in concert to deliver a remarkable experience in the moments that matter.
Third, building a culture of experimentation and being fundamentally more agile is critical to surviving in the brave new world of intense digital disruption that has emerged over the past decade or so. Increasingly, particularly in our current highly uncertain environment, this radical agility may well determine the difference between the winners and those lost to history.
This story first appeared at Forbes, where I am a senior retail contributor. You can check out more of my posts and follow me here
Originally published at https://www.linkedin.com.