April 11, 2024 • 57 mins
A bunch of companies saw their share prices boom during the pandemic. Peloton surged because no one could go to gyms. Zoom jumped because no one could go to the office, and so on. Since then, many of these companies have come crashing down back down to earth. However, one pandemic winner that has yet to see its stock price mean-revert is Tractor Supply Co. Its shares have been up about 270% since their 2020 lows. The retailer has ridden a demographic and cultural shift as more Millennials move away from cities and decide to become hobby farmers growing their own chickens, vegetables, and fruit. In this episode, we speak with CEO Hal Lawton about the Tractor Supply business model, including how it's bucked the post-pandemic pattern and what it's doing to lock in customers for the long term.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:20):
Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3 (00:23):
I'm Tracy Alloway and I'm Joe Wisenthal.
Speaker 2 (00:26):
Joe, you know what I did this weekend?
Speaker 4 (00:27):
Something outdoors in your garden or maybe a home construction project,
but something that was very dirty and costly and time
consuming and an.
Speaker 3 (00:37):
Economical Thanks Joe.
Speaker 5 (00:39):
Yeah, but.
Speaker 3 (00:41):
I'm sure it's very satisfying on some level.
Speaker 2 (00:44):
Well, I did do a lot of that. I'm restoring
an orchard at the moment, and it's a lot of
hard work and a lot of supplies. As you pointed out,
I'm currently building a gate, and I think the gate
is going to be phenomenally expensive by the time I
finally finish it. But what I actually did this weekend,
or one of the things I did, was I went
over to tractor supply.
Speaker 4 (01:04):
Oh I'm jealous, you know, amazingly I still haven't been
to one. Wait, Tracy, are you a hobbyist farmer? It
would you call yourself that if you have an orchard?
Speaker 5 (01:14):
Right?
Speaker 2 (01:14):
Yeah, I mean I guess we have blueberries and raspberries
and strawberries and apples and apple pears and all of
that stuff. So yeah, yeah, I guess it's my hobby.
Speaker 4 (01:25):
You know, we did that episode about Tractor Supply last
year with the professor who had done that HBS study,
and by it sounds like you are the modal Tractor
Supply customer.
Speaker 2 (01:36):
Please, Joe, I prefer cottage core elder millennials.
Speaker 3 (01:39):
Okay, well that's no.
Speaker 2 (01:40):
It makes me sound like a character out of like
Final Fantasy or something.
Speaker 6 (01:44):
No.
Speaker 2 (01:45):
So I went over to Tractor Supply. And the reason
I went is because it's chicken season. So they have
all the baby chicks over there and you can kind
of see them in their little enclosure, and I can
fantasize about the day when I will have my own
chicken and what kind I will get.
Speaker 4 (02:01):
But in the meantime, you have to build like ten
other things like and then you can get around to
building the chicken coop.
Speaker 2 (02:06):
Yeah that's right. I've got big plans for the chicken coop,
all right. But the reason I bring it up is
because Tractor Supply is a company that is sort of
of perennial interest to us. So last year we recorded
an episode with Michael Roberto when he published a case
study for Harvard Business School on Tractor Supply, and even
(02:27):
before then, I remember Samuel Rnes, the CORBU analyst, he
had always called this company one of the most interesting
retailers on the planet. So it's sort of loomed large
over our consciousness. And I think the interesting thing about
the Tractor Supply Company is there's this question of cyclical
(02:48):
versus structural. So this is one of the companies who
share a price and revenue really boomed during the pandemic.
Lots of people were staying at home, lots of people
became hobby farmers, as you point out Joe, buying tomato
cages and growing their own vegetables from seed whatever, and
so there was an expectation that a lot of that
(03:09):
business would start to subside or at least slow down
as people started going back to work, or some of
the moving from urban areas to the suburbs started to reverse.
But instead seems like this particular market just continues to grow,
and Tractor Supply share price is still very, very high.
Speaker 4 (03:29):
You're absolutely right, So the stock is really close to
an all time high, continues to power higher. You know,
like fifteen years ago this was like an eight dollars stock.
Today it's a two hundred and forty nine dollars stock.
You look like you could be looking at a chart
of in video or something, and it is striking that
you don't have to be an AI company.
Speaker 7 (03:46):
To see charts like this.
Speaker 4 (03:48):
If you like find the right product, the right lane,
the right store mix, et cetera, and you are on
the right secular trends such as the rise of the
hobbyist farmer, people moving out to the exerbs, growing their
own chickens, et cetera. It's an amazing case study on
how to like, how to execute.
Speaker 2 (04:03):
Absolutely So today I'm glad to say we really do
have the perfect guest because we are going to be
speaking to the CEO of Tractor Supply, mister hal Lawton.
He joins us. Now, thank you so much for coming
on the show.
Speaker 6 (04:15):
How Hi Tracy, Hi Joe, Thanks so much for having
me on. Look forward to talking with you all today.
Speaker 2 (04:20):
Likewise, we are very very excited about this conversation, not
least because it's a way for me to sort of
reflect on my own spending happens so for Tractor Supply,
but maybe just to begin with, you know, Joe called
it the hobbyist farmer. There's a bunch of different names,
cottage core, millennial type lifestyle, but like, who do you
(04:41):
think of as your primary customer? Rural enthusiast is the
other one that I remember.
Speaker 6 (04:47):
Yeah, you know, I think all those names are used
frequently to reference our customer and kind of our Our
main kind of theme that we ladder up to is
life out here. And the reason for that is is
we went out maybe seven or eight years ago and
talked with our customers, and you know, these customers range
from living in West Texas and they've you've got cattle,
(05:12):
maybe living in Wisconsin and have a dairy farm, or
you know, could be living here in Tennessee and have
five to ten acres and they do a little gardening.
Maybe they have some small animals, chickens, or they could
half acre, you know, one acre unincorporated, you know, suburb
exurb with you know, a raised bed garden in their backyard,
(05:32):
or could be a dog breeder, and you know, just
these whole range of customers that have different lives that
they live. But what we found when we talked with
them was they all used the words well out here
in the description of their lifestyle, and it was just
a very common phrase that all of our customers used,
and so we ended up kind of laddering it up
(05:53):
to that and saying, you know, we're built to serve
life out here, and that plays itself out in so
many different ways and so many, you know, variants of
the lifestyle, whether it's hobby farmers, you know, horse owners,
chicken owners, you know, whatever the passion they may be gardening,
et cetera. But at the end of the day, they
all have a lifestyle mentality philosophy that kind of ladders
(06:16):
up to this notion of life out here, which is
around freedom and self reliance, homesteading, the love of animals
and pets and land.
Speaker 7 (06:26):
I love that.
Speaker 4 (06:26):
So since we are recording, since Tracy and I are
in the Bloomberg HQ studios in Manhattan, I'm going to
use the phrase out there, because we're certainly not out
here right now, so we're talking about out there. You know, obviously,
tractor supply has been growing a long time, and then
it does seem to have at least helped been turbo
charged by some of the changes that happened during COVID.
(06:50):
I only realized this morning that you started in January
twenty twenty, so you've probably never known like tractor supplying
the normal times. But talk to us about, like how
you distinguish sort of long term and short term trends
in out heariness. Because I'm sure there was a bunch
of people like, Oh, we're gonna move out to the country,
We're gonna have chickens, we're gonna buy pets, et cetera.
We know that some of that has slowed down or
(07:11):
some of that was.
Speaker 3 (07:12):
A one off.
Speaker 4 (07:13):
So how do you think about the trajectory of the
outhereeness and whether COVID was it an accelerant, was it
something that went up and then we're back to trend, Like,
how do you think about the growth of what's sustainable
out there.
Speaker 6 (07:26):
It's a great question and it's one that's been asked
repeatedly over the last few years about our business. To
your point, we were eight point four billion dollars in
revenue in twenty and nineteen. We did fourteen point six
billion dollars of revenue in twenty twenty three. You know,
(07:48):
that's roughly a twenty percent compound annual growth rad over
those years, so significant growth for you know, particularly for
our retailer with over two thousand store so reasonably mature.
We would articulate that the majority of that sales lift
we've seen and the increased customer transactions and new customers
(08:11):
that are shopping us is structural in nature, and I
can get into the reasons for that, but I would
just say at the highest level, I think, you know,
what we've seen in our business is very different than
many of the other kind of COVID winners that you
know went kind of boom to bus to some degree, right,
whether it was everybody you know jumped on a peloton
(08:33):
because they couldn't go to a gym, and then you know,
we saw that reversion. Everyone started you know, using videos, meetings,
things like zooms and stuff. And now you've got to
shift back right where people are still doing that but
obviously in person now. And you know, you look at
even like other retailers who sell say electronics, who had
a huge search because everybody needed a computer or a
(08:53):
new router or you know need some other needed wanted
a new TV, and then that all back. I mean,
there's a lot of circumstances. We can think about different
companies and different sectors that had a boom and then
a reversion you know, with us, it's been different because
for the most part it's been macro structural. But I
would also assert that we've done some things hopefully that
(09:15):
have helped make that, you know, structural. The big thing
I would push on is really just the millennial generation.
And at the timing that COVID was occurring, the millennial
generation was kind of late twenties, early thirties, and you know,
it'd been a question for a decade whether or not
that generation was going to revert to to kind of
(09:36):
the normal behavioral trends that other generations had followed, or
were they going to be different. Right, we'd read the
numerous stories on this is going to be a rental generation,
and it's going to be an urban generation, et cetera,
et cetera, right, and sharing generation, and you know, lesser kids,
they're you know, lesser you know, buying homes and those
sorts of things. And what we're seeing is that that
(09:59):
gener generation is reverting to previous generational norms, they're just
doing it a little later. And what we would articulate
is that COVID was actually a.
Speaker 5 (10:09):
Catch up versus a pull forward.
Speaker 6 (10:11):
And historically that generation, say twenty six twenty five twenty
seven would have started to you know, create household, buy homes,
I begin to have children, those sorts of things, and
they just pushed that out till twenty eight, thirty, thirty, two,
thirty three, depending on where their age fell in that
(10:31):
generational span. But you know, they're following the same steps,
which is like, all right, like I've been in the
city for.
Speaker 5 (10:37):
Five or ten years, I've kind of done that.
Speaker 6 (10:40):
It's time for me to you know, kind of get
on with the next phase of my life. And many
of them did that in twenty twenty and twenty twenty
one and are continuing to do that.
Speaker 5 (10:49):
I mean, we still see.
Speaker 6 (10:50):
A net exodus out of urban even in twenty three.
And when they're buying homes, both because of the current
home environment they have to buy a bit more ex
urban or country suburban as we would call it, but
I think also their preference is to buy in those areas,
and so they're buying homes and have been since twenty
(11:11):
twenty in the areas where our stores are, and they're
naturally wired for our type of business. You know, they
come predisposed to gardening, they come predisposed to things like recycling,
and and whether it's vegetarian or fresh foods. But you know,
if you think about the mental lifestyle that they were living,
(11:31):
even in a city, when they go out into kind
of country suburbia, ex urban rural, you know, they want
to have a similar mentality. So they get animals. They
do raised bed gardens, they do chickens. In fact, now
we're seeing that generation start to move into goats as
they think about, you know, the vegetables and get the
(11:52):
right milk.
Speaker 2 (11:53):
My husband and I have been talking about goats. We've
been having a debate on goats versus sheep. Specifically, there's
a type of sheet called a be doll sheep and
it looks absolutely adorable. Sorry I interrupted you. How go ahead,
I I could talk about it.
Speaker 4 (12:07):
Basically, you've catalyzed yet another whole in Tracy's pocket book
with the sheep.
Speaker 7 (12:12):
The sheep, And.
Speaker 2 (12:30):
That's really interesting. And you sort of jogged my memory
about some of the early commentary on millennials, and it
was very much like, oh, this is a generation that
just isn't going to own houses, when in fact, it
seems like it just took everyone a little bit longer
to actually buy a house for various reasons. But going
back to something you you alluded to just then, you've
(12:53):
sort of been riding a wave of, you know, a
cultural trend and also demographic trend as millennials get older,
and in some respects that could be considered a cyclical development.
But you mentioned doing stuff to actually make it more
permanent or more structural. What is it that you're doing
to ensure that, you know, something that is would seem
(13:16):
to be out of your control sticks around for longer.
Speaker 6 (13:19):
As we saw the surge in our business, we doubled
down on the investment in our business across a variety
of factors, with the primary goal of really staying ahead
of our customer as it evolves and to illuminate that
a little bit. In twenty nineteen, we spent two hundred
(13:41):
and seventy five million dollars in capital expenditures. We're now
spending between seven and eight hundred million dollars on an
annual basis, So we've you know, nearly tripled the amount
of capital that we're spending on the business on an
annual basis, and we're doing it across avariety of areas,
(14:01):
but really.
Speaker 5 (14:01):
All with the goal of, of.
Speaker 6 (14:03):
You know, better serving our customers and just making sure
we're staying ahead of them as they're rapidly, you know,
evolving in terms of both number needs and you know,
kind of the ways that they're used to shopping. So
a few examples of that one would be in our
membership program or our loyalty program. We've always had a
little well we've had a littalto program for the well
over ten years, but it really was a modest program,
(14:27):
kind of pre COVID, And in March of twenty one,
we relaunched the program to be a tiered based rewards
based system where kind of the more you spend, the
more you earn, all with the goal of driving behavior,
locking these new customers in getting them, you know, kind
of as used as possible to routinely shopping tractors supply
(14:48):
and you know, I can talk more about our Neighbor's
Club program, but we now have thirty four million members.
It represents nearly eighty percent of our sales. We've seen
substantial benefits from that that investment. Second investment's been in digital.
We launched a consumer mobile app in the summer of
twenty twenty one. It now represents nearly forty percent of
(15:09):
our sales online. We rolled out deliver from Store in
a matter of weeks in the midst of twenty twenty
and in addition to kind of the e commerce side
of things, we've also rolled out in a bunch of
technology for our team members to utilize in our stores,
which has made them more efficient and sophisticated in serving
our customers. And then the third thing I would highlight
(15:31):
was we rolled out a store remodel program and we're
now remodeling roughly fifteen percent of our stores on an
annual basis. At the conclusion of twenty twenty three, remodeled
forty percent of our stores. There's a number of things
that we get out of that from a sales lift perspective,
but one of the other important benefits is it contemporizes
(15:52):
the store and really shifts it from what was historically
perceived to be a kind of farm and ranch store,
which you know, kind of the as you might imagine
that when you're saying it, that was kind of the
perception and a bit the style that we had in
the store, and we, you know, we were able to
contemporize it and make it feel a bit more like
what it Millennial would think of when they walk into
(16:13):
any sort of store, maybe they've been in an urban environment.
But we didn't fancy it up quote unquote enough that
our existing customer base they still felt really comfortable shopping it, right.
We didn't kind of fire or alienate our existing customer
But those would be three, you know, big investments that
i'd highlight that we've made over the last few years,
really all to serve our existing customer base is even better,
(16:35):
but really to set ourselves up to be a retailer
of choice for the new millennial customer.
Speaker 2 (16:42):
Joe, you know how you note that you're old. Tell
me it's when businesses start catering to your taste and
when you're.
Speaker 3 (16:49):
It's like, oh you're talking about me here.
Speaker 2 (16:50):
Yeah, pretty much. When CEOs come and say like, oh,
we're redesigning our stores to appeal to millennials who might
be more used to urban environments but are now in
rural areas, that's how you know, and that's.
Speaker 3 (17:02):
How you feel like you're looking in a mirror.
Speaker 4 (17:05):
Actually, I want to ask, so, uh you recently I
think in twenty twenty two, but a pet retailer pet
sense and I'm curious in terms of like becoming less cyclical.
I mean, you know, if people have animals or if
people have pets, whether it's recession or a boom or whatever,
they're probably going to feed them the same amount.
Speaker 7 (17:23):
How much does.
Speaker 4 (17:23):
That business allow you or was it sort of designed
in order to sort of build some more acyclicality into
the business.
Speaker 6 (17:32):
Nearly ninety percent of our customers have an animal or pet. Wow,
seventy five percent of them have a dog. And then
you know there's an array of cats and everything.
Speaker 4 (17:43):
It's just Tracy in this episode. Literally everything you say
just comes back to Tracy. But yeah, keep going.
Speaker 2 (17:48):
Sorry, I'm the art more than our customer.
Speaker 6 (17:50):
Yeah, exactly, over half of our customers have more than
two dogs. On average, our customer's dog weighs twenty pounds
more than the average dog across the country. So you know,
our customers have animals and past they almost all have dogs.
Most have two dogs and their big dogs and a
compelling kind of an element of our businesses for we've
been around for eighty five years. We've really been were
(18:12):
built even eighty five years ago to serve life out here.
But our business model and our culture and our mission
values have really been consistent throughout that entire eighty five years.
But our business model has evolved over time to better
server customers. So forty years ago, we didn't even sell
animal feed for the most part, horse feed, coffee, chicken.
Speaker 5 (18:30):
Feed, et cetera.
Speaker 6 (18:31):
And now we're far and away the largest player of
bagged animal feed in the United States between a twenty
and twenty five percent market share.
Speaker 5 (18:38):
Twenty five years.
Speaker 6 (18:38):
Ago, we didn't even sell pet food and similar you know, realization,
it's a better way for server our customers. It has
less ups and downs both annually and also throughout the year,
you know, seasonally. So let's start getting into pet food.
And you know, now we're right at that number four,
number five largest player and pet food in the country.
And you know, one of the initiatives that we have
(18:59):
in place to keep driving that expanded pet business is
pet Sentence. And to your point, we did acquire that
company seven to eight years ago, and in twenty twenty
two we rebranded it to be pet Scents by Tractors Supply.
We rolled out our neighbors Club membership program that was
work that worked in Tractors Supply. We rolled that out
(19:19):
to petscent So it works in both name plates now
pet Sence. The ownership of pet Sentence really over the
last decade almost has given us a lot of insights
into the pet industry, given us access to brands that
we would not have otherwise gotten access to, and allowed
us to bring that knowledge and that those contacts into
the core track supply and make the business better. We
(19:41):
also are rapidly growing the pet Sence brand and we've
got over two hundred stores now. They are in the
same towns as a tractor supply. Ideally they're in a
town that doesn't have a pet co. It doesn't have
a Pet Smart. Typically our towns don't. We typically serve
call it a twenty thousand person town. The tractor supply
would be on the outs to the town typically wherever
(20:01):
the more agg related you know, area is. But the
Pet Sense we want that in the center of the town,
kind of where the few restaurants are, the grocery store,
some of the clothing stores that are in the town.
You know, there might be a two three strip malls
or malls in the town that are where the commercial
activity is located. That's where we want a pet Sense
(20:22):
and it does really two things. It serves that inner
city quote unquote population that doesn't have big yards and
doesn't have horses and cows and they've got you know,
smaller animals and pets. But then also secondarily, in addition
to serving that community in a specialty like way, it
also serves convenience for the core tractor supply customers. So
(20:43):
to say, on a Friday night, you're in town having
dinner at the you know, olive garden, and you need
to get some dog food or chicken feed on the
way home just to get you through the weekend before you,
you know, you do your annual your weekly shop at
at track supply. Pet Sense also serves that in the
so it's a great win win pet Sense tractor supply
(21:04):
commonality on the brand pet Sense by tracks, by commonality
on the loyalty program Neighbor's Club a purposeful overlap where
it makes sense on assortment, but pet Sense doing it's
what it's good at as well in terms of being
a specialty player, carrying you know, more cats and even
things for fish and lizards, and you know that sort
of side of a pet specialty store.
Speaker 2 (21:26):
Joe, I have coyfish too.
Speaker 5 (21:28):
Of course you do.
Speaker 2 (21:29):
There you go, so one of the things I remember
from when we spoke to Michael Roberto, the author of
the Harvard Business case study on Tractor Supply. He talked
about how the essence of business strategy is basically what
you don't do, so what you decide not to do.
After all, it's pretty easy to say, we're going to
(21:49):
go after this massive market and this market, and we're
going to sell this, this and that, and he described
what Tractor Supply had done as a sort of judo
strategy of basically avoiding head to head competition with bigger
box stores like a Lows or a home depot. Can
(22:10):
you talk a little bit more, perhaps about what you've
decided not to do and how that maybe differentiates the business.
Speaker 6 (22:17):
So, and I think that's a very fair description of
who we are. We want to be the best retailer
serving life out here, and we're going to have store locations,
store size, assortment, customer service technology, and then a supply
chain you know, in the background, all built the most
(22:41):
optimally serve life out here. And as a consequence of
that strategy, you know, we're going to make a number
of decisions to optimize around that, but also to position
us uniquely against competition. So a couple things. Less than
ten percent of our stores are suburban. Zero some of
our stores are urban. So we are very purposely in
(23:05):
ex Surban and rural communities, you know, very different than
the vast, vast majority of retailers. You know, some of
the names you mentioned are heavy urban, heavy suburban. They
may dabble in ex Surban, but you know, very few
are purposely building in rural America. So location wise, you know,
we oftentimes be are have a twenty mile radius with
(23:28):
minimal competition. The second thing would be store size. So
our store size is eighteen thousand square feet plus or
minus the size of sale Walgreens, And if you think
about many of our competitors, they're going to have much
larger store size. There's one hundred thousand square feet, eighty
thousand square feet. That puts a lot of pressure on
(23:50):
you to keep inventory, to keep the.
Speaker 5 (23:53):
Store updated, to staff it.
Speaker 6 (23:56):
And I think you know, what we've seen in retail
over the last ten twenty years is a decreasing store size, right,
and those retailers that have these large, large store sizes
wish they had smaller ones. And you know, I always
mask what the you know, if you look back over
the history tracks by what are some of the most
important decisions ever made? And you know, number one decision,
most important decision are made was how we built our culture.
(24:18):
Hands down, the writing of our mission and values, creating
a culture around it and always staying on that path
number one most important decision. But I'd say a very
important second decision that was made was the size of
our stores, and if anything, it forced us us to
really prioritize and only have the assortment necesser to really
(24:39):
serve life out here most optimally, and it creates this
element of convenience.
Speaker 5 (24:43):
And we always say that our.
Speaker 6 (24:44):
Worst parking spot and our stores is better than the
best parking spot at a big box store.
Speaker 5 (24:50):
Yeah.
Speaker 6 (24:50):
So another decision that we've made is how we execute online.
Seventy five eighty percent of our online businesses picked up
in store or fulfilled from a store, delivered from a store.
You know, by comparison, most would be in the forty
or fifty percent range in retail or even less. We've
been very purposeful and not choosing not to compete in
(25:10):
that kind of long tail assortment or to have a
marketplace on our website because we just don't think that
we're competitively advantaged in that area and that you know,
we can build a robust, sustainable business uh in that area.
You know, we know what we do best, which is
serve rural America, serve life out here through an eighteen
thousand square foot store base with you know, the best
(25:32):
customer service in the industry from retail, and doing that
with the technology that you know is best needed by
our customers. And to your point, it's been very purposeful
over decades and decades in terms of really defining who
we are and building a real competitive advantage around that.
Speaker 2 (25:49):
So one thing I was wondering, and you mentioned the
online business there and the idea of you know, click
and collect, which I believe has been a source of
growth for a lot of brick and mortar companies at
this point. But you came from Macy's and I think
home Depot before you joined Tractor Supply, and I think
at Macy's you were actually heading up their online business.
(26:12):
Can you talk a little bit more about how that
experience may have informed Tractor Supplies online strategy took.
Speaker 6 (26:20):
One of the areas that I'm personally very passionate about
is the intersection of retail and technology and how that
allows you to better serve your customer, but also how
that allows your team members, your employees to better serve
your customers as well, like you're strengthening their ability to
do so. And to your point, I spent ten years
(26:42):
at Home Depot for which of that ten years I
was running the online business there two thousand and nine
to twenty thirteen, which was a pretty big time period
for digital transformation in retail, coming on the heels of
the Amazon and really coming on the forefront and then
obviously the iPhone line. And then I spent three years
at eBay running their North America business, you know, thirty
(27:05):
billion dollar plus marketplace just in the United States and
obviously global in nature, and through my three years there
that was you know, big data, cloud computing kind of
the mid twenty fifteen fourteen sixteen seventeen timeframe. And then
in seventeen to twenty nineteen, that three year period, I
worked at Macy's where I was President of business and
(27:25):
did have responsibility for technology and online in that role.
And you know, those experiences have had substantial impact on on,
you know, my perspectives of how technology can drive the
business better serve customers better, enable team members, and try
to bring some of that in concert with the large
team that we had that thinks about these things every day.
And I think we've done an excellent job in the
(27:48):
last handful of years, you know, from a technology perspective,
and you know ways it's influenced us. As I mentioned earlier,
the way we've executed our consumer mobile app strategy, the
way we've executed our buyline pickup in store strategy, but
also the way we've set up our team members to
be successful.
Speaker 5 (28:04):
All of our team members wear headsets that allow for
a variety of.
Speaker 6 (28:07):
Point to point communications, tasking knowledge tools, AI knowledge tools.
All of our team members have a handheld device that
they use for executing in the stores, but that's complemented
by a bring your own device where we have our
own app just for our team members, and all three
of those work seamlessly. From our credentials and authentication perspective,
then we're also rolling out now kind of computer vision,
(28:30):
leveraging all of our cameras in our stores and taking
them from being kind of dumb cameras to smart cameras
and allowing us to create use cases to drive improve.
Speaker 5 (28:39):
Customer service in our stores.
Speaker 6 (28:40):
So you know, all these things that you know, I've
had a chance to participate in over the last fifteen
to twenty years in terms of just you know, technology trends.
I think we're you know, trying to just leverage all
of our learnings across those to create the best business
we can. And of course we have a great team
who does a lot of this work as well and
have had you know, there's similar set of experiences over
(29:01):
the last couple of decades.
Speaker 4 (29:03):
So obviously we're really interested in supply chains and things
like that here on odd Lodds. So one of the
questions or one of the things I think you said
you have nine distribution centers around the country, and I
think you're adding a tenth. I think, can you talk
about the decision making that goes into the upfront cost
(29:24):
of a new distribution center and what that unlocks in
terms of possibilities at the end retail location.
Speaker 3 (29:31):
When you build one out.
Speaker 4 (29:32):
How do you think about when it makes sense to
spend the money to build a new distribution center.
Speaker 6 (29:36):
In less than a month's time, our grand opening for
our tenth distribution center will take place, and that's in
Mammel Arkansas. We just opened our ninth distribution center a
year ago a little every year ago in Nabarrow, Ohio.
In addition to those and those ten distribution centers of
which each are about a million square feet, we also
have three import distribution centers that you know, kind of
(29:59):
decon solid date product that it comes in on containers.
Speaker 5 (30:02):
And then we have sixteen mixing.
Speaker 6 (30:04):
Centers, which are cross dock facilities that in a label
for faster replenishment on full palate goods, which is from
us for the most part, our high velocity items that
are big bagged items like food and feed, wood, Pellot's fertilizer,
et cetera. So we have a very robust, you know,
kind of multi building type strategy in our supply chain
(30:28):
as we build. To get back to your question on
the tenth distribution center, just kind of how do we
think about that. There's really two facets to the buildout
of one. One is just you kind of got to
have it from a capacity perspective, and about every two
hundred and fifty stores we have to build another distribution
center to just be able to you know, kind of
keep them in stock and have the capacity. All of
(30:50):
our dcs run twenty four hours a day, seven days
a week. We're maniacalon trying to make sure we get
as much through put through them as possible. Obviously with
team members in mind. As we think about that, part
of it is you just kind of have to. But
each of our dcs, in addition to that, does provide
a substantial financial benefit as we roll out of DC.
It takes caught up between one hundred and one hundred
(31:12):
and fifty million dollars a capital to build one, and
call it thirty to forty million dollars a year in
annual operaing expense from a labor perspective, et cetera. But
it allows us to significantly reduce our mileage on the
truck perspective, so we can reduce the inbound miles from
ours from our vendors to the DC because we've got
(31:34):
more more dcs across the country and so you're reducing
milage there. But then secondly, we're able to build a
distribution center so that you know, the stores in which
they serve are closer and we can reduce that distance
as well. In fact, over the last six years, we've
reduced our average truck distance by one hundred and twenty
(31:54):
mile which has generated substantial freight savings for us. And
so you know, our DCS as we think about it,
and there's kind of two main drivers for it. One
we just got to have it, but two, it does
provide a substantial financial benefit for the business as well.
And then what I would say is they also create
a unique position for us in the marketplace where all
(32:15):
of our core farm and ranch competitors for the most part,
with exception of one or two, buy through distribution. And
so that's going to slow their ability to replenish down
and create a higher cost for that. And then those
retailers that we compete with that are more national retailers
that we compete with kind of category back category, say
a home approvement retailer or a pet retailer. Last year,
(32:37):
we processed over eight billion pounds of food and feed
through our supply chain, and so you know, we're just
experts at moving fifty pound bags of animal feed, foods, fertilizer,
wood pellets, those sorts of things, and have far away
the lowest cost to serve on those. So it gets
us scale on a cost to serve, It gets us
(32:57):
speed of replenishment, It reduces our transportation costs that you know,
also just gives us that capacity to fuel our growth.
Speaker 2 (33:22):
There was a line in one of your most recent
earnings calls that sort of caught my eye, and you
were talking about how you had reduced the attrition rate
in your supply chain team by implementing a new progressive
wage scale. Is that just? Is that corporate speak for,
(33:42):
you know, you gave everyone raises and they worked harder.
Speaker 5 (33:45):
Yes and no.
Speaker 6 (33:45):
So I'll start by saying one of the things that
we've invested in over the last five years substantially is
in wages. Earlier, when I was mentioning the investments that
we've made in the business specifically referenced capital expenditures. There's
obviously other line items that would be reflective of our investments,
and one of those has been in wages. And our
(34:09):
average hourly wage rate is nearly sixteen dollars. Now, that's
inclusive of our forty five thousand team members, store team
members and nearly five thousand distribution center team members. It
can go back and point at numerous times over the
last five years, we've made incremental wage adjustments for our
team members. So in June of twenty twenty, well before
(34:30):
others were doing so, we provided a dollar per hour
wage increase for every team member hourly team member of
the company. At that same time, we also started providing
benefits to all part time team members. Up until then,
you had to be full time to have access to benefits. Now,
if you work fifteen hours or more a week at
Tractor Supply, you have access to benefits the same benefits
(34:52):
I do. It's one benefit set system for everyone, and
that fifteen hours.
Speaker 5 (34:57):
Threshold is very low. To other retailers.
Speaker 6 (35:00):
If you were to go benchmark, most would be at
least twenty most or twenty five and upwards of thirty.
And we also started in June of twenty twenty providing
restricted stock grants to our store managers so that they
felt that empowerment, that ownership it, you know, in their
in their role. Specific to our distribution centers. Two things
we've done recently there. One is all of our supervisors
(35:24):
and managers in the dcs now receive restricted stock, which
wasn't the case prior, so again building ownership inside that
distribution center of our management team in there. And then secondly,
as far as our hourly team members, we shifted to
what you you as you called it a progressive wage scale. Historically,
our distribution centers would have gotten their raises once a
(35:46):
year in an annual merit cycle. And you know what
we found through that was in particular of the last
two or three years as you had a real crunch
around available labor, was that people wanted merit increases fast,
stir more consistently. And so we went to a one
where you at ninety days, do you get a raised.
At one hundred and eighty days, you get a raised.
(36:07):
At three hundred and sixty days, you get a raised,
and then it's progressive from there. And so when you join,
you know what you start at, and you know exactly
what your rage rates are going to be as you
look at it's.
Speaker 5 (36:16):
Very calendarized for you.
Speaker 6 (36:17):
And and so that gave people certainty, It gave people clarity,
They gave them a reward, a little bit of a
reward along, you know, along the way. Plus their managers
now have stock incentive and you know, they're kind of
treating it a bit more like you know, an ownership
and mentality.
Speaker 5 (36:34):
And it's it's been very successful for us.
Speaker 6 (36:35):
And we had a fifty point a reduction in our
supply chain attrition last year, and we're continuing to see
attrition rates below down this year kind of three months in.
Speaker 4 (36:45):
So on your website it says currently I'm looking at
your history page, it says there are twenty two hundred
stores in the forty nine states, and I think your
goal per the last conference call is to get up
to three thousand stores, So I have I guess it's
a two part question. Is what is the main constraint
to adding stores? Is it available land? Is it just
the capacity to plan them out?
Speaker 7 (37:06):
Like where is the heart?
Speaker 3 (37:07):
Is it materials and labor to build them?
Speaker 6 (37:09):
Like?
Speaker 4 (37:09):
What is that constraint? And then when you talk about
new store productivity, and I think, as you've been saying
that stores lately have been getting up to full productivity
faster than they have in the past, what is the
dial that you can turn to get a brand new
store up and running so that it's sort of on
par with the legacy stores.
Speaker 6 (37:28):
Well summarized Joe on kind of our store goal and
the number of stores we open annually, So we have
a three thousand store goal in the United States. We
have a little over twenty two hundred stores, now we
build annually around eighty stores, so we've got, you know,
basically a decade left of new store growth. We do
(37:50):
have a history of increasing that as but you know,
but we feel very good about the three thousand store goal,
and you know, perhaps there's some more upside beyond that.
There's a variety of factors that limit the number of
stores we build a year. As I mentioned, we're currently
this year planning to build eighty tractor supply stores, and
I should mentioned ten to twenty pet scent stores. I
(38:12):
would say the main limiting factor is our culture. And
I think the thing that keeps me up the most
at night is not allowing our growth to exceed the
pace of our culture. And we cannot be one of
those companies that wakes up five years from ago. We
just had incredible growth, but we're just not the same
(38:33):
company that we were five years ago from a culture
and customer service perspective. Obviously, in addition to that limiting factor,
there's a variety of other things. Right, there's access to
all the construction materials you need, there's access to you know,
local permitting resources, there's access to you know, construction labor.
All those things that We've had over the last two
(38:54):
or three years nuances there that have impacted our ability
to move faster on store rollout, just with you know,
the supply cheam directions that curbent COVID and such, and
the availability for people to.
Speaker 5 (39:05):
Get out and approve permits and those sorts of things.
Speaker 6 (39:07):
But that's all reasonably settled now, and I'd say it's
mostly just back to normal, with the exception of the
higher interest rates on building stores. But the main bottleneck
on an annual basis is just making sure that we
don't outgrow our culture. And you know, we bring every
new store manager, so we have twelve percent store manager attrition,
one of the lowest, perhaps the lowest in retail in
(39:28):
terms of attrition. But at twenty two hundred stores, that's
a couple hundred and fifty new store managers a year.
Plus we have eighty news stores, so you're talking three
thirty three hundred and fifty new store managers a year.
We bring every one of those store managers to our
store support center here in Brentwood, Tennessee, right outside of Nashville.
They spend an entire week going through training. They also
(39:50):
spend ninety days prior to starting at their store training
at another store, and so we invest a lot of
resource to make sure the store managers are up and
running and that you can't tell a difference when you
walk for when you go into one store versus another,
and we're just so passionate about that.
Speaker 5 (40:07):
I think you know that is the primary limiting.
Speaker 6 (40:09):
Factor for our our new stores in terms of number
a year, and then trying to get our stores up
to volume as fast as possible is kind of every
retailer's goal and focus. And typically they started about seventy
percent of our estimated sales in the first year, and
over a three or four year time period will ramp
up to that one hundred percent of what we expect
(40:30):
out of that store. And they are opening up at
higher volumes than they did pre COVID, and they are
ramping faster, and I think there's a number of reasons
for that, but I think the biggest is the improvement.
Speaker 5 (40:41):
That we've made in our brand awareness.
Speaker 6 (40:43):
And pre COVID, our unated brand awareness was down in
the thirties, and now post COVID, our unaated brand awareness
is nearly doubled. And just so as we move into markets,
more people are aware of us, they are more apt
to consider shopping us. And you know that just allows
us to ramp up to ramp up quicker.
Speaker 2 (41:01):
How important are partnerships to business growth now? Because famously
you have a partnership with car Heart, So if you
walk into a tractor supply store, you'll see lots of
car Heart hats and you know, clothing of all sorts.
But I think you also have some sort of deal
with Yellowstone. And in the course of researching for this interview,
(41:21):
I saw you have a line of garden clothes with
Martha Stewart. Now, so that seems to be an area
of interest for you. How do you identify these potential
partnerships and then how important is that for the overall
business mix?
Speaker 6 (41:35):
Nowadays Track Supply would not be the same company absit
the many fantastic partners that we have, And that's really across,
you know, all different facets of the business. Certainly on
the on the product side, we have some great partners
that work very closely with this help us create unique
(41:57):
product experiences for our customers. It can only be found
a tractors supply to your point, whether that's in apparel,
car Heart, who we're you know, one of the largest
seller of car hearts in the country and we have
you know, nearly one hundred store within a store car.
Speaker 5 (42:12):
Heart across our store base.
Speaker 6 (42:14):
But even partners like Purina on the feed side, and
you know are we have two private brands and feed
do More in producers Pride, and we work very closely
with Purina on the production of those and in fact,
our do More brand is the only private brand product
in the United States that had that carries the Purina.
Speaker 5 (42:33):
Checkerboard, you know.
Speaker 6 (42:34):
And you can go across our business and we've got
these just really fantastic strong partner relationships on the product side,
but also on the marketing side of your point. So
we've got great relationships with Yellowstone and you know, Taylor
Shared and that team, and we were, you know, one
of the very first partners that they had and have
always built custom commercials for that. And you know, Landy Wilson,
(42:56):
we have a strong multi year relationship with their professional
bull writing and we're one of the first inaugural sponsors
with them as that as that has really grown as
a sport and an enterprise. But then also if you
look on the tech side, we have an incredibly strong
partnership with Microsoft and Microsoft Azure particular and their cloud
platform and their AI capabilities, and I'd say we're very
(43:18):
much on the forefront of partnering with them and experimenting
and developing scaled solutions. And then even if you look
at like on the community side, we're far and away
the largest contributor and have been for thirty plus years
with FFA, the Future Farmers of America, and we're in
our second year of the largest rural agriculture scholarship program
(43:39):
in the country to million dollars a year, one hundred
five thousand dollars scholarships and fifty ten thousand dollars scholarships.
And so, you know, whether it's on the community side,
whether it's on the tech side, whether it's on the
merchandising side, or on the marketing side, you know, and
in a variety of other stakeholders as well. We had
just incredible partnerships people that that we've been with for
(44:01):
quite some time, and you know, there's synergies between our
businesses and their businesses, and it just really allows us
to be the best company we can be.
Speaker 4 (44:09):
I just have one more question, but since you mentioned
specifically interest rates, in the context.
Speaker 5 (44:15):
Of build out.
Speaker 4 (44:16):
Can you just give a little like more specifics about
how does a high interest environment affect the math of
store rollouts? And yeah, what and you mentioned that on
your call. That came up as one of the challenges
for twenty twenty three, along with weather and some other things.
But talk to us a little bit about the effective
interest the effective elevated interest rates on expansion decisions and
(44:38):
how it changes how various investments pencil out.
Speaker 6 (44:41):
Yeah, absolutely so, I mean interest rates are significant in
any sort of real estate project, right, And historically we
have used third party contractors to develop our locations for
us under assigned contract and our commitment is part of
that signed contract is you know, typically at a minimum
(45:03):
fifteen years or a twenty year lease within two to
three options on the back end of that. So you know,
we're signing up for fifteen to thirty years saying in
a location with a lease dollars per month associated with that,
and as part of that part of the agreement, then
a developer would go build that store for us, right,
and that includes acquiring the land, you know, building the store,
(45:29):
and then once they've got us up and running, most
of our landing lords will then sell that property to,
you know, someone who wants to own the long term
cash flow stream. So if you're a developer, you are
typically funding the acquisition of that land and the build
out of that store through some sort of financing, and
(45:49):
then you're selling the property to someone who's counting on
those cash flows. And so both the financing and the
selling to someone who's kind of that cash flows are
significantly impacted by interest rates. Right, what's the interest rate
you're going to pay on sixty seven million dollars of
capital for a year to fifteen months while you're building
that store, and then when you sell that tractors supply
(46:11):
to someone and it's got a three hundred thousand dollars
year annual revenue stream associated with it, right from the least,
what interest rate are they going to use to discount
that cash flow back at?
Speaker 5 (46:21):
And so it has.
Speaker 6 (46:22):
Substantial implications on our real estate developers. And with the
movement up in its rates obviously makes it more expensive
to build, and then you obviously are monetizing those future
cash flows at less right because of higher interest rates,
And so they've got more risk and they've got a
bunch of movement and so it has significant implications. And
so one of the things we've done over the last
(46:43):
twelve months is start to actually finance the build out ourselves.
So we have gone probably about half of our stores
this year. We will work with the developers still, we'll say, look,
you just build the store, force, work with the contractors
on the property, you know, work with the local scipalities
around zoning and permitting and all those sorts of things.
(47:03):
But don't worry about you know, buying the fixtures, buying
the HVAC, you know, buying the concrete block, all those things.
Speaker 5 (47:09):
We're going to do all that.
Speaker 6 (47:10):
We will pay for it all and we're just going
to give you a four or five hundred thousand dollars
fixed fee to build that for us. But the idea
that you need to finance them on the front end
or worry about the sale on the back end, don't
worry about that anymore.
Speaker 5 (47:23):
We will take that on.
Speaker 6 (47:24):
And what we found is that it frees up a
lot of value because they were putting a lot of
risk in the model, particularly with the variability and interest
rates and how things are moving around, and so it's
had significant impacts. We're fortunate to be investment grade in
terms of debt rating to be billion dollars plus cash
flow positive every year. So we've got a lot of
levers that we can we can put in place to
(47:46):
just kind of address that situation. But it's certainly been
a big topic I think for all everyone in real
estate over the last eighteen months.
Speaker 2 (47:55):
Since you guys are experts in moving big bags of stuff,
so can you just start buying and also delivering materials
for new stores to yourself?
Speaker 5 (48:03):
Right?
Speaker 6 (48:03):
That's and that's exactly part of the benefit that we've
captured by bringing you know, kind of self development in
the house is that we can go negotiate now for
you know, eighty HVAC systems at one time. We can
go negotiate for all the fixtures at one time, all
the bailers that we have in the back of our store,
all those sorts of things that in the past the
(48:26):
contractor would have singularly sourced just for that store. We
can now do it, you know, in large batches, fifty
one hundred at a time and get a nice reduction
and price by leveraging our volume.
Speaker 4 (48:40):
Last quick question for me, just I mean, I know
you're writing these big secular trends, but things like inflation,
et cetera, labor market. How do things look right now
we're recording this April nine, twenty twenty four. Does it
feel like we're something like a normal environment.
Speaker 6 (48:55):
I don't know if you're a retailer that feels perfectly
normal right now on I'll get into that in just
a second. But what I would say at the highest level,
I think our economy is strong right now. I mean
we're running, you know, as a country two three four
percent GDP right kind of pick your quarter a month
GDP solid right now. You've got consumers spending really leading
(49:16):
the way on that. You know, the PCEE personal conception
expenditures you know for the month of January and February
very solid in that you know, two and a half
to three and a half percent range, very solid growth there.
Speaker 5 (49:29):
You know.
Speaker 6 (49:30):
The only thing I think from a retailer perspective, why
it doesn't feel normal right now is consumers are still
shifting their spend from goods to services, and you know,
pre COVID services, so things like you know, hotels, restaurants, entertainment, cruises,
those are you know, airline tickets, those sorts of things.
They were about sixty nine percent of a consumer spend,
(49:53):
with goods being the other thirty one percent. During covid U,
when people had less travel than they could go do
you had these stimulus checks coming through and people were
feeling the need to spend those goods as a percent
of consumer expenditures gotten nearly as high as thirty seven percent,
with services, you know by comparison, dropping down to sixty
(50:16):
three Over the last eighteen months. As our economy is
opened back up and people have gotten back to more
normal spending, perhaps some pent up desire to travel, you've
seen that services spin start to creep back towards sixty
nine percent. I think at the end of February it
was in the high sixty sevens, maybe right at sixty
eight percent. So and if you look at the February SPIN,
(50:39):
services were up six percent, whereas goods were only up
one percent on spend. So there's a big swing happening
right now between goods and services. But other than that,
I think, you know, our economy seems to be very
health healthy right now. The consumer continues to spend, you know,
inflations moderating, I think people have started you see that
lesser as a an issue when you do consumer surveys,
(51:04):
and you know, I think our economies is very much stabilizing.
Speaker 5 (51:07):
Hats off to the FED for everything they've done.
Speaker 2 (51:10):
Hell a lot and CEO of Tractor Supply, thank you
so much for coming on all thoughts and explaining exactly
how you are capturing so much of my income. It
was great, all right, Joe, Well, I thought that was fascinating,
(51:33):
and I can see why I am in fact spending
quite a decent amount of money at Chactor Supply in
recent years. There's so much to pick out of that conversation.
I mean, I thought the point about distribution was pretty interesting.
This idea that you can build up and expertise in
moving a particular type of things. So in this case,
I guess big bags of animal feed and stuff like that,
(51:55):
and so you can start to get efficiencies out of
that and also maybe at some point point start to
you know, negotiate supply for building your own stores in
bulk purchase as well.
Speaker 4 (52:06):
No, I thought that was really fascinating as well, because
you can imagine, right, and it's not you don't have
to imagine that like, okay, in something like pet food
or something like that, or feet. They're competing with a
lot of other companies. But if pet if feed is
such a dominant share of their own supply chain, then
they can become the most efficient or theoretically the most
(52:28):
efficient distributor of fifty pound bags in a way that
you might not expect. Companies that specialize in so many
other things to like build that expertise and so like
a way of gaining scale and price competitiveness even from
smaller side.
Speaker 2 (52:43):
Yeah, and the other thing I was thinking, and this
came up in the episode we did before on the
Harvard Business case study, but this idea of the choice
of location for opening stores and not automatically migrating or
being attracted to urban centers because I think, for you know,
a large proportion of retail, the thinking is always you
want to be where the people are. So even in
(53:05):
the middle of New York, you will have in fact,
I think we have a home depot right below the
Bloomberg offices in Midtown Manhattan. Yeah, you will have those
kind of big box stores, you know, a Target or
a home depot or whatever. But it seems like in
the case of Chactor Supply, they're sort of going where
the animals are not necessarily where the people are.
Speaker 5 (53:25):
No totally.
Speaker 4 (53:26):
And then I love like also, you know, in terms
of the strategic location hearing them walk through the math
of the effective interest rates on store development, and I
always joke, you know, it's like every company is a bank,
but that is basically like what he described, which is like,
why when Tractor Supply has like a great credit rating
(53:47):
is really big, it's you know, it's not going to
go away. Why not bring that sort of borrowing and
lending capacity onto the Tractor Supply balance sheet and then
free up the developer who then can focus on the
one thing that they're really good at, which is constructing
a building, rather than having the developer also take that
financial risk and presumably pay a higher spread for their
(54:10):
borrowing than tractor would you.
Speaker 2 (54:12):
Know the other thing I was thinking this might be
kind of weird, but you know, Tractor Supply is sort
of keying off this big demographic trend which we discuss
aging millennials and the fact that millennials want more space
and they're moving out of cities and they want pets
and things like that. I sometimes wonder if like Tractor
Supply is going to be the Harley Davidson of millennials,
(54:34):
like everyone had pets when they were a certain age,
just like all the Baby Boomers had a motorcycle when
they were a certain age, and then it kind of
ages out.
Speaker 3 (54:43):
I like the analogy. I'm done with that analogy.
Speaker 7 (54:46):
Oh you know what, Tracy. One other thing that we.
Speaker 4 (54:48):
Have to do more episodes on is, like I guess
I would say, like the point suffocation or reward program
Oh yeah, And I.
Speaker 7 (54:56):
Just feel like, you know, I'm starting to think that.
Speaker 4 (54:59):
You know, people like post about prices for anything, like
inflation is out of control, and then another person posts like,
here's a screenshot from Walmart dot com and these prices
aren't nowhere near what you say, and stuff like that.
Speaker 7 (55:10):
Yeah, and I feel like there is this.
Speaker 4 (55:12):
Divide between the time people who are like have the
time and capacity to be part of rewards programmed.
Speaker 2 (55:18):
I've said this so many times. It's the price pack
architecture is becoming more sophisticated. And McDonald's is my sort
of ultimate example of this, which is if you download
the app, and if you take the time to order
before you actually rock up to the little takeout window,
you can get decent deals and they are like a
(55:39):
significant percentage less than what you would get from just
ordering spontaneously, and it is kind of it's weird, and
it adds another layer of complexity to inflation. I think
it also brings up questions about privacy and fairness and
things like that.
Speaker 4 (55:55):
It's interesting to hear him talk about like how much
he credits like that to like, you know, getting that
consumer app. I think he said it was in summer
twenty twenty one, and like the sort of taking it
from a very rudimentary rewards program to more advanced one.
Speaker 3 (56:11):
Super interesting stuff.
Speaker 2 (56:12):
Absolutely, and we really should do that episode. Yeah, Okay, Well,
in the meantime, shall we leave it there?
Speaker 3 (56:17):
Let's leave it there.
Speaker 2 (56:18):
This has been another episode of the Oudlots podcast. I'm
Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 4 (56:24):
And I'm Joe Wisenthal. You can follow me at the Stalwart.
Follow our guest Tractor Supply CEO hel Lawton. He's at
hell Lawton. Follow our producers Carmen Rodriguez at Carman Ermann
dash El Bennett at Dashbot, Kelbrooks at Kelbrooks. Thank you
to our producer Moses Ondam. For more odd Lots content,
go to Bloomberg dot com slash odd Lots where you
have transcripts, blog and a newsletter, and you can chat
(56:46):
about all of these topics twenty four to seven in
the discord with fellow listeners Discord dot gg slash oddlines.
Speaker 2 (56:53):
And if you enjoy odd Lots, if you like it
when we do deep dives into the business model of
companies like track Supply, then please leave us a positive
review on your favorite podcast platform. And remember, if you're
a Bloomberg subscriber, you can listen to all of our
episodes absolutely ad free. All you need to do is
connect your Bloomberg account with Apple Podcasts. Thanks for listening.
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:20):
Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3 (00:23):
I'm Tracy Alloway and I'm Joe Wisenthal.
Speaker 2 (00:26):
Joe, you know what I did this weekend?
Speaker 4 (00:27):
Something outdoors in your garden or maybe a home construction project,
but something that was very dirty and costly and time
consuming and an.
Speaker 3 (00:37):
Economical Thanks Joe.
Speaker 5 (00:39):
Yeah, but.
Speaker 3 (00:41):
I'm sure it's very satisfying on some level.
Speaker 2 (00:44):
Well, I did do a lot of that. I'm restoring
an orchard at the moment, and it's a lot of
hard work and a lot of supplies. As you pointed out,
I'm currently building a gate, and I think the gate
is going to be phenomenally expensive by the time I
finally finish it. But what I actually did this weekend,
or one of the things I did, was I went
over to tractor supply.
Speaker 4 (01:04):
Oh I'm jealous, you know, amazingly I still haven't been
to one. Wait, Tracy, are you a hobbyist farmer? It
would you call yourself that if you have an orchard?
Speaker 5 (01:14):
Right?
Speaker 2 (01:14):
Yeah, I mean I guess we have blueberries and raspberries
and strawberries and apples and apple pears and all of
that stuff. So yeah, yeah, I guess it's my hobby.
Speaker 4 (01:25):
You know, we did that episode about Tractor Supply last
year with the professor who had done that HBS study,
and by it sounds like you are the modal Tractor
Supply customer.
Speaker 2 (01:36):
Please, Joe, I prefer cottage core elder millennials.
Speaker 3 (01:39):
Okay, well that's no.
Speaker 2 (01:40):
It makes me sound like a character out of like
Final Fantasy or something.
Speaker 6 (01:44):
No.
Speaker 2 (01:45):
So I went over to Tractor Supply. And the reason
I went is because it's chicken season. So they have
all the baby chicks over there and you can kind
of see them in their little enclosure, and I can
fantasize about the day when I will have my own
chicken and what kind I will get.
Speaker 4 (02:01):
But in the meantime, you have to build like ten
other things like and then you can get around to
building the chicken coop.
Speaker 2 (02:06):
Yeah that's right. I've got big plans for the chicken coop,
all right. But the reason I bring it up is
because Tractor Supply is a company that is sort of
of perennial interest to us. So last year we recorded
an episode with Michael Roberto when he published a case
study for Harvard Business School on Tractor Supply, and even
(02:27):
before then, I remember Samuel Rnes, the CORBU analyst, he
had always called this company one of the most interesting
retailers on the planet. So it's sort of loomed large
over our consciousness. And I think the interesting thing about
the Tractor Supply Company is there's this question of cyclical
(02:48):
versus structural. So this is one of the companies who
share a price and revenue really boomed during the pandemic.
Lots of people were staying at home, lots of people
became hobby farmers, as you point out Joe, buying tomato
cages and growing their own vegetables from seed whatever, and
so there was an expectation that a lot of that
(03:09):
business would start to subside or at least slow down
as people started going back to work, or some of
the moving from urban areas to the suburbs started to reverse.
But instead seems like this particular market just continues to grow,
and Tractor Supply share price is still very, very high.
Speaker 4 (03:29):
You're absolutely right, So the stock is really close to
an all time high, continues to power higher. You know,
like fifteen years ago this was like an eight dollars stock.
Today it's a two hundred and forty nine dollars stock.
You look like you could be looking at a chart
of in video or something, and it is striking that
you don't have to be an AI company.
Speaker 7 (03:46):
To see charts like this.
Speaker 4 (03:48):
If you like find the right product, the right lane,
the right store mix, et cetera, and you are on
the right secular trends such as the rise of the
hobbyist farmer, people moving out to the exerbs, growing their
own chickens, et cetera. It's an amazing case study on
how to like, how to execute.
Speaker 2 (04:03):
Absolutely So today I'm glad to say we really do
have the perfect guest because we are going to be
speaking to the CEO of Tractor Supply, mister hal Lawton.
He joins us. Now, thank you so much for coming
on the show.
Speaker 6 (04:15):
How Hi Tracy, Hi Joe, Thanks so much for having
me on. Look forward to talking with you all today.
Speaker 2 (04:20):
Likewise, we are very very excited about this conversation, not
least because it's a way for me to sort of
reflect on my own spending happens so for Tractor Supply,
but maybe just to begin with, you know, Joe called
it the hobbyist farmer. There's a bunch of different names,
cottage core, millennial type lifestyle, but like, who do you
(04:41):
think of as your primary customer? Rural enthusiast is the
other one that I remember.
Speaker 6 (04:47):
Yeah, you know, I think all those names are used
frequently to reference our customer and kind of our Our
main kind of theme that we ladder up to is
life out here. And the reason for that is is
we went out maybe seven or eight years ago and
talked with our customers, and you know, these customers range
from living in West Texas and they've you've got cattle,
(05:12):
maybe living in Wisconsin and have a dairy farm, or
you know, could be living here in Tennessee and have
five to ten acres and they do a little gardening.
Maybe they have some small animals, chickens, or they could
half acre, you know, one acre unincorporated, you know, suburb
exurb with you know, a raised bed garden in their backyard,
(05:32):
or could be a dog breeder, and you know, just
these whole range of customers that have different lives that
they live. But what we found when we talked with
them was they all used the words well out here
in the description of their lifestyle, and it was just
a very common phrase that all of our customers used,
and so we ended up kind of laddering it up
(05:53):
to that and saying, you know, we're built to serve
life out here, and that plays itself out in so
many different ways and so many, you know, variants of
the lifestyle, whether it's hobby farmers, you know, horse owners,
chicken owners, you know, whatever the passion they may be gardening,
et cetera. But at the end of the day, they
all have a lifestyle mentality philosophy that kind of ladders
(06:16):
up to this notion of life out here, which is
around freedom and self reliance, homesteading, the love of animals
and pets and land.
Speaker 7 (06:26):
I love that.
Speaker 4 (06:26):
So since we are recording, since Tracy and I are
in the Bloomberg HQ studios in Manhattan, I'm going to
use the phrase out there, because we're certainly not out
here right now, so we're talking about out there. You know, obviously,
tractor supply has been growing a long time, and then
it does seem to have at least helped been turbo
charged by some of the changes that happened during COVID.
(06:50):
I only realized this morning that you started in January
twenty twenty, so you've probably never known like tractor supplying
the normal times. But talk to us about, like how
you distinguish sort of long term and short term trends
in out heariness. Because I'm sure there was a bunch
of people like, Oh, we're gonna move out to the country,
We're gonna have chickens, we're gonna buy pets, et cetera.
We know that some of that has slowed down or
(07:11):
some of that was.
Speaker 3 (07:12):
A one off.
Speaker 4 (07:13):
So how do you think about the trajectory of the
outhereeness and whether COVID was it an accelerant, was it
something that went up and then we're back to trend, Like,
how do you think about the growth of what's sustainable
out there.
Speaker 6 (07:26):
It's a great question and it's one that's been asked
repeatedly over the last few years about our business. To
your point, we were eight point four billion dollars in
revenue in twenty and nineteen. We did fourteen point six
billion dollars of revenue in twenty twenty three. You know,
(07:48):
that's roughly a twenty percent compound annual growth rad over
those years, so significant growth for you know, particularly for
our retailer with over two thousand store so reasonably mature.
We would articulate that the majority of that sales lift
we've seen and the increased customer transactions and new customers
(08:11):
that are shopping us is structural in nature, and I
can get into the reasons for that, but I would
just say at the highest level, I think, you know,
what we've seen in our business is very different than
many of the other kind of COVID winners that you
know went kind of boom to bus to some degree, right,
whether it was everybody you know jumped on a peloton
(08:33):
because they couldn't go to a gym, and then you know,
we saw that reversion. Everyone started you know, using videos, meetings,
things like zooms and stuff. And now you've got to
shift back right where people are still doing that but
obviously in person now. And you know, you look at
even like other retailers who sell say electronics, who had
a huge search because everybody needed a computer or a
(08:53):
new router or you know need some other needed wanted
a new TV, and then that all back. I mean,
there's a lot of circumstances. We can think about different
companies and different sectors that had a boom and then
a reversion you know, with us, it's been different because
for the most part it's been macro structural. But I
would also assert that we've done some things hopefully that
(09:15):
have helped make that, you know, structural. The big thing
I would push on is really just the millennial generation.
And at the timing that COVID was occurring, the millennial
generation was kind of late twenties, early thirties, and you know,
it'd been a question for a decade whether or not
that generation was going to revert to to kind of
(09:36):
the normal behavioral trends that other generations had followed, or
were they going to be different. Right, we'd read the
numerous stories on this is going to be a rental generation,
and it's going to be an urban generation, et cetera,
et cetera, right, and sharing generation, and you know, lesser kids,
they're you know, lesser you know, buying homes and those
sorts of things. And what we're seeing is that that
(09:59):
gener generation is reverting to previous generational norms, they're just
doing it a little later. And what we would articulate
is that COVID was actually a.
Speaker 5 (10:09):
Catch up versus a pull forward.
Speaker 6 (10:11):
And historically that generation, say twenty six twenty five twenty
seven would have started to you know, create household, buy homes,
I begin to have children, those sorts of things, and
they just pushed that out till twenty eight, thirty, thirty, two,
thirty three, depending on where their age fell in that
(10:31):
generational span. But you know, they're following the same steps,
which is like, all right, like I've been in the
city for.
Speaker 5 (10:37):
Five or ten years, I've kind of done that.
Speaker 6 (10:40):
It's time for me to you know, kind of get
on with the next phase of my life. And many
of them did that in twenty twenty and twenty twenty
one and are continuing to do that.
Speaker 5 (10:49):
I mean, we still see.
Speaker 6 (10:50):
A net exodus out of urban even in twenty three.
And when they're buying homes, both because of the current
home environment they have to buy a bit more ex
urban or country suburban as we would call it, but
I think also their preference is to buy in those areas,
and so they're buying homes and have been since twenty
(11:11):
twenty in the areas where our stores are, and they're
naturally wired for our type of business. You know, they
come predisposed to gardening, they come predisposed to things like recycling,
and and whether it's vegetarian or fresh foods. But you know,
if you think about the mental lifestyle that they were living,
(11:31):
even in a city, when they go out into kind
of country suburbia, ex urban rural, you know, they want
to have a similar mentality. So they get animals. They
do raised bed gardens, they do chickens. In fact, now
we're seeing that generation start to move into goats as
they think about, you know, the vegetables and get the
(11:52):
right milk.
Speaker 2 (11:53):
My husband and I have been talking about goats. We've
been having a debate on goats versus sheep. Specifically, there's
a type of sheet called a be doll sheep and
it looks absolutely adorable. Sorry I interrupted you. How go ahead,
I I could talk about it.
Speaker 4 (12:07):
Basically, you've catalyzed yet another whole in Tracy's pocket book
with the sheep.
Speaker 7 (12:12):
The sheep, And.
Speaker 2 (12:30):
That's really interesting. And you sort of jogged my memory
about some of the early commentary on millennials, and it
was very much like, oh, this is a generation that
just isn't going to own houses, when in fact, it
seems like it just took everyone a little bit longer
to actually buy a house for various reasons. But going
back to something you you alluded to just then, you've
(12:53):
sort of been riding a wave of, you know, a
cultural trend and also demographic trend as millennials get older,
and in some respects that could be considered a cyclical development.
But you mentioned doing stuff to actually make it more
permanent or more structural. What is it that you're doing
to ensure that, you know, something that is would seem
(13:16):
to be out of your control sticks around for longer.
Speaker 6 (13:19):
As we saw the surge in our business, we doubled
down on the investment in our business across a variety
of factors, with the primary goal of really staying ahead
of our customer as it evolves and to illuminate that
a little bit. In twenty nineteen, we spent two hundred
(13:41):
and seventy five million dollars in capital expenditures. We're now
spending between seven and eight hundred million dollars on an
annual basis, So we've you know, nearly tripled the amount
of capital that we're spending on the business on an
annual basis, and we're doing it across avariety of areas,
(14:01):
but really.
Speaker 5 (14:01):
All with the goal of, of.
Speaker 6 (14:03):
You know, better serving our customers and just making sure
we're staying ahead of them as they're rapidly, you know,
evolving in terms of both number needs and you know,
kind of the ways that they're used to shopping. So
a few examples of that one would be in our
membership program or our loyalty program. We've always had a
little well we've had a littalto program for the well
over ten years, but it really was a modest program,
(14:27):
kind of pre COVID, And in March of twenty one,
we relaunched the program to be a tiered based rewards
based system where kind of the more you spend, the
more you earn, all with the goal of driving behavior,
locking these new customers in getting them, you know, kind
of as used as possible to routinely shopping tractors supply
(14:48):
and you know, I can talk more about our Neighbor's
Club program, but we now have thirty four million members.
It represents nearly eighty percent of our sales. We've seen
substantial benefits from that that investment. Second investment's been in digital.
We launched a consumer mobile app in the summer of
twenty twenty one. It now represents nearly forty percent of
(15:09):
our sales online. We rolled out deliver from Store in
a matter of weeks in the midst of twenty twenty
and in addition to kind of the e commerce side
of things, we've also rolled out in a bunch of
technology for our team members to utilize in our stores,
which has made them more efficient and sophisticated in serving
our customers. And then the third thing I would highlight
(15:31):
was we rolled out a store remodel program and we're
now remodeling roughly fifteen percent of our stores on an
annual basis. At the conclusion of twenty twenty three, remodeled
forty percent of our stores. There's a number of things
that we get out of that from a sales lift perspective,
but one of the other important benefits is it contemporizes
(15:52):
the store and really shifts it from what was historically
perceived to be a kind of farm and ranch store,
which you know, kind of the as you might imagine
that when you're saying it, that was kind of the
perception and a bit the style that we had in
the store, and we, you know, we were able to
contemporize it and make it feel a bit more like
what it Millennial would think of when they walk into
(16:13):
any sort of store, maybe they've been in an urban environment.
But we didn't fancy it up quote unquote enough that
our existing customer base they still felt really comfortable shopping it, right.
We didn't kind of fire or alienate our existing customer
But those would be three, you know, big investments that
i'd highlight that we've made over the last few years,
really all to serve our existing customer base is even better,
(16:35):
but really to set ourselves up to be a retailer
of choice for the new millennial customer.
Speaker 2 (16:42):
Joe, you know how you note that you're old. Tell
me it's when businesses start catering to your taste and
when you're.
Speaker 3 (16:49):
It's like, oh you're talking about me here.
Speaker 2 (16:50):
Yeah, pretty much. When CEOs come and say like, oh,
we're redesigning our stores to appeal to millennials who might
be more used to urban environments but are now in
rural areas, that's how you know, and that's.
Speaker 3 (17:02):
How you feel like you're looking in a mirror.
Speaker 4 (17:05):
Actually, I want to ask, so, uh you recently I
think in twenty twenty two, but a pet retailer pet
sense and I'm curious in terms of like becoming less cyclical.
I mean, you know, if people have animals or if
people have pets, whether it's recession or a boom or whatever,
they're probably going to feed them the same amount.
Speaker 7 (17:23):
How much does.
Speaker 4 (17:23):
That business allow you or was it sort of designed
in order to sort of build some more acyclicality into
the business.
Speaker 6 (17:32):
Nearly ninety percent of our customers have an animal or pet. Wow,
seventy five percent of them have a dog. And then
you know there's an array of cats and everything.
Speaker 4 (17:43):
It's just Tracy in this episode. Literally everything you say
just comes back to Tracy. But yeah, keep going.
Speaker 2 (17:48):
Sorry, I'm the art more than our customer.
Speaker 6 (17:50):
Yeah, exactly, over half of our customers have more than
two dogs. On average, our customer's dog weighs twenty pounds
more than the average dog across the country. So you know,
our customers have animals and past they almost all have dogs.
Most have two dogs and their big dogs and a
compelling kind of an element of our businesses for we've
been around for eighty five years. We've really been were
(18:12):
built even eighty five years ago to serve life out here.
But our business model and our culture and our mission
values have really been consistent throughout that entire eighty five years.
But our business model has evolved over time to better
server customers. So forty years ago, we didn't even sell
animal feed for the most part, horse feed, coffee, chicken.
Speaker 5 (18:30):
Feed, et cetera.
Speaker 6 (18:31):
And now we're far and away the largest player of
bagged animal feed in the United States between a twenty
and twenty five percent market share.
Speaker 5 (18:38):
Twenty five years.
Speaker 6 (18:38):
Ago, we didn't even sell pet food and similar you know, realization,
it's a better way for server our customers. It has
less ups and downs both annually and also throughout the year,
you know, seasonally. So let's start getting into pet food.
And you know, now we're right at that number four,
number five largest player and pet food in the country.
And you know, one of the initiatives that we have
(18:59):
in place to keep driving that expanded pet business is
pet Sentence. And to your point, we did acquire that
company seven to eight years ago, and in twenty twenty
two we rebranded it to be pet Scents by Tractors Supply.
We rolled out our neighbors Club membership program that was
work that worked in Tractors Supply. We rolled that out
(19:19):
to petscent So it works in both name plates now
pet Sence. The ownership of pet Sentence really over the
last decade almost has given us a lot of insights
into the pet industry, given us access to brands that
we would not have otherwise gotten access to, and allowed
us to bring that knowledge and that those contacts into
the core track supply and make the business better. We
(19:41):
also are rapidly growing the pet Sence brand and we've
got over two hundred stores now. They are in the
same towns as a tractor supply. Ideally they're in a
town that doesn't have a pet co. It doesn't have
a Pet Smart. Typically our towns don't. We typically serve
call it a twenty thousand person town. The tractor supply
would be on the outs to the town typically wherever
(20:01):
the more agg related you know, area is. But the
Pet Sense we want that in the center of the town,
kind of where the few restaurants are, the grocery store,
some of the clothing stores that are in the town.
You know, there might be a two three strip malls
or malls in the town that are where the commercial
activity is located. That's where we want a pet Sense
(20:22):
and it does really two things. It serves that inner
city quote unquote population that doesn't have big yards and
doesn't have horses and cows and they've got you know,
smaller animals and pets. But then also secondarily, in addition
to serving that community in a specialty like way, it
also serves convenience for the core tractor supply customers. So
(20:43):
to say, on a Friday night, you're in town having
dinner at the you know, olive garden, and you need
to get some dog food or chicken feed on the
way home just to get you through the weekend before you,
you know, you do your annual your weekly shop at
at track supply. Pet Sense also serves that in the
so it's a great win win pet Sense tractor supply
(21:04):
commonality on the brand pet Sense by tracks, by commonality
on the loyalty program Neighbor's Club a purposeful overlap where
it makes sense on assortment, but pet Sense doing it's
what it's good at as well in terms of being
a specialty player, carrying you know, more cats and even
things for fish and lizards, and you know that sort
of side of a pet specialty store.
Speaker 2 (21:26):
Joe, I have coyfish too.
Speaker 5 (21:28):
Of course you do.
Speaker 2 (21:29):
There you go, so one of the things I remember
from when we spoke to Michael Roberto, the author of
the Harvard Business case study on Tractor Supply. He talked
about how the essence of business strategy is basically what
you don't do, so what you decide not to do.
After all, it's pretty easy to say, we're going to
(21:49):
go after this massive market and this market, and we're
going to sell this, this and that, and he described
what Tractor Supply had done as a sort of judo
strategy of basically avoiding head to head competition with bigger
box stores like a Lows or a home depot. Can
(22:10):
you talk a little bit more, perhaps about what you've
decided not to do and how that maybe differentiates the business.
Speaker 6 (22:17):
So, and I think that's a very fair description of
who we are. We want to be the best retailer
serving life out here, and we're going to have store locations,
store size, assortment, customer service technology, and then a supply
chain you know, in the background, all built the most
(22:41):
optimally serve life out here. And as a consequence of
that strategy, you know, we're going to make a number
of decisions to optimize around that, but also to position
us uniquely against competition. So a couple things. Less than
ten percent of our stores are suburban. Zero some of
our stores are urban. So we are very purposely in
(23:05):
ex Surban and rural communities, you know, very different than
the vast, vast majority of retailers. You know, some of
the names you mentioned are heavy urban, heavy suburban. They
may dabble in ex Surban, but you know, very few
are purposely building in rural America. So location wise, you know,
we oftentimes be are have a twenty mile radius with
(23:28):
minimal competition. The second thing would be store size. So
our store size is eighteen thousand square feet plus or
minus the size of sale Walgreens, And if you think
about many of our competitors, they're going to have much
larger store size. There's one hundred thousand square feet, eighty
thousand square feet. That puts a lot of pressure on
(23:50):
you to keep inventory, to keep the.
Speaker 5 (23:53):
Store updated, to staff it.
Speaker 6 (23:56):
And I think you know, what we've seen in retail
over the last ten twenty years is a decreasing store size, right,
and those retailers that have these large, large store sizes
wish they had smaller ones. And you know, I always
mask what the you know, if you look back over
the history tracks by what are some of the most
important decisions ever made? And you know, number one decision,
most important decision are made was how we built our culture.
(24:18):
Hands down, the writing of our mission and values, creating
a culture around it and always staying on that path
number one most important decision. But I'd say a very
important second decision that was made was the size of
our stores, and if anything, it forced us us to
really prioritize and only have the assortment necesser to really
(24:39):
serve life out here most optimally, and it creates this
element of convenience.
Speaker 5 (24:43):
And we always say that our.
Speaker 6 (24:44):
Worst parking spot and our stores is better than the
best parking spot at a big box store.
Speaker 5 (24:50):
Yeah.
Speaker 6 (24:50):
So another decision that we've made is how we execute online.
Seventy five eighty percent of our online businesses picked up
in store or fulfilled from a store, delivered from a store.
You know, by comparison, most would be in the forty
or fifty percent range in retail or even less. We've
been very purposeful and not choosing not to compete in
(25:10):
that kind of long tail assortment or to have a
marketplace on our website because we just don't think that
we're competitively advantaged in that area and that you know,
we can build a robust, sustainable business uh in that area.
You know, we know what we do best, which is
serve rural America, serve life out here through an eighteen
thousand square foot store base with you know, the best
(25:32):
customer service in the industry from retail, and doing that
with the technology that you know is best needed by
our customers. And to your point, it's been very purposeful
over decades and decades in terms of really defining who
we are and building a real competitive advantage around that.
Speaker 2 (25:49):
So one thing I was wondering, and you mentioned the
online business there and the idea of you know, click
and collect, which I believe has been a source of
growth for a lot of brick and mortar companies at
this point. But you came from Macy's and I think
home Depot before you joined Tractor Supply, and I think
at Macy's you were actually heading up their online business.
(26:12):
Can you talk a little bit more about how that
experience may have informed Tractor Supplies online strategy took.
Speaker 6 (26:20):
One of the areas that I'm personally very passionate about
is the intersection of retail and technology and how that
allows you to better serve your customer, but also how
that allows your team members, your employees to better serve
your customers as well, like you're strengthening their ability to
do so. And to your point, I spent ten years
(26:42):
at Home Depot for which of that ten years I
was running the online business there two thousand and nine
to twenty thirteen, which was a pretty big time period
for digital transformation in retail, coming on the heels of
the Amazon and really coming on the forefront and then
obviously the iPhone line. And then I spent three years
at eBay running their North America business, you know, thirty
(27:05):
billion dollar plus marketplace just in the United States and
obviously global in nature, and through my three years there
that was you know, big data, cloud computing kind of
the mid twenty fifteen fourteen sixteen seventeen timeframe. And then
in seventeen to twenty nineteen, that three year period, I
worked at Macy's where I was President of business and
(27:25):
did have responsibility for technology and online in that role.
And you know, those experiences have had substantial impact on on,
you know, my perspectives of how technology can drive the
business better serve customers better, enable team members, and try
to bring some of that in concert with the large
team that we had that thinks about these things every day.
And I think we've done an excellent job in the
(27:48):
last handful of years, you know, from a technology perspective,
and you know ways it's influenced us. As I mentioned earlier,
the way we've executed our consumer mobile app strategy, the
way we've executed our buyline pickup in store strategy, but
also the way we've set up our team members to
be successful.
Speaker 5 (28:04):
All of our team members wear headsets that allow for
a variety of.
Speaker 6 (28:07):
Point to point communications, tasking knowledge tools, AI knowledge tools.
All of our team members have a handheld device that
they use for executing in the stores, but that's complemented
by a bring your own device where we have our
own app just for our team members, and all three
of those work seamlessly. From our credentials and authentication perspective,
then we're also rolling out now kind of computer vision,
(28:30):
leveraging all of our cameras in our stores and taking
them from being kind of dumb cameras to smart cameras
and allowing us to create use cases to drive improve.
Speaker 5 (28:39):
Customer service in our stores.
Speaker 6 (28:40):
So you know, all these things that you know, I've
had a chance to participate in over the last fifteen
to twenty years in terms of just you know, technology trends.
I think we're you know, trying to just leverage all
of our learnings across those to create the best business
we can. And of course we have a great team
who does a lot of this work as well and
have had you know, there's similar set of experiences over
(29:01):
the last couple of decades.
Speaker 4 (29:03):
So obviously we're really interested in supply chains and things
like that here on odd Lodds. So one of the
questions or one of the things I think you said
you have nine distribution centers around the country, and I
think you're adding a tenth. I think, can you talk
about the decision making that goes into the upfront cost
(29:24):
of a new distribution center and what that unlocks in
terms of possibilities at the end retail location.
Speaker 3 (29:31):
When you build one out.
Speaker 4 (29:32):
How do you think about when it makes sense to
spend the money to build a new distribution center.
Speaker 6 (29:36):
In less than a month's time, our grand opening for
our tenth distribution center will take place, and that's in
Mammel Arkansas. We just opened our ninth distribution center a
year ago a little every year ago in Nabarrow, Ohio.
In addition to those and those ten distribution centers of
which each are about a million square feet, we also
have three import distribution centers that you know, kind of
(29:59):
decon solid date product that it comes in on containers.
Speaker 5 (30:02):
And then we have sixteen mixing.
Speaker 6 (30:04):
Centers, which are cross dock facilities that in a label
for faster replenishment on full palate goods, which is from
us for the most part, our high velocity items that
are big bagged items like food and feed, wood, Pellot's fertilizer,
et cetera. So we have a very robust, you know,
kind of multi building type strategy in our supply chain
(30:28):
as we build. To get back to your question on
the tenth distribution center, just kind of how do we
think about that. There's really two facets to the buildout
of one. One is just you kind of got to
have it from a capacity perspective, and about every two
hundred and fifty stores we have to build another distribution
center to just be able to you know, kind of
keep them in stock and have the capacity. All of
(30:50):
our dcs run twenty four hours a day, seven days
a week. We're maniacalon trying to make sure we get
as much through put through them as possible. Obviously with
team members in mind. As we think about that, part
of it is you just kind of have to. But
each of our dcs, in addition to that, does provide
a substantial financial benefit as we roll out of DC.
It takes caught up between one hundred and one hundred
(31:12):
and fifty million dollars a capital to build one, and
call it thirty to forty million dollars a year in
annual operaing expense from a labor perspective, et cetera. But
it allows us to significantly reduce our mileage on the
truck perspective, so we can reduce the inbound miles from
ours from our vendors to the DC because we've got
(31:34):
more more dcs across the country and so you're reducing
milage there. But then secondly, we're able to build a
distribution center so that you know, the stores in which
they serve are closer and we can reduce that distance
as well. In fact, over the last six years, we've
reduced our average truck distance by one hundred and twenty
(31:54):
mile which has generated substantial freight savings for us. And
so you know, our DCS as we think about it,
and there's kind of two main drivers for it. One
we just got to have it, but two, it does
provide a substantial financial benefit for the business as well.
And then what I would say is they also create
a unique position for us in the marketplace where all
(32:15):
of our core farm and ranch competitors for the most part,
with exception of one or two, buy through distribution. And
so that's going to slow their ability to replenish down
and create a higher cost for that. And then those
retailers that we compete with that are more national retailers
that we compete with kind of category back category, say
a home approvement retailer or a pet retailer. Last year,
(32:37):
we processed over eight billion pounds of food and feed
through our supply chain, and so you know, we're just
experts at moving fifty pound bags of animal feed, foods, fertilizer,
wood pellets, those sorts of things, and have far away
the lowest cost to serve on those. So it gets
us scale on a cost to serve, It gets us
(32:57):
speed of replenishment, It reduces our transportation costs that you know,
also just gives us that capacity to fuel our growth.
Speaker 2 (33:22):
There was a line in one of your most recent
earnings calls that sort of caught my eye, and you
were talking about how you had reduced the attrition rate
in your supply chain team by implementing a new progressive
wage scale. Is that just? Is that corporate speak for,
(33:42):
you know, you gave everyone raises and they worked harder.
Speaker 5 (33:45):
Yes and no.
Speaker 6 (33:45):
So I'll start by saying one of the things that
we've invested in over the last five years substantially is
in wages. Earlier, when I was mentioning the investments that
we've made in the business specifically referenced capital expenditures. There's
obviously other line items that would be reflective of our investments,
and one of those has been in wages. And our
(34:09):
average hourly wage rate is nearly sixteen dollars. Now, that's
inclusive of our forty five thousand team members, store team
members and nearly five thousand distribution center team members. It
can go back and point at numerous times over the
last five years, we've made incremental wage adjustments for our
team members. So in June of twenty twenty, well before
(34:30):
others were doing so, we provided a dollar per hour
wage increase for every team member hourly team member of
the company. At that same time, we also started providing
benefits to all part time team members. Up until then,
you had to be full time to have access to benefits. Now,
if you work fifteen hours or more a week at
Tractor Supply, you have access to benefits the same benefits
(34:52):
I do. It's one benefit set system for everyone, and
that fifteen hours.
Speaker 5 (34:57):
Threshold is very low. To other retailers.
Speaker 6 (35:00):
If you were to go benchmark, most would be at
least twenty most or twenty five and upwards of thirty.
And we also started in June of twenty twenty providing
restricted stock grants to our store managers so that they
felt that empowerment, that ownership it, you know, in their
in their role. Specific to our distribution centers. Two things
we've done recently there. One is all of our supervisors
(35:24):
and managers in the dcs now receive restricted stock, which
wasn't the case prior, so again building ownership inside that
distribution center of our management team in there. And then secondly,
as far as our hourly team members, we shifted to
what you you as you called it a progressive wage scale. Historically,
our distribution centers would have gotten their raises once a
(35:46):
year in an annual merit cycle. And you know what
we found through that was in particular of the last
two or three years as you had a real crunch
around available labor, was that people wanted merit increases fast,
stir more consistently. And so we went to a one
where you at ninety days, do you get a raised.
At one hundred and eighty days, you get a raised.
(36:07):
At three hundred and sixty days, you get a raised,
and then it's progressive from there. And so when you join,
you know what you start at, and you know exactly
what your rage rates are going to be as you
look at it's.
Speaker 5 (36:16):
Very calendarized for you.
Speaker 6 (36:17):
And and so that gave people certainty, It gave people clarity,
They gave them a reward, a little bit of a
reward along, you know, along the way. Plus their managers
now have stock incentive and you know, they're kind of
treating it a bit more like you know, an ownership
and mentality.
Speaker 5 (36:34):
And it's it's been very successful for us.
Speaker 6 (36:35):
And we had a fifty point a reduction in our
supply chain attrition last year, and we're continuing to see
attrition rates below down this year kind of three months in.
Speaker 4 (36:45):
So on your website it says currently I'm looking at
your history page, it says there are twenty two hundred
stores in the forty nine states, and I think your
goal per the last conference call is to get up
to three thousand stores, So I have I guess it's
a two part question. Is what is the main constraint
to adding stores? Is it available land? Is it just
the capacity to plan them out?
Speaker 7 (37:06):
Like where is the heart?
Speaker 3 (37:07):
Is it materials and labor to build them?
Speaker 6 (37:09):
Like?
Speaker 4 (37:09):
What is that constraint? And then when you talk about
new store productivity, and I think, as you've been saying
that stores lately have been getting up to full productivity
faster than they have in the past, what is the
dial that you can turn to get a brand new
store up and running so that it's sort of on
par with the legacy stores.
Speaker 6 (37:28):
Well summarized Joe on kind of our store goal and
the number of stores we open annually, So we have
a three thousand store goal in the United States. We
have a little over twenty two hundred stores, now we
build annually around eighty stores, so we've got, you know,
basically a decade left of new store growth. We do
(37:50):
have a history of increasing that as but you know,
but we feel very good about the three thousand store goal,
and you know, perhaps there's some more upside beyond that.
There's a variety of factors that limit the number of
stores we build a year. As I mentioned, we're currently
this year planning to build eighty tractor supply stores, and
I should mentioned ten to twenty pet scent stores. I
(38:12):
would say the main limiting factor is our culture. And
I think the thing that keeps me up the most
at night is not allowing our growth to exceed the
pace of our culture. And we cannot be one of
those companies that wakes up five years from ago. We
just had incredible growth, but we're just not the same
(38:33):
company that we were five years ago from a culture
and customer service perspective. Obviously, in addition to that limiting factor,
there's a variety of other things. Right, there's access to
all the construction materials you need, there's access to you know,
local permitting resources, there's access to you know, construction labor.
All those things that We've had over the last two
(38:54):
or three years nuances there that have impacted our ability
to move faster on store rollout, just with you know,
the supply cheam directions that curbent COVID and such, and
the availability for people to.
Speaker 5 (39:05):
Get out and approve permits and those sorts of things.
Speaker 6 (39:07):
But that's all reasonably settled now, and I'd say it's
mostly just back to normal, with the exception of the
higher interest rates on building stores. But the main bottleneck
on an annual basis is just making sure that we
don't outgrow our culture. And you know, we bring every
new store manager, so we have twelve percent store manager attrition,
one of the lowest, perhaps the lowest in retail in
(39:28):
terms of attrition. But at twenty two hundred stores, that's
a couple hundred and fifty new store managers a year.
Plus we have eighty news stores, so you're talking three
thirty three hundred and fifty new store managers a year.
We bring every one of those store managers to our
store support center here in Brentwood, Tennessee, right outside of Nashville.
They spend an entire week going through training. They also
(39:50):
spend ninety days prior to starting at their store training
at another store, and so we invest a lot of
resource to make sure the store managers are up and
running and that you can't tell a difference when you
walk for when you go into one store versus another,
and we're just so passionate about that.
Speaker 5 (40:07):
I think you know that is the primary limiting.
Speaker 6 (40:09):
Factor for our our new stores in terms of number
a year, and then trying to get our stores up
to volume as fast as possible is kind of every
retailer's goal and focus. And typically they started about seventy
percent of our estimated sales in the first year, and
over a three or four year time period will ramp
up to that one hundred percent of what we expect
(40:30):
out of that store. And they are opening up at
higher volumes than they did pre COVID, and they are
ramping faster, and I think there's a number of reasons
for that, but I think the biggest is the improvement.
Speaker 5 (40:41):
That we've made in our brand awareness.
Speaker 6 (40:43):
And pre COVID, our unated brand awareness was down in
the thirties, and now post COVID, our unaated brand awareness
is nearly doubled. And just so as we move into markets,
more people are aware of us, they are more apt
to consider shopping us. And you know that just allows
us to ramp up to ramp up quicker.
Speaker 2 (41:01):
How important are partnerships to business growth now? Because famously
you have a partnership with car Heart, So if you
walk into a tractor supply store, you'll see lots of
car Heart hats and you know, clothing of all sorts.
But I think you also have some sort of deal
with Yellowstone. And in the course of researching for this interview,
(41:21):
I saw you have a line of garden clothes with
Martha Stewart. Now, so that seems to be an area
of interest for you. How do you identify these potential
partnerships and then how important is that for the overall
business mix?
Speaker 6 (41:35):
Nowadays Track Supply would not be the same company absit
the many fantastic partners that we have, And that's really across,
you know, all different facets of the business. Certainly on
the on the product side, we have some great partners
that work very closely with this help us create unique
(41:57):
product experiences for our customers. It can only be found
a tractors supply to your point, whether that's in apparel,
car Heart, who we're you know, one of the largest
seller of car hearts in the country and we have
you know, nearly one hundred store within a store car.
Speaker 5 (42:12):
Heart across our store base.
Speaker 6 (42:14):
But even partners like Purina on the feed side, and
you know are we have two private brands and feed
do More in producers Pride, and we work very closely
with Purina on the production of those and in fact,
our do More brand is the only private brand product
in the United States that had that carries the Purina.
Speaker 5 (42:33):
Checkerboard, you know.
Speaker 6 (42:34):
And you can go across our business and we've got
these just really fantastic strong partner relationships on the product side,
but also on the marketing side of your point. So
we've got great relationships with Yellowstone and you know, Taylor
Shared and that team, and we were, you know, one
of the very first partners that they had and have
always built custom commercials for that. And you know, Landy Wilson,
(42:56):
we have a strong multi year relationship with their professional
bull writing and we're one of the first inaugural sponsors
with them as that as that has really grown as
a sport and an enterprise. But then also if you
look on the tech side, we have an incredibly strong
partnership with Microsoft and Microsoft Azure particular and their cloud
platform and their AI capabilities, and I'd say we're very
(43:18):
much on the forefront of partnering with them and experimenting
and developing scaled solutions. And then even if you look
at like on the community side, we're far and away
the largest contributor and have been for thirty plus years
with FFA, the Future Farmers of America, and we're in
our second year of the largest rural agriculture scholarship program
(43:39):
in the country to million dollars a year, one hundred
five thousand dollars scholarships and fifty ten thousand dollars scholarships.
And so, you know, whether it's on the community side,
whether it's on the tech side, whether it's on the
merchandising side, or on the marketing side, you know, and
in a variety of other stakeholders as well. We had
just incredible partnerships people that that we've been with for
(44:01):
quite some time, and you know, there's synergies between our
businesses and their businesses, and it just really allows us
to be the best company we can be.
Speaker 4 (44:09):
I just have one more question, but since you mentioned
specifically interest rates, in the context.
Speaker 5 (44:15):
Of build out.
Speaker 4 (44:16):
Can you just give a little like more specifics about
how does a high interest environment affect the math of
store rollouts? And yeah, what and you mentioned that on
your call. That came up as one of the challenges
for twenty twenty three, along with weather and some other things.
But talk to us a little bit about the effective
interest the effective elevated interest rates on expansion decisions and
(44:38):
how it changes how various investments pencil out.
Speaker 6 (44:41):
Yeah, absolutely so, I mean interest rates are significant in
any sort of real estate project, right, And historically we
have used third party contractors to develop our locations for
us under assigned contract and our commitment is part of
that signed contract is you know, typically at a minimum
(45:03):
fifteen years or a twenty year lease within two to
three options on the back end of that. So you know,
we're signing up for fifteen to thirty years saying in
a location with a lease dollars per month associated with that,
and as part of that part of the agreement, then
a developer would go build that store for us, right,
and that includes acquiring the land, you know, building the store,
(45:29):
and then once they've got us up and running, most
of our landing lords will then sell that property to,
you know, someone who wants to own the long term
cash flow stream. So if you're a developer, you are
typically funding the acquisition of that land and the build
out of that store through some sort of financing, and
(45:49):
then you're selling the property to someone who's counting on
those cash flows. And so both the financing and the
selling to someone who's kind of that cash flows are
significantly impacted by interest rates. Right, what's the interest rate
you're going to pay on sixty seven million dollars of
capital for a year to fifteen months while you're building
that store, and then when you sell that tractors supply
(46:11):
to someone and it's got a three hundred thousand dollars
year annual revenue stream associated with it, right from the least,
what interest rate are they going to use to discount
that cash flow back at?
Speaker 5 (46:21):
And so it has.
Speaker 6 (46:22):
Substantial implications on our real estate developers. And with the
movement up in its rates obviously makes it more expensive
to build, and then you obviously are monetizing those future
cash flows at less right because of higher interest rates,
And so they've got more risk and they've got a
bunch of movement and so it has significant implications. And
so one of the things we've done over the last
(46:43):
twelve months is start to actually finance the build out ourselves.
So we have gone probably about half of our stores
this year. We will work with the developers still, we'll say, look,
you just build the store, force, work with the contractors
on the property, you know, work with the local scipalities
around zoning and permitting and all those sorts of things.
(47:03):
But don't worry about you know, buying the fixtures, buying
the HVAC, you know, buying the concrete block, all those things.
Speaker 5 (47:09):
We're going to do all that.
Speaker 6 (47:10):
We will pay for it all and we're just going
to give you a four or five hundred thousand dollars
fixed fee to build that for us. But the idea
that you need to finance them on the front end
or worry about the sale on the back end, don't
worry about that anymore.
Speaker 5 (47:23):
We will take that on.
Speaker 6 (47:24):
And what we found is that it frees up a
lot of value because they were putting a lot of
risk in the model, particularly with the variability and interest
rates and how things are moving around, and so it's
had significant impacts. We're fortunate to be investment grade in
terms of debt rating to be billion dollars plus cash
flow positive every year. So we've got a lot of
levers that we can we can put in place to
(47:46):
just kind of address that situation. But it's certainly been
a big topic I think for all everyone in real
estate over the last eighteen months.
Speaker 2 (47:55):
Since you guys are experts in moving big bags of stuff,
so can you just start buying and also delivering materials
for new stores to yourself?
Speaker 5 (48:03):
Right?
Speaker 6 (48:03):
That's and that's exactly part of the benefit that we've
captured by bringing you know, kind of self development in
the house is that we can go negotiate now for
you know, eighty HVAC systems at one time. We can
go negotiate for all the fixtures at one time, all
the bailers that we have in the back of our store,
all those sorts of things that in the past the
(48:26):
contractor would have singularly sourced just for that store. We
can now do it, you know, in large batches, fifty
one hundred at a time and get a nice reduction
and price by leveraging our volume.
Speaker 4 (48:40):
Last quick question for me, just I mean, I know
you're writing these big secular trends, but things like inflation,
et cetera, labor market. How do things look right now
we're recording this April nine, twenty twenty four. Does it
feel like we're something like a normal environment.
Speaker 6 (48:55):
I don't know if you're a retailer that feels perfectly
normal right now on I'll get into that in just
a second. But what I would say at the highest level,
I think our economy is strong right now. I mean
we're running, you know, as a country two three four
percent GDP right kind of pick your quarter a month
GDP solid right now. You've got consumers spending really leading
(49:16):
the way on that. You know, the PCEE personal conception
expenditures you know for the month of January and February
very solid in that you know, two and a half
to three and a half percent range, very solid growth there.
Speaker 5 (49:29):
You know.
Speaker 6 (49:30):
The only thing I think from a retailer perspective, why
it doesn't feel normal right now is consumers are still
shifting their spend from goods to services, and you know,
pre COVID services, so things like you know, hotels, restaurants, entertainment, cruises,
those are you know, airline tickets, those sorts of things.
They were about sixty nine percent of a consumer spend,
(49:53):
with goods being the other thirty one percent. During covid U,
when people had less travel than they could go do
you had these stimulus checks coming through and people were
feeling the need to spend those goods as a percent
of consumer expenditures gotten nearly as high as thirty seven percent,
with services, you know by comparison, dropping down to sixty
(50:16):
three Over the last eighteen months. As our economy is
opened back up and people have gotten back to more
normal spending, perhaps some pent up desire to travel, you've
seen that services spin start to creep back towards sixty
nine percent. I think at the end of February it
was in the high sixty sevens, maybe right at sixty
eight percent. So and if you look at the February SPIN,
(50:39):
services were up six percent, whereas goods were only up
one percent on spend. So there's a big swing happening
right now between goods and services. But other than that,
I think, you know, our economy seems to be very
health healthy right now. The consumer continues to spend, you know,
inflations moderating, I think people have started you see that
lesser as a an issue when you do consumer surveys,
(51:04):
and you know, I think our economies is very much stabilizing.
Speaker 5 (51:07):
Hats off to the FED for everything they've done.
Speaker 2 (51:10):
Hell a lot and CEO of Tractor Supply, thank you
so much for coming on all thoughts and explaining exactly
how you are capturing so much of my income. It
was great, all right, Joe, Well, I thought that was fascinating,
(51:33):
and I can see why I am in fact spending
quite a decent amount of money at Chactor Supply in
recent years. There's so much to pick out of that conversation.
I mean, I thought the point about distribution was pretty interesting.
This idea that you can build up and expertise in
moving a particular type of things. So in this case,
I guess big bags of animal feed and stuff like that,
(51:55):
and so you can start to get efficiencies out of
that and also maybe at some point point start to
you know, negotiate supply for building your own stores in
bulk purchase as well.
Speaker 4 (52:06):
No, I thought that was really fascinating as well, because
you can imagine, right, and it's not you don't have
to imagine that like, okay, in something like pet food
or something like that, or feet. They're competing with a
lot of other companies. But if pet if feed is
such a dominant share of their own supply chain, then
they can become the most efficient or theoretically the most
(52:28):
efficient distributor of fifty pound bags in a way that
you might not expect. Companies that specialize in so many
other things to like build that expertise and so like
a way of gaining scale and price competitiveness even from
smaller side.
Speaker 2 (52:43):
Yeah, and the other thing I was thinking, and this
came up in the episode we did before on the
Harvard Business case study, but this idea of the choice
of location for opening stores and not automatically migrating or
being attracted to urban centers because I think, for you know,
a large proportion of retail, the thinking is always you
want to be where the people are. So even in
(53:05):
the middle of New York, you will have in fact,
I think we have a home depot right below the
Bloomberg offices in Midtown Manhattan. Yeah, you will have those
kind of big box stores, you know, a Target or
a home depot or whatever. But it seems like in
the case of Chactor Supply, they're sort of going where
the animals are not necessarily where the people are.
Speaker 5 (53:25):
No totally.
Speaker 4 (53:26):
And then I love like also, you know, in terms
of the strategic location hearing them walk through the math
of the effective interest rates on store development, and I
always joke, you know, it's like every company is a bank,
but that is basically like what he described, which is like,
why when Tractor Supply has like a great credit rating
(53:47):
is really big, it's you know, it's not going to
go away. Why not bring that sort of borrowing and
lending capacity onto the Tractor Supply balance sheet and then
free up the developer who then can focus on the
one thing that they're really good at, which is constructing
a building, rather than having the developer also take that
financial risk and presumably pay a higher spread for their
(54:10):
borrowing than tractor would you.
Speaker 2 (54:12):
Know the other thing I was thinking this might be
kind of weird, but you know, Tractor Supply is sort
of keying off this big demographic trend which we discuss
aging millennials and the fact that millennials want more space
and they're moving out of cities and they want pets
and things like that. I sometimes wonder if like Tractor
Supply is going to be the Harley Davidson of millennials,
(54:34):
like everyone had pets when they were a certain age,
just like all the Baby Boomers had a motorcycle when
they were a certain age, and then it kind of
ages out.
Speaker 3 (54:43):
I like the analogy. I'm done with that analogy.
Speaker 7 (54:46):
Oh you know what, Tracy. One other thing that we.
Speaker 4 (54:48):
Have to do more episodes on is, like I guess
I would say, like the point suffocation or reward program
Oh yeah, And I.
Speaker 7 (54:56):
Just feel like, you know, I'm starting to think that.
Speaker 4 (54:59):
You know, people like post about prices for anything, like
inflation is out of control, and then another person posts like,
here's a screenshot from Walmart dot com and these prices
aren't nowhere near what you say, and stuff like that.
Speaker 7 (55:10):
Yeah, and I feel like there is this.
Speaker 4 (55:12):
Divide between the time people who are like have the
time and capacity to be part of rewards programmed.
Speaker 2 (55:18):
I've said this so many times. It's the price pack
architecture is becoming more sophisticated. And McDonald's is my sort
of ultimate example of this, which is if you download
the app, and if you take the time to order
before you actually rock up to the little takeout window,
you can get decent deals and they are like a
(55:39):
significant percentage less than what you would get from just
ordering spontaneously, and it is kind of it's weird, and
it adds another layer of complexity to inflation. I think
it also brings up questions about privacy and fairness and
things like that.
Speaker 4 (55:55):
It's interesting to hear him talk about like how much
he credits like that to like, you know, getting that
consumer app. I think he said it was in summer
twenty twenty one, and like the sort of taking it
from a very rudimentary rewards program to more advanced one.
Speaker 3 (56:11):
Super interesting stuff.
Speaker 2 (56:12):
Absolutely, and we really should do that episode. Yeah, Okay, Well,
in the meantime, shall we leave it there?
Speaker 3 (56:17):
Let's leave it there.
Speaker 2 (56:18):
This has been another episode of the Oudlots podcast. I'm
Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 4 (56:24):
And I'm Joe Wisenthal. You can follow me at the Stalwart.
Follow our guest Tractor Supply CEO hel Lawton. He's at
hell Lawton. Follow our producers Carmen Rodriguez at Carman Ermann
dash El Bennett at Dashbot, Kelbrooks at Kelbrooks. Thank you
to our producer Moses Ondam. For more odd Lots content,
go to Bloomberg dot com slash odd Lots where you
have transcripts, blog and a newsletter, and you can chat
(56:46):
about all of these topics twenty four to seven in
the discord with fellow listeners Discord dot gg slash oddlines.
Speaker 2 (56:53):
And if you enjoy odd Lots, if you like it
when we do deep dives into the business model of
companies like track Supply, then please leave us a positive
review on your favorite podcast platform. And remember, if you're
a Bloomberg subscriber, you can listen to all of our
episodes absolutely ad free. All you need to do is
connect your Bloomberg account with Apple Podcasts. Thanks for listening.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Nikki Glaser Podcast
Every week comedian and infamous roaster Nikki Glaser provides a fun, fast-paced, and brutally honest look into current pop-culture and her own personal life.