Feeding the beast at Tractor Supply
During a recent Goldman Sachs investor conference, analyst Matt Fassler described Tractor Supply as “one of the most unique differentiated growth stories in retail.”
That was the cue for CEO Greg Sandfort to share some of the Brentwood, Tenn.-based company’s insights into its large and growing brand of farm-and-ranch retailing. And he shredded a few myths of rural retailing in the process.
How large? Tractor Supply’s annual sales hit $4.7 billion in 2012 as store count swelled to 1,176. The company sees an opportunity for 2,100 stores in the United States, and it’s working diligently to get there.
Tractor Supply plans to open about 100 new stores this year, and another 100 next year. To illustrate the level of planning involved for that amount of growth, Sandfort said the company already knows who the store manager is going to be for each store opening through the first nine months of next year.
The chain could conceivably grow faster, he said, but why? “As a growth company, you have to feed the beast. The No. 1 thing is you have to be able to service that store base. You have to get ahead of the supply chain formula. You can’t get behind. Because catching up is very painful and very costly.”
Looking in the western region, where the company currently has 42 stores across 11 states, it sees an opportunity for 307. The company’s westernmost distribution center is in Nebraska, and that will have to change. Tractor Supply plans to add a western distribution center in 2015. Beyond that, the company is eyeing the Pacific Northwest for another distribution play.
Through its growth, the company points to its internal processes as a competitive advantage. “We’re really proud of, and stress every day, our ability to execute,” Sandfort said. “Many retailers have great ideas, but one of the things about Tractor is when we say we’re going to go and do something, we go and we do it.”
That discipline is on display as the company rolls out new products, the development of which is considered an important responsibility by Tractor Supply executives.
“It’s our job to bring in new products,” Sandfort said.
At any time and in any store, there’s probably three different types of product testing taking place — not just single SKUs, but 4-ft. sections, “center court” presentations, entire gondolas of product mix or various combinations of the above.
During his presentation, Sandfort explained that Tractor Supply does not mind seeing a test fail. In fact, that’s what the tests are designed to reveal.
The process, which involves 60-plus tests at any given time, “teaches us to fail early, often and cheaply,” Sandfort said. “If the customer doesn’t respond, I don’t want to take it to more than 25 stores if we’ll just have to liquidate it.”
Responding to a question about guns and ammunition — a category not found in Tractor Supply stores, even though a high percentage of its rural customers are known to hunt and fish — Sandfort shared another piece of tried-and-true merchandising philosophy. “If we can’t be meaningful in a category, don’t dabble,” he said.
The company’s strategy for continuous improvement includes another unusual tactic: Three times a year it holds a vendor day open only to new vendors — existing vendors need not apply — meeting with buying teams in half-hour increments. “It can be guys working out of their garage, or maybe some from Asia,” Sandfort said. “It’s another process that allows us to fill the pipeline with newness.”
Stepping beyond an aerosol can mentality
For a company long known for its rust-stopping aerosol cans, Rust-Oleum has evolved into a marketer of cutting-edge offerings, such as Countertop Transformations and the NeverWet liquid repellent system.
For more than 90 years, Rust-Oleum has sought to provide innovative solutions for its customer base. Back then it was whale oil that sea captain Robert Fergusson, Rust-Oleum’s founder, used to stop corrosion from spreading on his metal decks. Today, it’s about deck and concrete restoration; NeverWet, a technology that repels water-based liquids; and other breakthroughs.
“Innovation is the heart of Rust-Oleum; it is at the core of what keeps us thriving,” said Mike Freeman, brand manager.
Freeman said Rust-Oleum views itself as a “game changer.” As such, it looks to push the boundaries of innovation, seeking to bring products to market that others wouldn’t even consider.
A big hit for the company was its Countertop Transformations Do-It-Yourself Coating System. Rust-Oleum marketed it as a simple and affordable system that gives countertops the permanent look of natural stone. Countertop Transformations has been on the market for three years and been well-received by consumers and industry, having earned a Good Housekeeping Very Innovative Product (VIP) award in 2012.
The ideas behind Rust-Oleum’s products come from many sources, both externally and internally. Freeman said a concept could originate from a consumer who has a specific need or from an opportunity that a customer foresees. And it could also emerge from the company’s R&D team. “We invest in consumer research so that we can gain insight into what types of needs and issues homeowners are faced with,” Freeman said. “With that insight, we quickly and efficiently develop solutions that drive demand.”
NeverWet is an example of this insight. Its two-step product system creates a moisture-repelling barrier on a multitude of surfaces — metal, wood, aluminum, galvanized metal, PVC, concrete, masonry, asphalt, vinyl siding, fiberglass, canvas and most plastics.
“NeverWet was a natural fit for us,” Freeman said. “It essentially eliminates the headache of having to deal with water-soaked items. Its success is clear through the overwhelming interest we’ve received from consumers. It can be used on virtually any substrate.”
Another product, Deck and Concrete Restore, features a scuff-, peel- and chip-resistant finish that withstands temperature changes, heavy foot traffic and furniture abrasion. The product is a pre-mixed, water-based, one-part polymer coating containing synthetic and mineral pigments.
Joel Tressler, director of marketing for Rust-Oleum Restore, said that while most homeowners think the only solution to revive a battered deck is replacement, Deck and Concrete Restore — a liquid armor resurfacer — enables them to “protect their investment and reclaim this extra ‘room,’ and start enjoying it again — without spending a small fortune.”
“Our years of experience have proven one thing time and again — innovation drives success; success for us, for consumers, but most importantly for our customers,” Freeman said. “Whether it’s making our products better, or completely inventing a new category altogether, we are game-changers. Our extensive breadth of product clearly demonstrates that. If there’s a surface, there’s a Rust-Oleum for it.”
Hi-Tech Heat Shields
Say “insulation,” and the first thing that comes to mind is thick, bulky, wool-like materials designed to be stuffed into exterior walls and under roofs to retard the transfer of heat or cold into and out of a building.
But there is another category that almost acts like insulation: radiant barriers. Wafer-thin materials with no inherent insulating properties, radiant barriers block heat transfer through roofs and, some companies say, walls. They include reflective metallic foils that are used alone or bonded to other materials, as well as liquid coatings that are painted or sprayed onto interior surfaces.
Not every shiny metallic material or coating reflects heat, however. Only products that are engineered or formulated to repel infrared radiation and meet specific industry standards qualify as radiant barriers under current regulations. Radiant barriers must have an emittance rating of less than 0.1 to meet ASTM C1313 and C1371 specifications. Liquid interior radiation control coatings must have an emittance rating of less than 0.25 to meet the ASTM C1321 standard.
Radiant barriers have been used in home construction for years, mainly in the hotter Sun Belt states where heat-blocking materials are needed and can be most effective. Early adopters used jerry-rigged foils and even metal sheeting to deflect at least some of the heat. But not all of those materials performed as intended; some products — such as tin and galvanized steel sheeting tacked to the underside of roof rafters — transferred ambient heat into the building.
Eventually, the practice of using reflective metallic foils as heat barriers caught on, and manufacturers began delivering products. Some performed as advertised, but because the science of heat reflectivity was not well understood until recent research, unsupported and sometimes wildly inflated claims of effectiveness often obscured the value of reputable products.
Industry research is divided as to the value of radiant barriers. Independent studies by the Florida Solar Energy Center and Oak Ridge National Laboratory show that radiant barriers in high heat-zone areas can reduce air conditioning costs by as much as $150 per year, but savings decline steeply in regions with lower ambient temperatures.
Other research has demonstrated that radiant barriers can improve heating and air conditioning in all climate zones, and a recent ASHRAE study conducted by ORNL showed that adding a radiant barrier generally improves the heat-blocking performance of standard insulation systems.
Michael Morris is a carpenter, author and journalist covering the home-building and remodeling industry.
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RBS radiant barrier sheathing is an oriented strand board with a perforated aluminum foil bonded to the interior face to prevent moisture buildup in the roof deck. (woodbywy.com)
ThermaWrap uses the optimum balance of Tyvek weather barrier and adds a low-emissivity metallized surface. (dupont.com)
LiquidFoil attic barrier is a vapor-permeable reflective paint for under-roof surfaces. It blocks up to 84% of heat radiating into or out of a structure. (henry.com)
Solarbord OSB radiant barrier sheathing has a 3% emittance rating and 97% reflectivity, which can reduce a home’s air-conditioning requirements by up to ½-ton. (norbord.com)