Resisting temptation at Tractor Supply
Tractor Supply posted another strong quarter, with a 20% sales increase and 40% increase in net income. These are on top of record results last year.
How do they do it? It’s complicated. But one secret that emerged from the 1,000-plus location farm-and-ranch retailer’s fourth-quarter earnings call was the importance of resisting the temptation to stray from the categories that connect Tractor Supply to its customers.
Greg Sandfort, president and chief merchandising officer, explained it this way: “I’ve said a couple of times, there are many things we could sell in our store, but we’re going to stay true to who our customer is and service them.”
Even with its 2011 success story, Tractor Supply executives say they’re nowhere near a state of optimized regionalization of merchandise. Sandfort estimated TSCO is just in the second or third inning of proficiency. “There’s still plenty of running room for us,” he said.
Footwear is a for-instance. The first or second quarter will see a reset in the assortments of the highly regional-specific category of footwear. Other changes include product-category extension in the garden area, where more live product will hit stores in 2012.
Master Lock gets a presidential plug
Just in time for Home Channel News’ “Made in the USA” report (see page 16), President Obama locked down an American-made theme in his State of the Union address.
“A few weeks ago, the CEO of Master Lock told me that it now makes business sense for him to bring jobs back home,” Obama said in his address before the U.S. Congress last month. “Today, for the first time in 15 years, Master Lock’s unionized plant in Milwaukee is running at full capacity.”
A Master Lock spokeswoman said that CEO John Heppner, along with several other CEOs, met with the president, the vice president and cabinet members in an “Insourcing American Jobs” forum on Jan. 11 at the White House.
Since mid-2010, Master Lock has brought back approximately 100 jobs from China to its Milwaukee factory, which is unionized. Increasingly higher labor and logistics costs in Asia contributed to the decision. Milwaukee provided a more competitive overall cost structure, better control and the ability to better serve customers, according to a statement from the company.
Obama returned to the theme of insourcing a little later in his speech when he addressed the tax code. “If you’re a business that wants to outsource jobs, you shouldn’t get a tax deduction for doing it. That money should be used to cover moving expenses for companies like Master Lock that decide to bring jobs home.”
High times for niche retailer
A franchise chain of West Coast supply stores for “indoor gardeners” is bringing its special strain of controversy to Washington, D.C., with a fourth location in the Northeast quadrant of the nation’s capital.
WeGrow, which will open a 2,500-sq.-ft. “hydroponics superstore” this spring, is making no secret about its intention to serve medical marijuana growers. WeGrow already operates similar retail shops in Sacramento and Oakland, Calif., and Phoenix. The use of medical marijuana is legal in both California and Arizona.
“We’re not selling anything that has not been sold before,” said franchisee Alex Wong in a television interview posted on WeGrow’s website. Customers will include ordinary gardeners as well as marijuana cultivators, he added. Staff will give advice to both groups, and inventory will include pipes and other paraphernalia.
Whether Wong — and the District of Columbia — runs into trouble with the federal government remains to be seen.