Tractor Supply has irons in the fire
During a year more challenging than most for Tractor Supply, the Tennessee-based retailer still posted double-digit percentage increases in net sales and net earnings for the fourth quarter ended Dec. 31.
Beyond the top and bottom lines, the company revealed a number of initiatives in various stages of completion. Here are five highlights from the earnings call.
• Tractor Supply expects to open approximately 100 new Tractor Supply stores in 2017, with around 45% scheduled to open in the first half of the year. The company will continue the transition of its Del's stores into Tractor Supply stores, and we expect to close nine Del's stores as it continues its Tractor Supply Western expansion plan.
• The company has big plans for Petsense, its recent pet store acquisition. Tractor Supply intends to grow the store base by 25 to 30 stores in 2017. The company is engaged in sharing best practices, and has already converted its two HomeTown Pet stores to the Petsense operation. “Petsense has a proven store growth model, and with the addition of a digital component at some point, this will only broaden the offerings for the small town pet customer,” said Tractor Supply CEO Greg Sandfort.
• Based on the knowledge that customers want more personalized interaction with Tractor Supply, the retailer is speeding up the rollout of its Neighbor’s Club program. The program was live in more than 600 stores at the end of the year. All stores are expected to be up and running with Neighbor’s Club sometime in the second quarter of 2017.
The Neighbor’s Club customer loyalty program was launched in 140 stores in October of 2016. The fourth quarter was the first full three months with the program in place.
• On the distribution side of the business, the company will begin construction of a new DC in the Northeast later in 2017. Also, Tractor Supply’s Waverly, Nebraska, DC will be expanded.
• Feedback from the field team as well as customer in late 2016 led to the understanding that customers want more access. As a result, the retailer boosted the number of products online through its drop-ship program. Furthermore, it expanded its Buy Online Pickup in Store Program.
Large-format experiential stores focus on the customer experience
At a time when many retailers might be cutting back on brick-and-mortar investments to focus more on e-commerce, a few notable ones are taking the opposite approach and launching large-format experiential stores to immerse customers in the full brand experience and offer items in each product category, from couches to dresses.
Such stores are engaging shoppers by making the customer experience the focus. Anthropologie, for example, is growing its new stores to provide a unique experience that includes full service shops and access to online-only merchandise in its new Anthropologie & Co. stores.
For retailers considering expanding their store layouts – and even retailers with no plans to do so – understanding what makes larger format experiential stores successful can provide valuable insights to improve brick-and-mortar operations. With an effective strategy in place, such stores have the potential to offer several key benefits and keep customers coming back.
Create a unique customer experience
Large-format experiential stores can lead to an unparalleled shopping experience. With a wider range of inventory and plenty of room to shop, each section of the store is meticulously designed and curated for the shopper.
Anthropologie’s experiential format include a full beauty section, petites selection, shoe and accessories salon and jewelry store. It also include a home section, with fully decorated “rooms,” including bedrooms, living rooms and dining rooms.
Conversely, traditional Anthropologie stores might only have clothing, a handful of accessories and a small selection of home goods. This wide variety of options gives customers the opportunity to customize their experience to fit their personal needs, ultimately building customer loyalty. It also enables customers to imagine what certain pieces commonly only found online – such as furniture – might look like in their own homes.
Offer more than merchandise
In addition to including a wider variety of merchandise than your typical store, some large-format experiential stores go beyond merchandise when it comes to pleasing their customers. For example, Restoration Hardware began opening larger scale stores, known as RH galleries, to highlight more of its designs, which they refer to as “next generation design galleries.”
Beyond simply providing a wide variety of Restoration Hardware merchandise, the retailer included an upscale restaurant and café at its RH Chicago (The Gallery at the Historic 3 Arts Club) location that has become so successful, the retailer has added eateries to additional gallery locations.
These stores provide value to the customer throughout their entire in-store experience –whether through a seamless shopping or dining experience. Other retailers can learn that offering customers a full brand experience – and encouraging customers to return time and time again – can go beyond simply the expanded inventory and layout. It is about creating a unique experience that customers can’t get through online shopping.
Focus on convenience at check-out
While many consumers have been receptive to large format experiential stores, it’s important for retailers to set themselves up for success by avoiding making the stores feel too big. Though convenient, large stores with endless merchandise can be overwhelming for both employees and customers.
Large-format experiential stores give shoppers the opportunity to find and check out items that they might want to order online, but are concerned about size, fit and function. While these stores – which can be 25,000 sq. ft. or more in size – are meant to hold maximum inventory, successful retailers have made the space feel personal with their design layout and customer service.
Brick-and-mortar stores both large and small can make their shopping space feel more personal by having plenty of staff roaming the store to assist customers with mobile POS devices, like tablets, to help find items or check-out.
Customer service and simple payment options are both key to large experiential formats and online retail success because shoppers tend to place the highest value on flexibility and convenience. In Worldpay’s recent Pay That Way study, shoppers revealed that they make purchasing and payment decisions based on availability (18%), speed (13%) and convenience (15%). If the customer experience is inconvenient, there’s a chance customers might not complete transactions or return to a given store in the future.
Retailers can also provide more convenience at check-out by offering multiple payment options, such as contactless cards and mobile wallets, so their customers can pay the way they want.
Mark Bergner is director of product strategy at Worldpay US, a global payments company for all channels: in-store, online and via mobile.
Flooring industry leaders point to top issue
There is no higher flooring industry priority than the installation labor crisis, according to the Floor Covering Leadership Council.
And according to a statement from the FCLC, members agreed to develop a strategic plan that will serve as the road map for the Installation Summit Task Force.
The FCLC describes itself as a coalition of flooring industry trade associations committed to identifying issues and developing solutions to the challenges in the industry.
FCLC’s next meeting will be comprised of a professionally facilitated strategy session focused on the industry installation crisis and will be held in Phoenix, Arizona on April 13th during the NWFA Wood Flooring Expo.
The following companies make up the FCLC:
American Floorcovering Alliance, Inc. (AFA),
International Certified Flooring Installers Associations Inc. (CFI),
Ceramic Tile Distributors Association (CTDA),
Flooring Contractors Association (FCA),
Marble Institute of America (MIA),
Multilayer Flooring Association (MFA),
North American Association of Floor Covering Distributors (NAFCD),
North American Laminate Flooring Association (NALFA),
National Institute of Certified Floorcoverings Inspectors (NICFI),
National Tile Contractors Association (NTCA),
National Wood Flooring Association (NWFA),
Resilient Floor Covering Institute (RFCI),
World Floor Covering Association (WFCA).