- Consumers will likely stick to shopping habits picked up during the coronavirus pandemic well into the future, according to Hal Lawton, CEO of Tractor Supply Company.
- The farm supplies chain has been one of the top-performing retail stocks on the S&P 500 during the outbreak.
- Citing trends seen in countries hit by the virus earlier than the United States, Lawton said Thursday that customers will still gravitate toward shopping methods such as ordering products online and curbside pickup 12 to 18 months from now.
Consumers will likely stick to shopping habits picked up during the coronavirus pandemic well into the future, according to Hal Lawton, CEO of Tractor Supply Company. The farm supplies chain has been one of the top-performing retail stocks on the S&P 500 during the outbreak.
Citing trends seen in countries hit by the virus earlier than the United States, Lawton said Thursday that customers will still gravitate toward shopping methods such as ordering products online and curbside pickup 12 to 18 months from now.
"A lot of these new behaviors are going to be ingrained in customers' minds," Lawton told Matthew Shay, CEO of industry trade group the National Retail Federation, in a conversation streamed live on Zoom.
He also said consumers' preference for contactless payment methods will continue "usurping" their inclination for using cash, and that they will be more likely to visit retailers where they can fulfill multiple product needs and cut down on shopping trips.
"Customers don't want to go to a retailer where they can only buy one category," he said.
Tractor Supply is well-positioned to continue capitalizing on these trends, according to Lawton, who became the retailer's CEO in January. The company issued a strong second-quarter forecast at the end of May that estimated an increase in net sales of 24% to 29% and same-store sales growth of 20% to 25%. The retailer even plans to build 85 new stores this year, adding to its almost 1,900 Tractor Supply locations across 49 states, according to Lawton.
"We feel really good about our business model and the playbook that we have," he said.
Tractor Supply shares, which have a market value of $13.7 billion, were recently down nearly 2%, amid selling in the broader market. The company's shares are up nearly 28% since the start of the year. By comparison, the S&P Retail ETF was down nearly 6% in trading Thursday, and has lost 11% of its value since the start of the year.
Even though the retailer's stores have been open throughout the pandemic as essential businesses, the company has invested in expanding its online sales and curbside pickup service, including a digital feature that allows customers to submit the model and color of their car to make it easier for employees to locate it in a parking lot, according to Lawton.
He said that 80% of the retailer's orders placed online get picked up at stores and that Tractor Supply will continue rolling out features that make curbside pickup and same-day delivery easier in the fall.
The Tractor Supply store format is also "non-intimidating" and smaller than what's found at many big-box retailers, according to Lawton. He said it's easier for customers to navigate efficiently and for employees to find products they can quickly deliver to customers through curbside pickup.
Even with this tighter format, Tractor Supply stores still offer a broad range of products that appeal to customers' new interests in outdoor hobbies that have cropped up amid the pandemic, according to Lawton. He cited raised garden beds and vegetable planting as categories with "all-time-high participation" as consumers become interested in a "rural revitalization" and work on improving their homes.
"That's where America is right now," Lawton said. "People are not going on vacation."
He said interest in outdoor product categories will likely endure into the fall as the pandemic continues.
"I think that's going to stay for the foreseeable future, especially if there's no vaccine," he said.