New York (CNN Business)If you’re one of those millennials who moved to a rural or suburban area during the pandemic, it’s practically a requirement that you pick up gardening tools at the very least, or maybe even some animal feed or a chicken coop.
One of the beneficiaries of that — besides, of course, the chickens — is Tractor Supply Co., a chain popular in those areas, which says it’s seen significant sales growth over the past year.Based in Brentwood, Tennessee, Tractor Supply (TSCO) has nearly 2,000 small-format stores in 49 states. The retailer does not actually sell tractors, but it’s an emporium of pet food and animal feed, lawn and garden tools, home goods, fencing, truck beds, chicken coops and recreational clothing.
It aims to be a destination for higher-income hobbyist farmers, DIYers and everyone else living what it calls in securities’ filings the “‘Out Here'” lifestyle” outside of metro areas.
Business has boomed at Tractor Supply during the pandemic.Tractor Supply reported Thursday that comparable sales β those at stores open for at least one year β increased 38.6% during its most recent quarter ending March 27 compared with a year prior. Total sales grew 42.5% to $2.8 billion, while profit grew 116.5% from a year earlier, to $181.4 million.Read MoreThe company attributed its surging sales in part to its having attracted a group of new, younger customers ages 18 to 45 that are heading to the suburbs and rural areas. CEO Hal Lawton said Thursday that he believes a migration out of urban areas, largely driven by the millennial population, is helping.”The most robust home-ownership growth is in the millennial cohort, with the growth coming in suburban and rural areas,” he said. Census Bureau data also shows that homeownership rates are growing fastest among people under 44; the oldest people commonly considered millenials are turning or have turned 40 this year.Tractor Supply also points to an estimate from data analytics firm Prevedere that rural population growth among millennials increased 3% in February compared to the year prior, based on its an analysis of Census data.Lawton, a former Macy’s (M), eBay (EBAY) and Home Depot (HD) executive, said based on the company’s customer survey data, millennials “had a very large increase as a percentage of our sales” last quarter. “We believe the growth in this customer segment has staying power and could be a structural game changer for us.”
‘It’s not a huge store’
Shoppers like Becky Trout say Tractor Supply carries a certain appeal.In September, Trout, 27, and her fiancΓ© bought a house in Euclid, Ohio, a suburb of Cleveland, to escape their apartment in Cleveland. “We needed a backyard,” she said. Trout does a lot of gardening in that new backyard -β and she buys dirt, mulch and grass seed for it at Tractor Supply. She also shops for dog food there and recently bought two kayaks and fastener for her fence. She plans to buy patio chairs from Tractor Supply when the weather warms up. Trout said she’s been to Tractor Supply three times in the past month. She prefers its small, “easy to navigate” store over walking through a big-box chain.”It’s not a huge store like Home Depot or Lowe’s,” she said.
Tractor Supply says 25% of its customers have recently bought a new pet.Though many people are like or know someone like Trout, it’s not exactly clear how many millennials moved to suburban and rural areas over the past year -β or, more importantly for Tractor Supply’s future, how many might stay. Investment bank Cowen found in a survey of 2,700 US adults in June that there had been an uptick in millennials who said they were living in suburban areas and a decline in those who reported living in cities. Forty-nine percent of 18-to-24-year-old respondents in June who said they were living in a suburban area g, up eight percentage points from the same month in 2019, while 48% of respondents ages 25 to 34 said they lived in a suburban area, up four percentage points from the prior year.Adam Kamins, director of economic research at Moody’s, noted in an email that a wider set of Census Bureau figures on population patterns by age and geographic area will be released later this year, which should shed more light on where millennials moved in the pandemic. But there is already “indirect evidence that a move to suburban and exurban areas is taking place” and that millennials are powering this shift, he said.
Dollar General will hire 20,000 workersSome millennials will move back to cities as the virus gets under control, he said, but others will stay put in the suburbs as remote work sticks.Aside from demographic shifts working in its favor, Tractor Supply has also benefited from increased pet adoption in the pandemic and consumers spending more on their pets, and shoppers investing in sprucing up their homes and backyards.”Our current survey work with our customers indicate 25% have recently acquired and adopted a new pet,” Lawton said Thursday. “New companion animal ownership acts as an annuity for our business as these puppies and kittens grow up.”
Tractor Supply plans to keep growing: The company will open up 80 new stores this year and on Thursday raised its sales and profit guidance for the year.βCNN Business’ Anna Bahney contributed to this article.
Source: edition.cnn.com
