CASE 1 Tractor Supply Company Targets the Part-Time Rancher Tractor Supply Company (TSC), a large and fast-growing earnings to keep their farms in operation. Many of them retailer with more than $4 billion in annual sales and more are the sons and daughters of traditional production farm- than 100 stores in 44 states, was the inventor of the "do-it- ers and inherited the family farm and decided to keep it yourself" (DIY) trend. Its origins date to 1938, when Charles running. Today less than 10 percent of TSC's customers E. Schmidt Sr. established a mail-order tractor parts busi- classify themselves as full-time farmers or ranchers, and ness. After the success of his first retail store in Minot, North many of its customers do not farm at all. Dakota, he opened additional stores to serve the needs of local farmers. But eventually TSC's sales stagnated because small farms and ranches were being acquired by large farm- RETAIL OFFERING ing and ranching corporations. These large agricultural The typical TSC store has 15,000 to 24,000 square feet of firms buy supplies and equipment directly from manufacture inside selling space and a similar amount of outside space ers rather than through local farm supply stores like TSC. used to display agricultural fencing, livestock equipment, and horse stalls. The company tries to locate stores in the TARGET MARKET prime retail corridor of rural communities, two or three counties away from major metropolitan areas. Fifty per- Since the early 1990s, TSC has targeted a growing group cent of its stores are in previously occupied buildings. of people interested in recreational farming and ranching. The typical store stocks about 15,000 SKUs, using a Called "sundowners," "U-turners," "hobby farmers," combination of national and private-label brands. TSC "ruralpolitans," "micropolitans," "gentlemen farmers," and constantly tests new merchandise programs in its stores. "ex-urbanites," these people have turned to farming to For instance, based on a successful test of expanded cloth- escape the hubbub of urban and suburban life. They are drawn to what they believe is a more private, simple, and ing and footwear categories, TSC doubled the size of stress-free lifestyle. They typically live on 5 to 20 acres in these areas of the store and added more lifestyle clothes and workwear for both men and women. a rural community outside a metropolitan area, where they work at a full-time profession, and use some of their TSC stores are designed to make shopping an enjoy- able experience and, at the same time, maximize sales andCases SECTION V TRACTOR VALUES ETHICS SUPPLYC MISSION EXHIBIT 1 TSC's Mission and Do the "right thing" and always encourage others to do Value Statements the right, honest and ethical things. RESPECT To work hard, have fun and Treat others with the same personal and professional make money by providing consideration we expect for ourselves. legendary service and great BALANCE products at everyday low prices. Manage your time for both business and personal success. WINNING ATTITUDE Have a "can-do" attitude. Be positive, upbeat, and focused. OUR BUSINESS We are winners! We are committed to be the most COMMUNICATION dependable supplier of basic maintenance Share information, ask questions, listen effectively, speak products to farm, ranch and rural customers. thoughtfully, and let ideas live. DEVELOPMENT OUR PEOPLE: Learn from each other. Teach, coach, and listen. Create an We value honesty, integrity, mutual respect environment where everyone can be a "star". and teamwork above all else. TEAMWORK We are an open company where everyone Value different viewpoints. Execute the agreed-upon plans. has the information and tools Together, everyone achieves more! to grow and excel. CHANGE We encourage risk taking, celebrate initiative Accept it. Embrace it. Initiate it. Do everything and reward success. better, faster, and cheaper. INITIATIVE OUR STAKEHOLDERS: Seek opportunities. Use good judgement. We are a growth company. Take intelligent risks. Champion ideas. We consistently grow sales and profits by ACCOUNTABILITY continuous improvement throughout Know your responsibilities. Live up to your commitments. the company. operating efficiencies. Their environment allows plenty of space for individual departments and visual displays. TSC has a centralized supply chain management team that focuses on replenishment and forecasting and a buy- Informative signs assist customers with purchasing deci- ing team that selects merchandise, develops assortments, sions by delineating "good, better, best" qualities, pointing and evaluates new products and programs. Almost all pur- out their "everyday low-pricing" policy, and providing chase orders and vendor invoices are transmitted through useful information regarding product benefits and sugges an electronic data interchange (EDI) system. tions for appropriate accessories. TSC emphasizes customer service. The company tries to hire store employees who have farming and ranching MISSION AND VALUES backgrounds. Its training programs include (1) a full man- Despite changes to TSC's retail strategy in the past 70 years, agement training program, which covers all aspects of its its mission and values have remained constant. The com- operations; (2) product knowledge modules produced in pany's mission and value statements appear on its website conjunction with key vendors; (3) frequent management (Exhibit 1), on cards handed out to all employees, and on skills training classes; (4) semiannual store managers' the walls of every store. According to TSC management, meetings, with vendor product presentations; (5) vendor- the first discussion with new employees centers on the sponsored in-store training programs; and (6) ongoing firm's values and mission because the firm steadfastly product information updates at its management head- maintains that "being a great place to work enables the quarters. This extensive training, coupled with a manage- company to be a great place to shop and invest." ment philosophy that stresses empowerment, enables store employees to assist customers in making their pur- chase decisions and solve customer problems as they arise. Store employees wear highly visible red vests, aprons, or smocks and nametags. TSC uses a variety of incentive programs that provide the opportunity for store employ- ees to receive additional compensation based on their team, store, and/or company performance. While TSC creates a "hometown farmer" shopping ex- perience for customers, there is nothing "small-town" or "laid back" about its operations and use of technology. Its management information and control systems include a point-of-sale system, a supply chain management and re- plenishment system, a radio-frequency picking system in the distribution centers, a vendor purchase order control system, and a merchandise presentation system. These systems work together to track merchandise from the ini- tial order through to the ultimate sale