During a recent fourth-quarter earnings call, Chief Executive Officer Hal Lawton stated that the company prioritizes cost control and optimizing delivery performance, especially as demand for bulky item delivery continues to grow.

A Tractor Supply store facade. Photo: Tractor Supply

According to its plan, Tractor Supply will add over 150 new consolidation hubs in 2026. These hubs serve as points where drivers and goods from various facilities are consolidated for delivery to nearby customers. Following this expansion, the system will comprise approximately 375 hubs, covering more than half of the chain's stores.

"This coverage allows us to implement final-mile delivery at over 1,200 stores and serve over 15 million customers," Lawton noted.

Tractor Supply announced its final-mile delivery initiative in December 2024. The goal is to increase its self-delivery rate, particularly for large and bulky items such as fencing panels or ride-on lawn mowers.

Colin Yankee, Executive Vice President and Chief Supply Chain Officer, stated that the company aims to self-deliver 95% of large orders by the end of this decade. The company has observed higher customer satisfaction when utilizing its internal delivery network.

Simultaneously, the company is enhancing integration with gig economy delivery platforms, such as UPS's Roadie, to reduce the average cost per order. Lawton estimates that the final-mile delivery plan will save the company approximately 10 million USD annually in shipping costs, thereby improving its gross profit margin and enabling continued reinvestment in the system.

"This initiative is essentially self-funding during its implementation," he added.

The expansion of the delivery network comes as Tractor Supply's fourth-quarter gross profit margin declined by approximately 0,1 percentage points compared to the previous year. This reduction was partly due to increased delivery-related shipping expenses. Additionally, the company's sales were impacted by weakened demand for non-essential consumer goods and fewer extreme weather events, which typically boost emergency-related purchases.

Tractor Supply Co. is a retail chain specializing in agricultural supplies, rural home goods, and outdoor equipment across the United States. Founded in 1938, it initially served farmers and small farms, later expanding to include suburban and rural customers. Its product categories include: animal feed, gardening tools, fencing materials, lawn mowers, and pet care items. Tractor Supply operates over 2,000 stores nationwide, developing both traditional retail and e-commerce channels.

By Ngoc Minh (Source: Supply Chain Dive).