The retailer, capitalizing on America’s soaring interest in tending to egg-laying flocks, will sell 11 million chicks this year, plus all the stuff you need (or don’t need) to go with them.
School’s out for the summer, and a steady drumbeat of families makes their way to a Tractor Supply store in Lucas, Texas on a recent afternoon. They head for an eight-by-eight chicken coop in the middle of the store, where some 200 chicks are basking under the orange glow of the heat lamps as country music plays overhead. “We’re just looking,” insisted one mom, as her three kids swarmed the coop and pointed excitedly.
Looking can quickly turn into buying. The store has been selling out its supply of chicks in a matter of days, facing a surge in demand as an influx of families pile into the hobby, driven by curiosity, a desire to save money or both. New customers tend to go for docile breeds that are good egg-layers, like the Leghorn or Sex Link, said store manager Emily Franck. Others are adding to their flocks, like the family that stops by weekly and just that morning bought some special-edition “clown-faced” chicks.
Tractor Supply is doing a brisk business. It has been selling chicks since the 1990s, but demand really took flight during the pandemic. Foot traffic in the category has risen 60% in the last five years, helping it peddle 50 million birds and outpace the company’s robust overall sales during that time. With a sprawling footprint of 2,100 stores in every state but Alaska, the retailer is America’s largest seller of live poultry, and has seen a fresh wave of interest this year that could top the all-time record it set in 2020, when it cleared 11 million birds, up from 7.5 million in 2019.
A good, egg-laying hen can lay 250 to 300 eggs a year. Leghorns, pictured here, cost $4.49 apiece.
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Inflation is part of it. Shoppers have flocked to stores as the price of eggs has risen sharply, peaking at a national average of $4.82 per dozen in January. While prices have come down some, eggs still cost 21% more than a year ago. “Who wants to go into a store and pay $7 for a dozen eggs?” said Greg Privett, president of Privett Hatchery, who supplies chicks to Tractor Supply. “That’s what’s driving demand this year. It’s strictly egg prices.”
The migration from big cities is helping, too. Millennials who moved out of places like New York and San Francisco during the pandemic are Tractor Supply’s best new customers, many of them venturing into backyard hobbies like raising chickens and tending to raised-bed gardens. For some, it’s a way to have more control over where their food comes from. People typically start with four to six birds, but the average customer ends up with about 14, said Seth Estep, Tractor Supply’s chief merchandising officer.
“It’s a great thing to do as a family,” said Estep. “By the time they get home, they all have names.”
At three or four bucks each, Tractor Supply will make, at most, $50 million from selling chicks this year. “It’s pretty immaterial,” said CEO Hal Lawton, for a company that does $14 billion in annual revenue. But then you add in the rest of the stuff. Customers spend about $100 to get started, once they buy a brooder to keep the birds warm, water and food dispensers, shavings and a bag of feed. Eventually, they’ll have to buy a coop: The starting price point is $299, with high-end versions selling for as much as $3,999. Then there are the repeat purchases for food and treats, with millennial customers veering toward pricier, organic options.
“Collectively, it becomes a very large business for us,” said Lawton.
It’s resonating with shoppers. One in four of the company’s customers have purchased chickens. Its so-called Chick Days, which run from March until September, have also been a “great gateway” for new customers, Lawton noted in the company’s April earnings call.
In a 110,000-square-foot hatchery in Portales, New Mexico, tens of thousands of fertilized eggs are nestled into trays. They will incubate for about two weeks, with the temperature, humidity and air flow all designed to mimic mother nature. Once they hatch, chirping fills the air.
Spring is the busiest time of year at Privett Hatchery, which provides Tractor Supply with about a third of its chicks. Within 48 hours of being born, the chicks are routed from the New Mexico hatchery to stores across seven states by none other than the United States Postal Service, which has been transporting live animals for more than a century.
Some of Tractor Supply’s customers have hundreds, or even thousands, of chickens. “It’s bad when the butcher has a whole bunch,” joked Derek Grether, the store manager in Wylie, Texas.
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The baby birds will make the journey in an open box, with a couple of fistfuls of straw and plenty of holes. The packaging is determined by the hatchery’s computer system, which checks weather forecasts for each destination. There’s no need to bother with food or water for the road. Baby chicks ingest the yellow yolk inside their shells before being born, which provides sustenance for the first 72 hours of life.
When they arrive at the destination post office, the local Tractor Supply store gets a call. The fastest employee gets to take a joyride. “We drop whatever we’re doing in the store to go pick them up,” said Greymi Rosa, a district manager who oversees a dozen stores in North Texas. They don’t want the chicks to overstay their welcome. “These guys are going ‘chirp, chirp, chirp’ at a thousand miles an hour,” Rosa said with a laugh.
Bigger, more established stores will get two shipments a week, each with maybe 300 birds during the peak season. Newer locations, like the one in Lucas, northeast of Dallas, may only receive 200 birds once a week. A handful of ducks, turkeys and pheasants are often included in the shipments as well, and Tractor Supply gets first dibs on specialty breeds from the hatcheries, like “Easter Eggers” that lay blue and green eggs.
Stores have at least one “chicken aficionado,” said Lawton, but each employee is trained in how to properly handle and care for the birds and can pitch in on feeding them, cleaning their cages and keeping the temperature just right.
Each store has an aisle devoted to the items needed to care for a backyard flock, dominated by stacks of 50-pound bags of feed. More than a third of poultry sales come from its own private-label brands. Tractor Supply developed its own line of organic feeds after noticing that customers were springing for the premium variety at more than twice the rate of other feeds. Treats also fly off the shelves, made with apparently irresistible insects like mealworms, crickets, beetles and flies.
“We sell a tremendous number of treats for chickens,” said Estep. “It’s absolutely amazing the amount of poultry treats that customers will buy.”
Tractor Supply is now placing orders for next year so that hatcheries can start building their flocks. It anticipates demand will remain sustained into 2024, but wrong forecasts could end with a surplus of birds.
“We want to try to buy as close to demand as possible,” said Estep.
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Source: https://www.forbes.com/sites/laurendebter/2023/06/10/how-tractor-supplys-inflation-chickens-are-ruling-the-backyard-roost/