Tractor Supply (NASDAQ: TSCO) is plowing through the competition

As a good reminder to investors that there’s still a lot happening outside of the well-known tech centers and urban hubs, Tractor Supply (NASDAQ: TSCO) could be finding success by focusing on markets often ignored by bigger players. Just as Jay Gatsby learned at the end of F. Scott Fitzgerald’s classic novel about the American dream, there’s a vast republic beyond the city. 

Indeed, Tractor Supply (NASDAQ: TSCO) calls itself the largest “rural lifestyle” retailer in the US, with its 2,233 stores dotted across 49 states selling everything from power tools to chicken feed. While not as well known as some of its larger competitors that can include Walmart (NYSE: WMT), Lowe’s (NYSE: LOW), Home Depot (NYSE: HD) and Petco (NASDAQ: WOOF) — depending on the particular item you’re looking for — its shares have been outperforming them all.

The company’s CEO, Hal Lawton, noted a confluence of favorable trends that boosted sales over the last quarter from cold weather that can stimulate demand for big ticket items like snow plows to excitement over its ongoing efforts to expand garden centers that have included partnerships with big names like Martha Stewart. He also mentioned a cutting-edge AI program that could be a surprising move to some for a company known more for its heartland values than its Silicon Valley prowess 

Tractor Vision, as the system is called, uses cameras and computer vision to help alert staff to potential bottlenecks that can develop throughout stores such as lines forming at checkout registers. It can also dispatch salespeople to customers who look like they might need help when shopping for larger items such as outdoor riding lawn mowers. It’s a real world use case for a much-hyped technology that could lead to increased operational efficiency and help smaller chains better compete with their much larger rivals. Indeed, Tractor Supply shares have surged 28% so far this year, outpacing gains made by industry benchmark Walmart, which has been struggling to expand its saturated market share.

Tractor Supply is also benefiting from favorable demographic trends, with Lawton saying in a recent earnings call that the company is seeing “outsized population growth in rural markets.” While other retailers often ignore rural America, Tractor Supply is benefiting from its focus on a population and way of life that rivals can underestimate.