Northern Tool + Equipment, a family-owned business, has been a prominent player in the retail industry for over 40 years. With a presence in more than 130 retail stores, a robust catalog business, and an expansive online channel offering a diverse range of products, Northern Tool is focused on expansion. The company’s partnership with Tango, spanning ten years, has been instrumental in guiding their strategic growth decisions.
With a growth strategy to aggressively expand store growth over the next five years, Northern Tool sought data-driven solutions to drive expansion, particularly in new Midwest markets. They aimed to optimize site selection, minimize risks, and cater to evolving customer profiles in various regions.
Tango’s tools help Northern Tool understand the interrelationship between ecommerce and bricks and mortar locations.
Northern Tool collaborated with Tango to utilize market optimization models and analytical tools to identify optimal locations and infill opportunities. They looked at Northern Tool’s goals, expansion plans, customer profiles, and location preferences to find the right solution.
Northern Tool’s expansion strategy targeted both existing and new markets such as Kentucky and Ohio. The customer profile differentiation between Southern and Midwest regions was noteworthy, providing Northern the opportunity to delve deeper into what has been driving category sales in each region.
Northern Tool’s unique store preferences set them apart as a destination store. They seek locations with heavy traffic, particularly near interstates, to accommodate customers traveling longer distances. Quick and easy access is vital due to the wide catchment area they serve. The company’s preference for free-standing stores in suburban areas emphasizes their commitment to providing convenient access to their retail locations.
Northern Tool used Tango Predictive Analytics to gain data-driven insights that were pivotal in making informed decisions. Tango’s models provided valuable information beyond superficial site characteristics, offering a comprehensive view that went beyond human intuition. This allowed the company to focus on key market nodes and optimize their expansion strategy for maximum potential.
Tango’s data points provided a more accurate representation of the real impact of opening new stores, reducing reliance on subjective assessments from real estate managers. The objectivity of the model aided the executive team’s commitment to data-driven decision- making.
COVID-19 underscored the importance of growth and adaptation. The demand surge in home improvement reinforced the need for expansion. Northern Tool’s real estate strategy focused on strategically placed locations in suburbs, guided by Tango’s machine learning and AI models. Interstate proximity and density ratings were key considerations, enabling the company to penetrate higher-density neighborhoods strategically while at the same time being easily accessible for commercial customers.
Despite a significant catalog business, Northern Tool acknowledged the shift towards e-commerce and retail channels. E-commerce and catalog sales accounted for a substantial portion of their business, with retail channel growth outpacing direct sales. The company’s adaptability during the COVID-19 pandemic, including the adoption of curbside pickup, showcased the benefits of continued strength of an omnichannel approach.
Northern Tool’s journey, guided by Tango’s data-driven insights, demonstrates the power of informed expansion strategies. By utilizing Tango’s advanced Predictive Analytics solution, the company optimized site selection, adapted to changing customer profiles, and continued to strengthen their omnichannel approach. The collaborative effort between Northern Tool and Tango showcases how data-driven decisions fuel successful strategic growth in the ever-evolving retail landscape.