Tractor Supply’s DEI reversal to appease right-wing critics could fracture its surprisingly diverse ‘exurban’ customer base

Tractor Supply last week abruptly announced it was cutting all diversity-focused positions and withdrawing its carbon-emissions and diversity and inclusion goals in an about-face meant to mollify right-wing activists, led by commentator Robby Starbuck.

Last month, Starbuck slammed Tractor Supply’s LGBTQ-inclusive stance and DEI hiring initiatives on X. He called on customers to boycott the large retailer of farming supplies and pressure its corporate leadership over the efforts. In an unsigned press release on Thursday, Tractor Supply said: “We have heard from customers that we have disappointed them.” Starbuck called Tractor Supply’s reversal a “massive victory” and “the single biggest boycott win of our lifetime.”

Yet in appeasing conservative critics, Tractor Supply risks shrinking the large, diverse customer base that helped it grow into a Fortune 300 company and ostracizing the “exburban” shoppers it’s depending on to jump-start stalling sales.

Rural roots, ‘exurban’ present

Tractor Supply repeatedly touted its roots in rural America in explaining why it was curtailing DEI and ESG efforts. Yet rural America is not where its business is likely to grow in the future. Indeed, Tractor Supply has long served the “exurban customer”—one who lives not in deeply rural, often politically conservative regions, but at the edge of more liberal metropolitan areas, where backyards can be tallied in several acres.

The retailer was founded in the 1930s to serve working farms, but Tractor Supply became a retail giant, earning $14 billion in revenue last year, by catering to hobbyist farmers, including suburbanites with larger properties who love gardening and dabble in livestock. Its midsize, carefully curated stores offer an eclectic mix of work clothes (Tractor Supply was the first major retailer to jump on the Carhartt phenomenon), tools, pet food, and feed for farm animals (especially chickens, goats, and horses). Today, the core Tractor Supply customer typically has one to five acres of land, and some small livestock like chickens, hogs, or sheep. What’s more, professional farmers are only 10% of its customers, down from 90% at the company’s start in 1938.

“We’re seeing a new kind of shopper in our stores,” CEO Hal Lawton told Fortune in 2021, when Tractor Supply was one of the fastest-rising companies in the Fortune 500.

(Tractor Supply declined to comment to Fortune beyond its statement last week.)

The pandemic provided Tractor Supply with a big boost by helping it attract a new wave of customers as COVID confined nearly everyone at home and persuaded more urbanites to try smaller-town living. Americans adopted pets by the millions, shifted spending to their homes—including their second homes—and sought solace outdoors. Sales rose a staggering 23% in 2020. Tractor Supply now has nearly 2,500 stores (including its parent company’s Petsense by Tractor Supply chain), up from 2,180 only three years ago.

Sales stall

But fast-forward to today and it’s easy to see why Tractor Supply wants to avoid a consumer boycott at all costs. Its growth has stalled. Last year, Tractor Supply’s comparable sales, a metric that strips out the impact of new stores or stores that were closed in the preceding year, were flat. So far this year, growth is still anemic, with comparable sales up only 1.1% in the first quarter.

Widespread consumer backlash could make things even worse. Boycotts against brands like Bud Light and Target over LGBTQ initiatives, also incited by right-wing groups, have cost the companies tens of millions in sales.

With comparable sales stagnant, Tractor Supply’s growth will have to come from new stores. Because of demographic trends and Tractor Supply’s own priorities in recent years, those will be in more-diverse exurbs, which demographically are growing very fast, rather than redder, rural regions. What’s more, only 14% of American live in rural areas.

Past DEI wins

In its statement, Tractor Supply said, “Going forward, we will ensure our activities and giving tie directly to our business.” Only three months ago, Tractor Supply was saying the exact opposite. “Diversity and inclusion play a key role in moving our business forward,” Tractor Supply claimed in its annual proxy filing in March.

And Tractor Supply had been doing well by at least one DEI metric. Last year, Tractor Supply, one of 1,300 companies to fill out Human Rights Campaign’s survey, earned a near-perfect score of 95/100 for workplace protections and outreach to the LGBTQ+ community. Last week, the company said it would “no longer submit data to the Human Rights Campaign,” one of the biggest LGBTQ+ advocacy groups in the United States.

“Tractor Supply Co. is turning its back on their own neighbors with this shortsighted decision,” an HRC leader told CNN this weekend. It was notable that Tractor Supply announced it would no longer sponsor any Pride events right before a weekend in which hundreds were held across the U.S.

Lawton told Fortune in 2021 that Tractor Supply wanted “our stores and our team members to mirror the communities that we serve.” In its annual report published in March, Tractor Supply noted that racial and ethnic minorities represent 18% of its workforce, just one percentage point higher than in 2021. The company’s new anti-DEI stance will make moving the needle even more difficult.

This story was originally featured on Fortune.com