Case Analysis

Gaga for Wawa:

Blue Ocean
Strategy
Case Background
● Founded in 1803 as an iron foundry producing cast iron stove plates & fire backs
● In 1902, George Wood entered into dairy business – “doctor certified” milk
● When dairy business faced threat from scientific advancements, emotional appeal of the brand
carried the business
● Entered into Food Market in 1964, launched by Grahame Wood with pvt label merchandise,
200 stores by 1978
● Traded down to convenience stores
● In 1996 expanded to fuel business – Wawa Gas
● Operates in three businesses – Convenience, Fuel, and Quick Service Food
● In 2017 - $10.5 Billion in revenue, 789 stores in six states, average weekly store sales are
$116,000, 230% higher than average 7- Eleven store
● Focus on value innovation – pursuing differentiation and low costs
Learnings for Other Retailers
● Wawa has shown innovation and resilience in its retailing strategies
● When business market becomes competitive, how to effectively shift from red ocean strategy
to blue ocean strategy
● To maintain a point of differentiation with respect to competitors; always have an USP
● Wawa always focussed on keeping the costs low wherever possible
● Wawa chose clustering strategy which made customers feel like their stores are everywhere,
increasing the credibility and brand image
● They had an excellent customer service, company was emotionally invested in the
community
● Look at current value proposition from different angles and building a strategy around it
● Developing synergies with partners and suppliers to minimize costs and investment
Traditional Red Ocean Benchmarking
Traditional red ocean strategy uses value-cost trade-off to beat the competition. This results
into lower profitability and higher costs

Benchmarking - Hurtful to the Value Proposition of Wawa

● It would result into continuous price wars, lowering the margins
● It would be difficult to beat a large competitor without Points of differentiation
● High risk of competitor mimicking the same service, or strategy
● It may deviate from its core values of customer service
● Instead, create substantial differentiation and avoid direct competition with
convenience stores at fuel stations as well as Quick Service restaurants
● Understand what customer values in similar transactions
Success of Wawa
● Their focus is on customer relationship and quality
● Wawa had alignment of value, people, and profit
● Store clustering strategy helped them reduce logistics and marketing costs – achieve better
unit economics for self and partners
● Employee satisfaction was good because of the culture and HR policies of ESOPs
● Their stores had lower wait times, faster turnaround
● Comparatively prices were lower- fuel, food and other items
● No credit card surcharges helped people get a better overall price
● Extremely friendly staff, giving a sense of warmth and friendliness to customers
● Leveraging the experience of partnerships and benefits of outsourcing instead of spending
on creating in-house capabilities
Protecting and Expanding Blue Ocean
● Large scale competitors might try to replicate Wawa’s business model
● This needs to be tackled by continuous innovation and adapting to changing customer
needs
● Continuous Monitoring of customer preferences in terms of food choices
● Creating differentiation with convenience store items
● Expanding into more private label brands
● Steer clear of direct competition with QSR by supplementing food business with other
new offerings
Business Lines Reinforcing Each Other
• Quick Service Restaurant that also sells convenience items and fuel
• Replaced existing unhealthy, fatty, low quality snacks associated with convenience stores
with healthy, fresh and high quality food items
• Ordering kiosks helped with the speedy service required at a convenience store
• High quality pvt label products

Food Service

• Gasoline that doesn’t damage your cars
• High-speed pumps, thus less waiting
time
• Credit card charges eliminated
• Fuel drove customers to the stores,
ATMs made them more attractive, and
Business
spend more at the restaurant/ store
• Wide aisles and abundant parking
• Limited product offering, mostly pvt
label, high quality
• Centralized ownership structure which
focused on overall store and not
Fuel Convenience
individual store profitability
Store
• Clustering again helped achieve reduced
logistics costs
• ATMs that didn’t charge any fees, aim is
to get wallet share
THANK YOU