More Private Label from Wawa

Published in CSP Daily News

Retailer launches candy line; more to come

WAWA, Pa. -- Wawa is spreading its red and white label with the golden goose to items throughout the store as part of its ongoing strategy to compete for consumers' minds and budgets, reported the Philadelphia Inquirer.

The goal is to cement ties with customers by creating a holistic brand experience, CEO Howard B. Stoeckel told the newspaper.

The newest private-label products are part of a line of 17 kinds of bagged candy, which hit store shelves yesterday, said the report. This year, it also introduced pudding, yogurt and tea [image-nocss] bags.

The 550-store chain sells 300 packaged items under the Wawa label, not counting sandwiches, having started with its own brand of bottled water in November 2004.

An additional 100 private-label items are in the works, Robert L. Price, the company's chief marketing officer, told the paper.

Stephen J. Hoch, a professor of marketing at the Wharton School of the University of Pennsylvania, said Wawa has a lot in common with fast-food purveyors, such as Starbucks, McDonald's and Subway, whose brands and products are virtually one and the same. Leveraging Wawa's strength in freshly prepared food into other areas of the store is not a stretch, Hoch told the Inquirer.

But Richard J. George, a professor of food marketing at St. Joseph's University, had reservations about Wawa's expansion of its label. There are some things they could do that would reinforce what Wawa stands for that would have more impact than coming out with their own yogurt, he told the paper. He suggested the chain figure out a way to get more out of its fresh bakery cases, which are busiest from 6 a.m. to noon.

Private label accounts for just 3% of convenience store sales, compared with 16% among other retailerssuch as supermarkets, drugstores and mass merchandiserstracked by ACNielsen, the report said. Over the last eight years, sales of private-label or store-brand packaged goods grew about twice as fast as sales of brands not affiliated with a retailer, the report added, citing ACNielsen data from last year.

At the same time, private label has evolved from its roots in generic products that were cheap in price and low in quality. Hoch said many stores aspire to develop a label with cachet. But only Trader Joe's and, to some extent, Target have achieved that, he said.

Stoeckel and Price evoked Trader Joe's origins as a c-store as they talked about their desire to differentiate Wawa through private label. Trader Joe's has developed a cultlike following by selling sophisticated and sometimes quirky private-label products. I don't think we're going to be serving lentils with mango chutney anytime soon, Price said, but we did launch humus and pita last year and bruschetta and toast this year.

So just how far is Wawa going to go with its own label? There's the emotional desire out of pride to just go ahead and do everything, but that's not our intention. Your brand is like a bank account. You can either borrow from it or deposit into it, said Price, who joined Wawa three years ago from H.E. Butt Grocery Co. in Texas, where he ran a highly regarded private-label program.

Price said the key is to discern whether the company would merely be using the Wawa brand to sell the product or whether the product enhances the Wawa brand. The chain has ruled out some products, including motor oil. It sounds obvious once you get to that, Price said. But, he said, one could argue that the company as a major fuel seller under the Wawa banner could get away with putting a Wawa label on a quart of oil. Competitor Sheetz Inc., Altoona, Pa., sells Sheetz motor oil.

The new candies are on the outer limits of Wawa's credibility because they include Laffy Taffy, Tootsie pops, and other well-known brands in a Wawa bag, Price said. He added that Wawa would tread carefully with soft drinks, potato chips and snack cakes because of the popularity of brands such as Coca-Cola, Herr's and Tastykake. That brand power and the companies' ability to deliver directly to stores make them hard to beat. Dannon yogurt, Deer Park water, Kozy Shack puddings and Planter's nuts, on the other hand, do not have those strengths, Price said, and Wawa has replaced them, at least partially, with its own products.

Price said Wawa has been able to find products made by companies that specialize in private-label goods that are at least as good as the national brands while cutting its cost of goods by roughly 10% to 30%.

The company passes some of the savings on to consumers, Price said. Wawa's roasted salted peanuts cost 24.8 cents an ounce, or 22% less than the 31.8 cents per ounce for Planter's. Price said Wawa invests its portion of the savings in things that makes us different.