Wawa's Ocean View
Chain seeks clearer competitive waters with a new format in Florida.
Ready, Set, Go
So much of the story about Wawa’s growth in the past two decades has been about getting the timing right. From introducing a full-service espresso offer to entering a new market, the company has accepted misfires and delays—as frustrating as they can be at the time—as a long-term positive. This is especially true of its delayed entry into Florida.
“We’ve crystallized our vision in terms of what we want to be longer term, and we used the opportunity to really look at the future, look at where we were headed, and developed a much more motivational and solid game plan than what we had before,” says Stoeckel, who points out that had Wawa built the new stores a couple of years ago as it originally intended, they would not look like the fast-casual-to-go concept of today.
Ned Bowman, executive director of The Florida Petroleum Marketers & Convenience Store Association (FPMA), Tallahassee, Fla., attended Wawa’s Orlando grand opening and was impressed by the crowds, the cleanliness of the site, its “Floridian” feel and its food offer. He says the appeal of the state to retailers such as Wawa (an FPMA member) is obvious.
“There’s a reason people want to come to Florida: It’s the third-largest gasoline market,” he says, citing that the degree of competition has encouraged retailers to up their retail game. Beyond major and mid-tier oil, key c-store retailers in the Orlando and Tampa markets include RaceTrac, 7-Eleven, The Pantry and, soon, Thorntons, which announced plans to open 15 to 20 stores in the Tampa-St. Petersburg-Clearwater area in the next three years.
While the state’s unemployment rate (8.6% as of press time) is slightly higher than the national average, it is on a downward trend. In addition, population growth is on an upward track, allowing the state to pick up two congressional districts in the last reapportionment.
“The Florida market is a very competitive gasoline market, and shoppers today, with the way the economy is, are looking for convenience and value,” says Bowman. “Our convenience marketers offer a very competitive gasoline market, and a lot of them offer pretty good foodservice quality.” He believes Wawa’s fresh and made-to-order hoagie offer will be its key competitive differentiator.
“Ninety-eight percent of competition is self-created,” says Jim Fisher, CEO of Houston-based IMST Corp., a site selection and development firm. Fisher says Orlando and Tampa may have several sizable retailers, but he likes Wawa’s edge on the operational side. “[Wawa] sees the potential of where they can operate very successfully based on the competitive environment. If there were strong operational companies in those markets, no one would go.”
Fisher ponders if and how Wawa would backfill its core markets, but to succeed in Florida, he says, the company must bring “numbers”—in terms of a full executive team, as well as volume. “And they will get them,” he predicts.
On the restaurant side, Wawa has already tussled with Panera Bread, Dunkin’ Donuts and Starbucks in its core markets. It expects more of the same in Florida, in the wake of those companies announcing southern expansions. Competition from Firehouse Subs and Jimmy John’s, also with sizable Florida footprints, were part of the reason Wawa introduced bread baking in the stores. Indeed, as much as the fast-casual-to-go model offers Wawa a chance to ultimately make the competition irrelevant, it needs to respond in the meantime.
“We have to compete against a lot of different competitors—gas, food, traditional c-store—and you have to be on the top of your game to differentiate yourself in each one,” says Gheysens. “[Aside from] the consumer perspective, there’s also the real-estate perspective: We’re all fighting for the same corner.” Wawa is banking on its fortified balance sheet to provide flexibility and fuel its offense as competition heats up.
“When the company gets into a business, it gets in it to win,” says Kim Lopdrup, a Wawa board member and senior vice president of business development for Darden Restaurants, whose brands include Red Lobster and Olive Garden.
He points out that one of the company’s six key values is “passion for winning.” This is obvious with fuel, in which Wawa has earned a reputation not only for its aggressive pricing but also its market efficiency; it owned 1.7% of all the motor gasoline sold in the United States in the first quarter of 2012, for example, despite having an outlet share of only 0.28%, according to figures from the Oil Price Information Service (OPIS). The organization continually ranks Wawa as No. 1 in its efficiency rating for gasoline, defined as gallons by location.
Consider coffee: Wawa ranks as the eighth-largest coffee retailer in the United States based on units sold, despite the fact that it has stores in only six states, and it averages more cups of coffee per site than Starbucks or Dunkin’ Donuts. Also, its merchandise sales are about 10 times the c-store industry average.
“Like our advertising says, ‘There’s no place like Wawa,’ ” says Lopdrup. “As long as we execute our concept well in the new market, we have great confidence that we’ll be highly successful.”
Wawa’s Fast-Casual-to-Go Statement
In July, Wawa opened the first of its Florida sites, a count it plans to grow to 100 within five years. The company is entering Florida with its newest format, which emphasizes a food-first offering, complete with built-to-order hoagies, a full-service espresso bar and expansive frozen-beverage lineup. As CEO Howard Stoeckel says, “The bar’s higher on foodservice, the competition is keener, everyone around you is rebranding, improving, taking their business to a higher level, so you can’t stand still. We in the c-store industry have to work that much harder to establish our foodservice reputation.”
Glass Act: Large glass windows showcase the grand foodservice statement inside the newest Wawa store, and give this site a decidedly “Floridian” feel.
Check It Out: To bring a greater level of convenience, Wawa designed dedicated checkouts in its newest format. The latest POS from Radiant Systems is more intutive and allows customers to swipe their card while the order is being rung up.
Fountain of Youth: Frozen beverages, fountain and prepared food all underline Wawa’s commitment to fast-casual-to-go.
Coffee Talk: With its success selling drip coffee firmly established, the chain is launching a full-service espresso-based beverage program. “It’s amazing the number of people who come in on a Saturday or Sunday and have nowhere to go, other than they want their daily routine and daily fix,” says CEO Howard Stoeckel, “not in terms of coffee, but the experience.”
At the coffee island, Wawa is constantly redesigning the fixture to maximize its efficiency, examining it and every area of the store from the perspective of work cells. “We have an operations engineering group that looks at it from a customer’s work cell, an associate’s work cell, arm reach, motion … to make sure we’re as efficient as possible,” says president Chris Gheysens.
Hot Bread: Encouraged partly by customer demand and partly by the appeal of Jimmy John’s and Firehouse Subs, Wawa included in-house kitchens in its latest format to bake hoagie rolls fresh.
Smoothie Moves: The success of its smoothie program—now including 24 varieties—convinced Wawa that it should give full-service espresso a second look.
Fueling Up: While food is the focus inside the store, the new format’s expansive forecourt shows fuel is an equally powerful strength. OPIS calls the chain “the efficiency king” for its ability to command greater market share with fewer sites. While Wawa is “watching patiently on the sidelines” to see which alternative fuel wins out, it has engineered some flexibility into its new sites—for example, installing a conduit to accommodate dryers, compressors and other equipment required for a compressed-natural-gas (CNG) setup. On the conventional-fuel side, it is retrofitting sites for diesel, with plans to increase installations in the next few years.
An Art and a Science: A Wawa associate shows Orlando mayor Buddy Dyer and a crowd of admirers the technique behind building a quality hoagie at a special media open house of the chain’s first Florida site.
The Wawa Business Bookshelf
“Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant,” by W. Chan Kim and Renée Mauborgne (2005).
Advocates for businesses to create their own uncontested markets with maximum growth potential, or “blue oceans.” The strategy is based on a study of 150 strategic moves—or “value innovations”—that have taken place in 30 industries over the past 100 years. It is built on three propositions:
- Value: how compelling an offer is to customers in terms of its purpose and price.
- Profit: increasing profits by eliminating or trimming factors that the industry has taken for granted or on which it has overdelivered.
- People. How ready and willing employees are to fully execute the new strategy.
“We said we wanted to distance ourselves if we can from our competition and truly be different from those. Part of the blue ocean strategy is to combine the best of food, convenience and fuel and really simplify our customers’ lives and help them have a better day.”
“Firms of Endearment: How World-Class Companies Profit from Passion and Purpose,” by Rajendra S. Sisodia, David B. Wolfe, Jagdish N. Sheth (2007)
Examines how leading companies such as Costco, Whole Foods Market and Wegmans are delivering “share of heart” to their stakeholders, and in return earning loyalty and endearment.
“So much of our brand is winning the share of heart of our stakeholders: our customers, associates, vendors, communities we serve. And that’s really what we stay focused on: winning share of heart. And we do it one customer at a time, one store at a time.”
“Good to Great: Why Some Companies Make the Leap … And Others Don’t” (2001) and “Built to Last: Successful Habits of Visionary Companies” (2004) by Jim Collins
In these well-loved business tomes, Collins examines how good companies became truly great, and discovers common themes in leadership style, culture and discipline. Introduces the concepts of the humble, visionary “Level 5 Leader,” finding and placing the right people on a company’s “bus,” and investing in employees.
“Jim Collins talks about ‘Built to Last’ companies, where you grow your own people. We’ve always taken great pride in growing our own people.”