Retail Management Assignment

Case- Gaga for Wawa: Blue Ocean Retailing

Rishabh Kumar
Himalaya
Shikha
Manish Verma
Nidhi
Varsha Bhashi

Question 1: What can struggling retailers learn from Wawa’s Blue Ocean shift?

As it became clear that Wawa’s competitors were converging with it on all fronts, the market
became concentrated. Hence, the only viable and promising strategy was to opt for blue
ocean strategy as it is about value innovation i.e. pursuing product differentiation and low
costs.
“Blue Ocean Shift” is a roadmap to move you, your team and your organization to
new heights of confidence, market creation and growth. It guides you step by step on how to
shift from cutthroat markets — what we think of red oceans full of sharks — to wide-open
new markets, or blue oceans of uncontested market space, in a way that brings your people
along so they own and drive the process.
The increased competition in the market did not deter Wawa to abandon their PODs
(Point of Differentiation) instead it reconstituted the market boundaries to break away from
the competition and open new value-cost frontiers. Initially, Wawa’s strategy was
counterintuitive which was to deliberately position stores sub-optimally close to one another
whereas traditional stores positioned themselves with ample space between them to avoid
cannibalization and reduction in same-store sales. “Clustering” helped in unlocking strategic
benefits. It gave the appearance that the stores were present everywhere and gave an
impression of a larger brand or company and in the way creating credibility among the
masses.
Wawa’s customer service was another point of difference that it leveraged to build its
brand equity. By fostering and encouraging friendly atmosphere complimented by a high-
quality product, it was able to form a transactional relationship with its customers.
Wawa’s blue ocean shift highlights an important point about the strategy that it does
not compete head-to-head rather makes the competition irrelevant. There is a constant effort
being made to distance oneself from its competitors by introducing new, improved and
differentiated products to choose from.
Hence, the blue ocean tools and processes help to channelize efforts to challenge how a firm
or company can offer a leap in value for their present and potential customers.

Question 2: As they developed their Blue Ocean shift, how might the traditional red ocean
practice of benchmarking against competition help or hurt Wawa? Why?

In the current business environment, Red Ocean is often defined as a competitive

environment where industry boundaries are clearly defined, and existing and new players are
trying to out-perform each other using Value-Cost Trade Off. This leads to cut-throat
competition and race to the bottom, resulting in lower profitability and higher cost structure
as component of total price.
By following traditional red ocean practice, the competition would have outperformed
and outlasted Wawa as it includes big corporate identities with humungous war chests, and it
might lead to a market where operating in the long run becomes difficult especially for the
firms such as Wawa.
As traditional red ocean strategies encompass the following points:
1) Focuses on rivals within Strategy & Execution industry
2) Focuses on competitive position within strategic group
3) Focuses on better serving the buyer group
4) Core objective is to maximize the value of product and service offerings within the
established context.
5) Strive to improve the price performance within the functional-emotional orientation
under prevailing norms.
6) Spend energy & resources on adapting to external trends.

Whereas blue ocean strategies focus on the following points:

1) Exploring opportunities & spot threats across alternative industries
2) Looks across strategic groups within Strategy & Execution industry
3) Redefines the industry buyer group. It involves redefining the consumer segments.
4) Looks across to complementary product and service offerings
5) Rethinks or repurpose the functional-emotional orientation of the Strategy &
Execution industry
6) Actively strive to shape external trends over time
Therefore, the above comparison clearly shows that by benchmarking against competition, it
is will help the prospects of Wawa.

Question 4: If you were Wawa executive how would you continue to protect and expand
your Blue Ocean?

As it can be seen in the case that Wawa never wants to be in crowd of competitors. Wawa
had continuously changed it strategies to remain in Blue ocean. As Wawa added their food
business with its convenience store and gas business, people saw it as a convenience store
with gas that also sold food. But Wawa redefined their business to change consumer’s
perception of Wawa as a quick service restaurant that also sold convenience items and gas.
And the continuous improvements in food quality, fast & friendliest service backed it to
remain on the top in quick service restaurant (even it wasn’t included by the QSR in their top
50 brands, it was on the top in terms of every aspect).
1. Innovation in business strategies has always been one of the peculiar ways of Wawa
to stay in blue ocean. From serving as convenient store to one of the top brand in
quick restaurant service is good application of blue ocean strategies.
2. Collaboration with other food providers for the cost cutting and profit
enhancement- Wawa was after all, aiming for the freshest, high-quality, delicious
food which is reasonably priced. Wawa has collaboration with McLane for
convenience store goods supply, Taylor Farms to provide fresh salads, Safeway
Group for the supply of pre-made foods and Amoroso Bakery for supply of bread.
These collaborations helped the business in reduction of costs.
3. Employees Involvement- Wawa utilized fair process to include the tens of thousands
of employees needed for a successful strategic shift. Employees share the 40% of the
 company and they are investing in the long-term success of the company. Employees
are treated as the owner of the business.
4. New Blue ocean shift- Wawa opened a new store in Washington, DC with a new
look that attracted a lot of people. This is largest store of Wawa to date. There is
ample indoor and outdoor seating, free wi-fi with no fuel pumps. Ordering Kiosks still
exists because they support cost reduction strategy of Wawa.
These strategies has supported Wawa to remain in Blue ocean and continuous operation
with these strategies will surely ensure Wawa as a top quick restaurant & convenience
store.

Question 5: How does each Wawa business line build upon and reinforce the prior
components?

Wawa’s strength were its customer friendly employees whom they call their associates and
the quality and value they provide to the customers through their services. They started many
businesses and later conjured a new model altogether where all their major businesses come
together to provide an enriching customer experience.
The business lines they ventured into include:
 Iron Foundry- Wawa started its innings in 1803, by producing iron stove plates
and fire backs. They also tried their hands in textile business.
 In 1902, Wawa came up with Diary farm where Wood started a processing and
delivery facility which takes care of every step from animal to bottling to home
delivery keeping sanitary conditions and temperature under control. This made
Wawa’s dairy products one of the safest and ensured quality. All this was
organized 20 years prior to the introduction of pasteurization. Even after the
technological advancements customer’s trust on Wawa drove them to the stores.
 In April 1964, Wawa opened its first food market. Taking advantage of the trust
it carried from earlier businesses, it started a clustered model rather than the
franchise model as opted by the competitors. This helped them in building an
image in the mind of potential consumers that Wawa stores are everywhere. As
competition grew and players started expanding to supermarkets to survive, Wawa
held its nerves and in spite of copying the rivals, it traded down from small
grocery stores to convenience stores. The sort of customer service it provides to
the people is such that consumers fell in love with Wawa and there was a sort of
belongingness that even the competitors could not get rid of.
 In 1996 company ventured into fuel business, which is more efficient and of high
quality. For making a mark in this field it installed high speed pumps and most
importantly eliminated charges for credit cards so that people get a good price. It
helped in making the fuel cheaper.
 As the financial crisis hit them badly, inspired by a book on Blue Ocean Strategy,
they started thinking in a new direction altogether. They started a fast delivery
restaurant business which provided quick ready to eat food at fuel pumps. Wawa
invested in healthy food items and also started serving hot food items. Wawa also
focussed on coffee which recalls all the varieties that Starbucks offer that too at
far cheaper rates kept in hot thermal carafes.
 There is a friendliness in the ambience in the Wawa stores and to catch customer’s
attention items were kept that people often buy impulsively.
Wawa separated itself from others by not indulging into the red ocean of competition and
coming up with new and innovative models to retain their position and gain the market
share.