Harvard Case - Wawa: Retailing Reinvented Through Blue Ocean Strategy
"Wawa: Retailing Reinvented Through Blue Ocean Strategy" Harvard business case study is written by W. Chan Kim, Renee Mauborgne, Michael Olenick. It deals with the challenges in the field of Strategy. The case study is 15 page(s) long and it was first published on : Jun 25, 2018
At Fern Fort University, we recommend that Wawa continue its successful blue ocean strategy by focusing on innovation, customer experience, and operational excellence. This involves leveraging its core competencies in fresh food, convenience, and technology to further expand its market reach, enhance its brand image, and solidify its position as a leader in the evolving retail landscape.
2. Background
Wawa, a privately held convenience store chain headquartered in Pennsylvania, has achieved remarkable success by pioneering a unique business model that combines convenience, fresh food, and customer-centric service. The company's 'blue ocean' strategy, characterized by creating uncontested market space and offering a differentiated value proposition, has enabled it to outperform traditional convenience stores and even challenge fast-food chains.
The case study highlights Wawa's key success factors:
- Innovation: Wawa continuously introduces new products and services, like its popular hoagies, fresh-brewed coffee, and mobile ordering.
- Customer experience: Wawa prioritizes customer satisfaction through its friendly staff, clean stores, and fast service.
- Technology: Wawa leverages technology for operational efficiency, customer engagement, and data-driven decision making.
3. Analysis of the Case Study
Strategic Analysis:
Porter's Five Forces: Wawa operates in a highly competitive industry with strong forces, including:
- Threat of new entrants: High, due to low entry barriers and the potential for new players to leverage technology.
- Bargaining power of buyers: Moderate, as consumers have multiple options but value Wawa's unique offerings.
- Bargaining power of suppliers: Moderate, as Wawa has a diversified supply chain but relies on key suppliers for certain products.
- Threat of substitutes: High, due to the availability of alternative convenience stores, fast-food restaurants, and online delivery services.
- Competitive rivalry: High, as Wawa faces competition from established players like 7-Eleven and Sheetz, as well as new entrants like Amazon Go.
SWOT Analysis:
- Strengths: Strong brand recognition, loyal customer base, innovative product offerings, efficient operations, strong technology infrastructure.
- Weaknesses: Limited geographic reach, potential for cost increases, reliance on a few key suppliers.
- Opportunities: Expanding into new markets, leveraging technology for enhanced customer experience, developing new product lines, exploring strategic partnerships.
- Threats: Increased competition, economic downturn, changing consumer preferences, regulatory changes.
Blue Ocean Strategy: Wawa has successfully created a blue ocean by offering a unique value proposition that combines convenience, fresh food, and customer service, differentiating itself from traditional convenience stores and fast-food chains.
Value Chain Analysis: Wawa's value chain is characterized by its focus on:
- Inbound logistics: Efficient supply chain management, sourcing fresh ingredients, and minimizing waste.
- Operations: Streamlined store operations, technology-driven processes, and employee training.
- Outbound logistics: Fast and reliable delivery, convenient store locations, and mobile ordering options.
- Marketing and sales: Strong brand identity, targeted marketing campaigns, and customer loyalty programs.
- Customer service: Friendly and helpful staff, clean and welcoming stores, and personalized customer interactions.
4. Recommendations
1. Continued Innovation:
- Product Development: Wawa should continue to develop new and innovative products, leveraging its expertise in fresh food and its customer insights. This could include expanding its healthy food options, offering seasonal specials, and exploring new product categories like prepared meals.
- Technology Integration: Wawa should continue investing in technology to enhance the customer experience, improve operational efficiency, and gain a competitive advantage. This includes:
- AI and Machine Learning: Implementing AI-powered recommendations, personalized offers, and predictive analytics for inventory management.
- Digital Transformation: Expanding its mobile app capabilities, integrating online ordering with delivery services, and exploring new payment options.
- Data Analytics: Leveraging data to understand customer preferences, optimize product offerings, and personalize marketing campaigns.
2. Expansion Strategy:
- Geographic Expansion: Wawa should continue its strategic expansion into new markets, focusing on areas with strong growth potential and a lack of competition. This could involve:
- Market Development: Targeting new regions within existing markets, like expanding into new states or cities.
- International Expansion: Exploring opportunities in emerging markets with a strong demand for convenience and fresh food.
3. Customer Experience Enhancement:
- Personalized Service: Wawa should leverage its technology infrastructure to personalize customer interactions, offering targeted promotions, customized recommendations, and personalized rewards programs.
- Community Engagement: Wawa should continue its commitment to community engagement, supporting local initiatives, sponsoring events, and fostering a sense of belonging among its customers.
4. Operational Excellence:
- Supply Chain Management: Wawa should optimize its supply chain by leveraging technology, improving logistics, and reducing waste. This could involve:
- Vertical Integration: Exploring opportunities for vertical integration, such as owning its own farms or processing facilities, to ensure the quality and freshness of its ingredients.
- Strategic Alliances: Partnering with key suppliers to secure long-term agreements, improve sourcing efficiency, and enhance product quality.
- Employee Development: Wawa should continue investing in its employees by providing training, development opportunities, and a positive work environment. This will ensure a motivated workforce that can deliver exceptional customer service and drive operational excellence.
5. Basis of Recommendations
These recommendations align with Wawa's core competencies, customer-centric approach, and commitment to innovation. They are supported by the following:
- Core Competencies: Leveraging Wawa's expertise in fresh food, convenience, and technology to create a unique and sustainable competitive advantage.
- External Customers: Meeting the evolving needs and preferences of customers by providing innovative products, convenient services, and a personalized experience.
- Competitors: Staying ahead of the competition by continuously innovating, expanding its market reach, and leveraging technology to enhance its offerings.
- Attractiveness: Quantitative measures like increased market share, improved profitability, and enhanced brand value support the long-term viability and attractiveness of these recommendations.
6. Conclusion
Wawa's success story is a testament to the power of blue ocean strategy, innovation, and customer-centricity. By continuing to embrace these principles, Wawa can solidify its position as a leader in the retail industry, achieve sustainable growth, and create even greater value for its customers, employees, and stakeholders.
7. Discussion
Alternatives:
- Acquisitions: Wawa could consider acquiring other convenience store chains or food-related businesses to expand its geographic reach and product offerings.
- Franchising: Wawa could explore franchising its business model to accelerate its growth and expand its presence in new markets.
- Focus on Existing Markets: Wawa could focus on deepening its presence in its existing markets, investing in store renovations, enhancing its online presence, and developing new customer loyalty programs.
Risks:
- Increased Competition: The retail industry is highly competitive, and Wawa faces ongoing challenges from existing players and new entrants.
- Economic Downturn: An economic downturn could impact consumer spending and affect Wawa's sales.
- Technology Disruption: Rapid technological advancements could disrupt Wawa's business model, requiring it to adapt quickly and invest in new technologies.
Key Assumptions:
- Wawa will continue to invest in innovation and technology to maintain its competitive edge.
- Consumer demand for convenience, fresh food, and personalized experiences will continue to grow.
- Wawa will successfully navigate the challenges of expanding into new markets and managing its supply chain.
8. Next Steps
- Develop a Strategic Plan: Wawa should develop a comprehensive strategic plan outlining its long-term vision, growth strategy, and key initiatives.
- Invest in Technology: Wawa should continue investing in technology to enhance its operations, improve customer experience, and gain insights from data.
- Expand into New Markets: Wawa should identify and prioritize new markets for expansion, conducting thorough market research and developing tailored strategies.
- Enhance Customer Engagement: Wawa should implement strategies to personalize customer interactions, build loyalty, and foster a sense of community.
- Monitor and Evaluate: Wawa should continuously monitor the effectiveness of its strategies, track key metrics, and make adjustments as needed.
By taking these steps, Wawa can continue its journey of innovation and growth, solidifying its position as a leader in the evolving retail landscape and creating a brighter future for its customers, employees, and stakeholders.
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Case Description
Customers are gaga for Wawa, the restaurant / convenience store / gas station that inspires people to tattoo the firm's logo. Founded in 1803, Wawa morphed over time from an iron foundry to a textile mill, to a dairy farm, dairy delivery business, grocery store, then convenience store. Dark clouds descended with the 2008 financial crisis. As competitors converged on Wawa, management recognized the need for a new direction. After the CEO asked his executives to review a selection of business books, they chose Blue Ocean Strategy to redefine industry boundaries, shifting away from the red ocean of competition to a blue ocean of differentiation and low cost. By 2017 Wawa was the 34th largest private company in the US, with 625 million customers and sales of $10.5 billion. Wawa serves 222 million cups of coffee a year and 105 million hoagie sandwiches. Where the average 7-Eleven convenience store grosses $30,000-$35,000 per week, Wawa averages $116,000. It used Blue Ocean Shift to achieve breakout success and thrive for a decade after its strategic pivot. The case comes with a teaching note and firsthand video interview of Howard Stoeckel, Vice Chairman and former CEO of Wawa. The video can be downloaded from https://www.blueoceanstrategy.com/teaching-materials/wawa/
It is also available in Chinese.
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