Wawa battles identity crisis

Chain fights for consumers' attention by offering more Wawa-brand items

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April 25, 2006|By KNIGHT RIDDER/TRIBUNE

PHILADELPHIA -- With food and beverage sales growing, Wawa Inc. is facing a challenge.

"We want to be unique," the convenience-store chain's chief executive officer, Howard B. Stoeckel, said, but that's not easy when "everyone sells everything."

Some McDonald's are venturing into traditional convenience-store territory by staying open 24 hours a day, Stoeckel said.

This blurring of boundaries - it's as easy to run to a drugstore as a convenience store for a gallon of milk - is prompting Wawa and other retailers to fight for space in consumers' minds and budgets.

As part of its strategy, Wawa is spreading its red and white label with the golden goose to items throughout the store, having started with its brand of bottled water in November 2004. The goal is to cement ties with customers by creating a "holistic brand experience," Stoeckel said.

The 550-store chain based in Concord Township, Pa., sells 300 packaged items - not counting sandwiches - under the Wawa label, said Robert L. Price, the company's chief marketing officer. An additional 100 private-label items are in the works, he said.

The newest addition is a line of 17 kinds of bagged candy. Other items introduced this year include pudding, yogurt and teabags.

Wawa, which is 29 percent employee-owned and is controlled by the founding Wood family, had an estimated $4.3 billion in sales last year, ranking 29th among North American food retailers, according to Supermarket News, an industry publication.

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 identical.

Leveraging Wawa's strength in freshly prepared food into other areas of the store is "not a stretch," Hoch said.

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," George said.

As an example, he suggested that the chain figure out a way to get more sales from its fresh bakery cases, which are busiest from 6 a.m. to noon.

Private label accounts for 3 percent of convenience-store sales, compared with 16 percent among retailers - such as supermarkets, drugstores and mass merchandisers - that are tracked by ACNielsen. The data company reported last year that over the last eight years, sales of private-label, or store-brand, packaged goods had grown about twice as fast as sales of brands not affiliated with a retailer.

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 convenience store as they talked about their desire to differentiate Wawa through private label. Trader Joe's, a California chain, has developed a cult-like 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 hummus and pita" last year and bruschetta this year.

So just how far is Wawa going to go with its own label?

That's hard to decide, Price said. "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.

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