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If you're somebody
that lives in the Philadelphia area, you
know about the Wawa brand.
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It's a convenience store that has been
really at the beginning and the strength
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of the culture here in our area for many,
many decades. But like many companies, it's looking to
expand its operations.
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It has done so up and down the Atlantic
seaboard and now is looking to push even
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further into the Midwest. So how do companies deal with
that move and that expansion,
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especially in areas where businesses may not know who you are,
they may have heard about you,
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and you need to try and see if
you can have the same success in that new area that you've
had in your home territory?
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Pleasure to be joined
by John Zhang, who's a Professor of Marketing
here at the Wharton School.
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Hi, John, how are you today? Very good, Dan. That's a very deep and very good question.
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Well, and look, it's interesting because
for those of us who are here in the
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Philadelphia area, we know about the Wawa
brand. We have seen it play out. We've seen it developed
from just these corner stores to
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now these bigger locations
that have gasoline in them. And now that model has worked
very well to the point where
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you can find a Wawa anywhere
up and down the Eastern seaboard. So I guess I'll start out with— at some
point, Wawa decided that they were having
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enough success where
they could take this brand and expand it into
different parts of the country.
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I'm actually a big fan of Wawa. In fact, all my kids love to go to Wawa
and they love their Wawa sandwiches.
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And also, my daughter just
loves the coffee from Wawa for some reason, and a lot
of customer loyalty there.
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I would say that Wawa is really a great
success story from local here. And in fact, that they have found a great
formula for success.
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I think at this point, if you ask
customers, they love the fact that Wawa has fresh foods. They love the fact that
Wawa will customize to your demand,
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and they love the fact that Wawa can do
everything so quick. And also, I think Wawa
has successfully turned
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a convenience store
into a destination store. That's really pretty rare in the
marketplace.
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And you know, the convenience store
business is very, very competitive. And for Wawa to actually continue to
succeed, they do need to expand.
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They need to increase the density of their
stores. They need to expand beyond their existing
territories so that they have the scale,
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and they can negotiate with the suppliers,
and they have the efficiency. That's essentially the reason why they
need to expand.
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So using Wawa as an example,
but others— you could probably throw in there Sheetz, and
some of the other brands.
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Is there a moment in time where the
leadership of the company says to themselves, "Hey, listen. We've got
something here that we know can be
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successful in other parts of the world,
or other parts of the country?" So what is that moment?
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Or can you see it from how
companies kind of develop and want to take on that
next step in the process?
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Wawa is actually a private company. You probably— it would be hard to pin down,
because— that moment where they realize
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they have found the secret source for the
convenience business. And I would say that, in fact,
that at this point, they're pretty
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confident, and they really like the
customer response to what they do. And in fact, they are doing pretty well in
the marketplace.
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And also that in that particular business,
if you don't expand, you're going to lose
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a lot of advantages you have already
gathered. I think that at this point, they need to
increase the density of their stores,
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they need certainly to increase the
scale of their operations. Of course, in retailing
businesses, like in any other
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business, when you expand,
there is always risk involved. Well, and so they're trying
to also make a connection
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with a consumer who may
be loyal to another brand. So they have to do things that kind of
attract that person in.
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And it's a challenge when you go to a new
territory and if somebody has, you know, had a Sheetz— I'll use that
example from Western Pennsylvania.
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They've been a Sheetz
customer for, you know, 20, 30, 40 years, it's hard
to break them of that.
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But you have to try and kind of,
I think, stay on your core success in order to be able to, you know,
kind of show that new area what you've got.
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Well, I look at my kids, in fact.
The way that they are attracted by Wawa, the way that they crave for their
products at Wawa, and the fact that they
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seek out Wawa to go on their way and to buy
stuff at Wawa, I would say that indeed
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that they probably would be in a very good
situation to expand beyond the Pennsylvania and the East Coast area.
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And I think that, of
course, that you're always going to have to deal
with the competition.
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But it looks like that Wawa
has been able to do all that in the areas
that they already operate.
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So then what's the mindset of the other
company that is trying to, you know,
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hold down their customer
base against this other company kind of
coming into their territory?
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How do they approach things? You know, convenience business is huge. I mean, there's a huge market out there.
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And you look at the 7-Eleven. 7-Eleven has over
30,000 different stores in the whole world, in
many different countries.
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I think over 30 countries or something
like that. And the market is really huge.
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I don't think that the Sheetz should worry
about the entry of the Wawa. Wawa shouldn't really worry about the
cutthroat competition from Sheetz.
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I think that they each have their own
advantages. And there's certainly enough market for
everybody there.
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Is it a little bit easier in
this day of social media to try and be able to make that
connection with the consumer?
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And I say that— you know, you probably
have, again, using Wawa as the example, people from the Philadelphia
area who went to Wawa as
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younger kids now living in
Florida or South Carolina. And they may be a part of a group that
talks about Wawa.
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And once they know that that connection is
coming their way, it's kind of a natural,
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you know— it's a memory back to their
younger days. Well, that's good advice to Wawa if Wawa
is not thinking of doing all that.
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And I'm sure that they have people that
must be thinking exactly that way. And indeed, that social media is so
important.
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And there are a lot of
young people, there are older people, and they
are all using social media.
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I think that a good story can travel very,
very far nowadays. I think that Wawa definitely will leverage
all that.
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What does this example tell
you about how companies like Wawa look to continue to
succeed in this day and age?
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Well, it really tells you that even in a
very ordinary business, you still have room for innovation, you still have room
to do something excellent.
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I think that Wawa has
certainly found a good way to occupy a territory in
the convenience market.
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In fact, to make a convenience store
a destination store for many customers, to have these really diehard loyal
customers,
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that's really not easy for any kind of
a retailer. And not to mention, it is a convenience
store where you would imagine consumers
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typically buy product on impulse than
anything else. And you mentioned the innovation.
If people don't know about it,
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this was a company that, you go back 30,
40 years, was more like a deli. You know, you would go there, pick up a
pound of ham or cheese.
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It wasn't until like about 20
years ago that they started actually making sandwiches,
having coffee available.
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So they have really
innovated how they felt they needed to succeed in
the last couple of decades.
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Absolutely. I think in that particular market,
it's very dynamic. Things change very fast.
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I think that they surely have been staying
on top of the customer preference change
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and all these new trends about fresh
foods and delivered fast and all that. John, always great to talk with you and
get your insight.
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Thanks very much, sir. Thank you. It's so good to talk to you. Absolutely. John Zhang, who is a Professor of
Marketing here at the Wharton School.