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Wawa's McHugh Talks Success

February 1, 2006

By George Anderson

Harry McHugh, senior vice president of operations for Wawa, says that innovation and a commitment to values will determine which companies thrive and those that fail to survive in the retailing business in years to come.

In an interview with Grocery Headquarters magazine, Mr. McHugh said both traditional grocers and convenience stores find themselves being barraged from competitors on all fronts.

On where convenience stores are headed, he said, "A lot of former gas retailers are crushing toward the middle, meaning they're trying to offer beverages or hot beverages, increasing foodservice and trying to, if you will, make up for the lost GP at the pump. Implications for our business are to improve or get out. The old standbys no longer suffice. Customers are increasingly fickle and have many, many choices, and they are ever more demanding."

While many things have changed in retailing, location is still a critical factor because it addresses the need for convenience.

"Location, location, location still applies," he said. "People are time-starved, even more so today. So one needs to offer the most convenience in terms of location, easy access, easy parking, quick service, ready-to-eat foods - kind of one-stop shopping for convenience. To do all of that, you really have to have a dominant piece of real estate. And the question is, can you afford not to?"

Ultimately, a company's performance comes down to its people.

"We've always striven to be the best, not the biggest. Our focus has always been on getting, retaining, developing, awarding and challenging the best people. If you do an outstanding job on people, they in turn will delight customers. To that end, we have developed a powerful culture that is a people-centric, value-centric culture."

Getting employee buy-in is made easier when the same workers also own a piece of the company, said Mr. McHugh.

"About a third of our company is owned by our associates, so there's a sense of ownership and engagement. Our store managers are the best paid in the industry, as are our area managers. We're very proud of that, because money is important. People will only go so far for love. At the end of the day, they have to be rewarded by more than love and recognition and celebration. They have to be able to satisfy their own aspirations, achieve their own financial ends, take care of their family and continue to invest in themselves. It gives them a sort of balance in their lives."

Moderator's Comment: What lessons does Wawa have for others in the retailing arena? - George Anderson - Moderator

Discussion Questions:

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Is Wawa's company culture the reason the chain is so successful?


Wawa has been known to be consumer marketing oriented and more shopper focused than most supermarket and convenience store corporations. One of its major competitors, Sheetz C- Stores, is another example of superior marketing and consumer focus i.e.: give the shopper what they want, and exceed their expectations.

It is true innovation in outlet formats and consumer services, and ordering a meal e.g.: what you want to drink and have on your sandwich from a order/video screen, while you are picking up something else, or paying for your meal, are MAJOR benefits in consumers' minds.

But, not all executives value such consumer needs as important...sorry to say. This is where alternative grocery and non-grocery outlets, come into play.

Giving the shopper what they want, and when they want it with no hassles, most of the time, gains the sale!!

Hence, the problem/opportunity surfaces for these two Industries. Value is divided into two parts, for stock holder and for consumer/current shoppers. Most retailers in these industries only think of price/gross margin/EBITDA, as important, AND these critical financial requirements are secured the old fashion way...price and in-store merchandising which are outdated and address the traffic building means of our grandparent's, and in some cases, our parent's times.

Today's consumers/shoppers are different, and carry a much larger stick in the success of the retailer. Baby Boomers and their offspring as well as other generations want service, hassle free purchase events, information, and quality smiles, not to forget foods/meals, and fresh offerings.

Price is only the driving force of retailers because of the lack of consumer knowledge, marketing and the issues/needs, and problems/opportunities that need to be addressed.

The importance of consumer engagement says it all...in securing very meaningful profit for the retailer, and happy shoppers.

Until value is considered to be more than a price and product definition to drive traffic, while appeasing the stockholders and /or owners, shoppers will migrate to alternative outlets to buy foods and meals.

Is it time to adjust to the shopper - the retailer's major need? Hmmmmmmmmmmmmmm

Stephan Kouzomis, Faculty and Staff Member, University of Louisville's College of Business

Wawa has long been on my list of most admired firms. It's near legendary in its home markets of NJ and Eastern PA, where it excels at serving the morning coffee and lunch trade. Its use of kiosk and order queuing technology to speed the ordering process during the morning and midday peaks is a model for the C-store industry.

I'm not sure it's quite valid to compare Wawa, a convenience store, against a full-line grocer like U.K.'s Waitrose. But its systematic approach to providing fresh, fast, accurate service is worth emulating in any channel of trade.

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James Tenser, Principal, VSN Strategies

As the man says, it is Location, Location, Location. We have found that for convenience stores, as well as other classes of trade, location INSIDE THE STORE is a huge consideration once the shopper enters. Unfortunately, many retailers believe that shoppers will find what they want, if it is in the store. This is a passive, product driven mentality, not shopper centric. Unless a retailer has an excellent understanding of the natural location behavior of shoppers (intuitive paths) they have no choice but to be passive, simply inferring what product location and merchandising strategies will work. Infer or measure: that is the question.

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Herb Sorensen, Ph.D., Scientific Advisor Kantar Retail; Adjunct Ehrenberg-Bass, Shopper Scientist LLC

Recent surveys and media coverage in England have proved that I am not the only one whose favourite stores are John Lewis and their grocery subsidiary, Waitrose. Added to that is their new joint venture, Ocado, their online service supplying Waitrose's products direct to customers' doors. The thing that has always made the company successful and popular, even if some of what it stocks is not the most cutting edge ever, is its ownership. It is, and always has been, a partnership with every single employee owning a part of the company. That incentive has traditionally lead to exceptionally good customer service from interested, motivated and knowledgeable staff. Even the teenagers in the supermarket on a busy Saturday afternoon. I could tell stories ad nauseam about their wonderful, helpful staff but will refrain on this occasion. Just trust me when I say how pleased - though unsurprised - I am that they came out top amongst the shoppers surveyed. If Wawa is anything like them, then the same principles apply. Unfortunately the link to Mr. McHugh's interview didn't work but I shall keep trying because I would not like to know more about him and his business for my next visit to the US.

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Bernice Hurst, Owner, Fine Food Network

It is not often that retailers totally agree with the approach of others. There are many ways to succeed in retail and though many say the right things few do the planning and implementation required to consistently follow through and deliver. Wawa is one of the few. For me there is nothing to discuss, I totally endorse everything Wawa says AND does.

Michael Tesler, Founding Partner, Retail Concepts

Wawa has 500 stores in 5 states, and focuses on owning the land and buildings for its locations. The longest-lived retailers own their real estate, they don't lease it. Wawa's geographical concentration keeps its logistics, supervision, and promotional costs minimized. Although Wawa claims to have a special culture, it isn't clear how to prove that, except through comparative turnover statistics which aren't provided. How many retailers say they have no special culture?

Mark Lilien, Consultant, Retail Technology Group

Wawa is an example of bigger is not always better. There may be many who are larger, but there aren't many who are better. They do an excellent job of training their people and my guess is that their turnover is lower than most. Their commitment to people, whether employee or customer, shows. They know how to turn a consumer into a customer. They set standards, measure them and then act on the information.

As Mr. McHugh said, the consumer has many choices. Those retailers who listen to the consumer and deliver a good product and good customer service will turn the consumer into a customer. Wawa, talks the talk, but they also walk the walk.

Perhaps the the biggest lesson to be learned from Wawa is to carry through on your commitment to people and service. Because if you do it, they will shop.

Bernie Slome, VP of Business Development, ICC/Decision Services

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