Wawa Takes Private Label Route to Uniqueness
By George Anderson
Wawa is not interested in being your average convenience store. As the company’s CEO Howard Stoeckel told Knight-Ridder Newspapers, “We want to be unique.”
In its continuing quest for uniqueness, the 550-store chain has stepped up its private label offerings. Wawa currently sells 300 packaged goods products (not counting sandwiches)
and it intends to roll out an additional 100.
The latest Wawa branded items introduced in the retailer’s signature red and white label are 17 types of bagged candy, pudding, tea and yogurt.
Private label is an underdeveloped piece of business for most in the convenience store space. According to ACNielsen, the average convenience outlet generates only three percent
of its total sales from store brands.
Robert Price, chief marketing officer for Wawa, said the key to determining which products make sense for private label comes down to whether it will enhance the company’s brand
image.
“There’s the emotional desire out of pride to just go ahead and do everything, but that’s not our intention,” he said. “Your brand is like a bank account. You can either borrow
from it or deposit into it.”
Moderator’s Comment: Is Wawa in a better position to develop a private label program than most convenience store
operators? Are the dynamics of private label and, therefore, the chance of success different in convenience stores than in other channels? –
George Anderson – Moderator
What a great place to develop a private label offering. You have a customer base that is into convenience and menu solution, and puts the trust into the name out front. Same reasons we purchase Dunkin’ Donuts or Starbucks coffee beans; I had a specific need and I was willing to take some home with me to enjoy again. And in an environment where there are no real brands, I feel the brand becomes a reflection of bright clean and friendly service…which Wawa does as well as anyone in the channel.
For the panel’s perusal: Chipping In
It’s only on salty snacks, but tangentially deals with c-store PL in general.
Captive branded outlet — High frequency shoppers — Clear convenience / immediate consumables positioning — Product mix shifting to prepared foods that are currently unbranded anyway –What’s not to like about this as a fabulous Proprietary Brand opportunity? WaWa can be just as good a brand as Subway…and has license to cover more packaged items to boot. I probably wouldn’t buy Subway chips or candy, but WaWa? Maybe.
Convenience stores are perceived as somewhat interchangeable. There are certain branded items one expects a convenience store to carry: Slim Jims, Reese’s, Evian, Coke, HoHo’s and Lays, for example. Replacing any of these staples with private label items may be risky. However, adding exclusive items to the mix that are good and differentiated may motivate customers to drive a few blocks out of their way. WaWa is a bit unique in that they are heavily entrenched in a relatively small regional area and this dynamic may work in their favor in both distribution and building consumer loyalty.
Most retailers are followers that struggle to emulate successful retail models. Wawa is one of the few innovative retailers that continually find new ways to upgrade their offering to the consumer and differentiate themselves in the marketplace. If they have decided to pursue private label, I am sure it was researched thoroughly and will be executed well. I am betting it will be a winner.
Private label is one area where first mover advantage really IS an advantage and, at its best, it fills a brand void where no clear preference exists. Convenience stores are all about, well, convenience. As such, grab and go shoppers should be the most receptive of private label adopters. Wawa’s move into private label will give them a valuable head start in an INEVITABLE industry shift, allowing them to fine-tune and perfect while others decide “if” and “when.” Brands take time to develop but the results can, of course, be more than worth it (think Kirkland, Cherokee, Arizona…).
WaWa has long been a favorite of mine, and this effort to reinforce its brand equity reinforces that opinion. It may be in a unique position to pursue this strategy, thanks not to chance but to many years of concerted effort to build a well-deserved image and reputation for quality. If customers trust the WaWa brand and all it stands for, they will be predisposed to trust its own-label products. Does anybody think Circle K or 7 Eleven can pull off the same maneuver?
Since I commented on the original story in the Philadelphia Inquirer on April 17th, I will restrict my comment to the issue of the appropriateness of this strategy to Wawa.
Wawa is a terrific marketer who continues to innovate in the marketplace. I think this is a good example of “advance and secure” as it relates to extending the Wawa umbrella.
However, simply stated, Wawa or any food marketer needs to consider their own label decision within the context of the overall brand strategy. Wawa wants to be known as “fast, fresh, and friendly.” I am not certain that Wawa nuts or candy fulfills this strategy. Every retailer should be careful of the “margin” argument for its own label. Margins on commodity products can potentially undermine the long term brand execution.
Yes, Wawa is in a great position to develop private label due to the equity they’ve built up in their market because of their locations and approach to serving their customers. For Wawa, developing PL is also essential to hold onto their customer base in light of the increased pressure coming from Dunkin’ Donuts, McDonald’s, etc., as they try to fight Starbucks’ ever growing market share. In the end, the development of a private label brand will help grow incremental sales which today, in most convenience stores, is driven around a beverage purchase.
There are 2 kinds of private label: (1) exclusives and (2) commodities. Convenience store chains certainly have enough volume in certain categories to be more like Trader Joe’s. They could have some unique snacks, for example. If most of the private label items are commodities or famous-brand knockoffs, margins might be enhanced, but the brand value isn’t maximized.
Wawa has always been unique and an innovator, so this doesn’t surprise me that they’d be one of the innovators in private label in C-stores. This can only help them. They’re hampered somewhat by their size so that they don’t have the critical mass and hence economies of scale that some others do, but that hasn’t held them back so far. C-stores are way underdeveloped in private label. There’s not any reason why, other than that they’ve had lots of other crises on their plates to contend with, what with cigarette sales diving and everybody selling gasoline. I can see them reaching the same level as supermarkets, absolutely. But I don’t see it happening for perhaps five or ten years. (By then, my wash and wear suit will likely have worn out, and I’ll have to buy another. Perhaps Wawa will be selling them by then.)
Choosing to focus on private label products is not “easier” for one chain over another chain or for convenience stores over other store formats, it has everything to do with strategic choice. What does the chain want to stand for with the consumers? What is its point of differentiation? Wawa has a great opportunity because no other convenience stores have made the decision to differentiate themselves by using private labels.
I voted no because not all convenience stores are Wawa.
My answer for just them would be yes.