INSEAD the business school for the world

Selected Case

published: 25 Jun 2018

  • Topic: Strategy
  • Industry: Grocery stores
  • Region: North America

Customers are gaga for Wawa, the restaurant / convienence store / gas station that inspires people to tattoo the firm’s logo. Founded in 1803, the company morphed over time from an iron foundry to a textile mill, to a dairy farm, dairy delivery business, grocery store, then convienence store. Dark clouds descended with the 2008 financial crisis. As competitiors 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. It serves 222 million cups of coffee a year and 105 million hoagie sandwiches. Where the average 7-Eleven convienence 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.

Pedagogical Objectives:
• Blue Ocean businesses can be created and thrive in markets thought to be hopelessly red ocean, including retail, gas stations and restaurants. • The methodical use of the Blue Ocean process and tools provides structure to break out of the red ocean and are more effective than an ad hoc approach. • When a company creates a Blue Ocean and effectively aligns its value, profit and people propositions, it typically takes years for credible challengers to emerge. Since its Blue Ocean shift, Wawa has enjoyed a decade of strong profitable growth, rolling out its new offering across its 800 stores. • All Blue Oceans eventually turn red. In the long term, success requires reaching for new Blue Oceans as existing ones are eventually invaded by challengers.

Retail, Gas Station, Convenience Store, Grocery Store, Restaurant, Quick Serve Restaurant, Fast Casual Restaurant, Wawa, Blue Ocean Strategy, Blue Ocean Shift, Mcdonald’s, Panera, Chipotle