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Selected Case

published: 22 Mar 2019

  • Topic: Strategy
  • Region: North America

Abstract:
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.

Keywords:
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

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