WAWA, Pa. -- As part of a strategy to change how Virginia consumers perceive his company, Howard B. Stoeckel, president and CEO of Wawa Inc., said the convenience store chain may test a commissary program in six months to a year, reported The Richmond Times-Dispatch.
Most shoppers in the state, where Wawa first opened a location in 1998, think the retailer is just a place that sells competitively priced gasoline, he said. But in the Pennsylvania-based chain's core market of other mid-Atlantic states, consumers think of Wawa first as a food retailerit [image-nocss] was a dairy operator that later opened stores. Wawa didn't start selling gasoline until a decade ago.
"In [Virginia], food becomes a secondary thought because all of our stores here have fuel," Stoeckel told the newspaper.
About 200 of its 550-plus locations sell gasoline, the report said.
"The gas certainly brings them to the site and a certain number of people will automatically shop the store, but we need to bring more people into the store. It will happen over time," he said. "Some customers don't think of going to a retailer who sells fuel to get great food because in the past you haven't found a retailer that does both extremely well."
Getting more people inside Wawa stores to buy a hoagie, a chicken biscuit, a bowl of roast turkey over mashed potatoes, a milkshake or Wawa-branded candy or water is key to the company's future, Stoeckel said.
Profit margins on food items could be as much as 45 cents on each dollar of sale, compared with about 6 cents for gasoline, Mitch Morrison, group editor of CSP, told the Times-Dispatch. "Most convenience stores will ride the horse on smokes, gas and beer," he said. "But Wawa rides its horse on fresh food."
Wawa's food gets high praise for its quality, he added, and it draws customers.
Pushing food sales is important for Wawa as it expands its presence in Virginia. The company should have 51 locations in the state by year's end, an increase of 15 from 2005. Seven stores opened in the Richmond area this year. Plans call for operating between 75 and 90 stores in Virginia by 2010, the report said. The Richmond market, which now has 17 locations, ultimately could support about 50 stores, Stoeckel said.
More locations should help draw more customers inside, Richard D. Wood Jr., Wawa's chairman and the great-great-grandson of the company founder, told the paper. Doing so should help consumers think of Wawa for sandwiches, soups, salads, fruit and other food and not just low-priced gasoline. "The more locations you have, the more top of mind you become," said Wood, who served as CEO from 1981 until 2004, when Stoeckel became the first nonfamily member to run the chain.
Another way to entice shoppers to come inside may be through a gourmet-meals program in which food is prepared at a central commissary, put into containers and sent chilled in packages to stores. Wawa operated a meals-to-go program in the early 1990s but got rid of it for lack of consumer interest. "We were probably 12 years ahead of our time," Stoeckel said, adding that the company operated the program before it sold gasoline at its stores.
Wawa's history differs from most c-store retailers, according to the report. Most got into the business by offering gasoline first and adding food later. "We came at it exclusively from the food part of it and then added gas," Stoeckel said. "Doing it that way makes us very unique."
The company got into dairy farming and began operating a small processing plant in 1902. The dairy business was strong for decades. But as home delivery of milk declined, Wawa opened a small market in 1964 as a way to sell its dairy products. Wawa operated hundreds of small neighborhood food stores in its core markets of Pennsylvania, Delaware, New Jersey and Maryland until 1996, when it opened its first fueling station. Stores built today are about twice the size of the neighborhood locations.
Selling gasoline was a risky step for Wawa, said Wood, who was CEO at the time. "When we opened the first gas store, I was really worried that no one would come. But we opened it and people came," he said. Wawa sold 1 billion gallons of gas in 2005, he added.
That kind of risk-taking helps keep Wawa relevant and ahead of its competitors, said Morrison. "They are willing to go against the grain of conventional thought," he told the paper. "They do their own thinking and debating, regardless of what others are doing out there."
Wawa, for instance, recently stopped selling magazines and has not sold lottery tickets in years. Selling those items slows down the checkout process, Stoeckel said. "If you try to be too many things to consumers, you don't simplify their lives," he said.
Stan Sheetz, president and CEO of the Sheetz Inc. c-store chain, said Wawa is a good operator. The Sheetz chain, which has nine Richmond-area stores, and Wawa are aggressively expanding their local presence. "They know how to run a good convenience store, and they are a great competitor," Sheetz told the paper. "Competition is good."
A key area that separates Wawa from other chains, Morrison said, is Wawa's extensive offering of private-label products for items such as bottled water, candies, packaged nuts, yogurt and teas. "They are in an industry that is not so private-label focused. Instead, the mentality in the industry is to focus on having major brands and carry the top products in every category," he said. "But Wawa is among the more progressive companies. They have achieved brand status with their customers."
Rather than sell branded gasoline from Exxon or Shell, Wawa opted for its own.
"Before we got into the gasoline business, we spent 32 years cultivating and earning the trust of our consumers," Stoeckel said. "Customers figure, 'if you can do dairy then we give you permission, and we have trust in you to do all of these other foodservice products.' Dairy has been a very important part of our history and creates a halo over the business."
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