Times of hardship have the tendency and potential to create a stronger sense of unity. And it seems that's what the recession has done to the seafood industry, which actually performed quite well last year, despite the tightening of shoppers' budgets. At the International Boston Seafood Show this month, several educational sessions took strides to offer relevant and applicable information for those in the industry to increase sales and improve sustainability.
The health of the seafood industry at retail was marked in the seminar, “The Drawing Power of Seafood at Retail,” where Tom Demott, chief operating officer and managing partner of perishables sales for Encore Associates, said seafood was hot this past year. Industry growth in 2009 was largely attributed to lobster and crab sales, with lobster tonnage sold at retail growing a whopping 85%.
“Sales have increased about 10% and there's still an opportunity to sell more,” Demott said, highlighting the spending power of seafood department customers. “If you look at every dollar of seafood purchased, there's at least another dollar of other product purchased, so there's an opportunity to nearly double sales.”
The show itself focused heavily on opportunities, with speakers and panelists arguing that opportunities are out there, and explaining how to capture them. One major retailer described how cutting SKUs to focus on the most popular products had helped boost sales and reduce shrink at his chain. Others focused on how important approachable, knowledgeable associates continue to be for seafood departments.
The seminars took a proactive tone, and since many seafood departments benefited from an environment where prices for many items were falling just as shoppers were watching their budgets, many sessions focused on how to capture and keep shoppers in the coming year.
VALUE STILL NO. 1
Consumers are still looking for value, even as the economy appears to be on the uptick. And value means quality at a good price, industry experts across all sectors of the industry agreed. Some consumers are finding value through trading down from fresh to frozen seafood options, while others might be opting for less expensive species. And while lobster, crab and halibut are usually considered top shelf in the seafood department, retail prices this year were down and consumers ate them up.
“Consumers are looking for ways to change their seafood-purchasing habits without sacrificing quality, and some consumers are trading out of fresh to frozen,” said Steve Lutz, executive vice president of the Perishables Group, West Dundee, Ill., at the seminar, “How the Economy is Changing Consumer Seafood Purchases.”
Many consumers are trading down, or trading across categories, but Lutz emphasized that if retailers don't do a good job recognizing and responding to these trends, they risk consumers opting out of the category altogether. On the other hand, there are also value opportunities that can cause consumers to actually trade up, and retailers should take advantage of these opportunities when possible.
Lobster sales over the past year offer a good example — lobster volume was up 81% last year, due mostly to lower prices. And halibut, generally one of the more expensive seafood options, increased 21.5% in volume with just a 10% decrease in price during 2009, according to Perishables Group data.
“If you don't think value is a driver and you don't think consumers respond to value, remember halibut and remember that shift in behavior,” Lutz said.
“Consumers were actually spending considerably more if there is value. Those opportunities continue to be out there. We have a significantly new category consumer complexity that we didn't have two years ago.”
As far as seafood purchases go, about 50% of respondents to a recent Perishables Group survey said they are buying about the same amount of seafood; 25% said less and another 25% said more. Of the 25% who said they're buying less, 82% cited price as the reason. Of those who said they're buying more, health was the No. 1 reason.
Because of this, while value is No. 1, retailers also need to keep health, purchase criteria, demographics and other factors in mind, Lutz said.
“Consumers are spending again, but they remain cautious, and we know behavior shifts and purchase patterns have emerged,” Lutz said. “Value will continue to be a key driver in consumer behavior in 2010, but value has a lot of different components and if all we focus on is price and forget health, purchase criteria and so on, we lose out.”
AT STORE LEVEL
Food Lion's Bloom, Salisbury, N.C., finds that less is more with its customers, according to Cecil Smith, manager of seafood merchandising and training for the Food Lion food group. Smith spoke during the “Seafood Marketplace” seminar at the show.
The retailer reduced its finfish SKU count by 50% and shellfish by 33% and saw increased sales over the previous year while decreasing shrink, Smith said.
“We changed up what we were doing in seafood and focused on what customers really wanted to buy, since people started to pull back on their money,” Smith said, adding that the cases were easier to shop and consumers actually thought more variety was being offered.
Smith also advocated focal point merchandising as a planned and methodical way to place seafood items in the case to drive quality, value or price impression.
Bloom started focal point merchandising in 2008. When the seminar attendees took a walk down to the show floor to take a look at the Seafood Marketplace merchandising displays, Smith pointed out two fresh cases with a whole fish in each. Cuts that came from that fish were arranged around it in a compelling way as an example of focal point merchandising.
“It can also help you with allocation and what you want to do with each item and really giving that consumer something to look at in the case — directing them to look at something you want them to look at,” Smith said. “Allocation is determined by the delivery goal of each item: quality, value, price impression or a combination.”
It's also important to provide store managers with easy-to-follow and easy-to-execute merchandising notes and weekly planograms, he said. This strategy has been tremendously successful for Bloom. In addition, seasonal themes and active selling in front of service cases with enthusiastic associates can help boost sales.
Getting store associates to actively engage shoppers can give them a pride of ownership — that it's their seafood department — Smith added.
Nancy Wangles, director of deli and seafood for Dierbergs Markets, said she also believes knowledgeable store associates engaging with customers can make a big difference. Advocating personal attention and service from seafood sales associates not only creates relationships with customers, but also increases associates' job satisfaction.
Wangles and others on the panel from Dave's Marketplace and Kings Super Markets agreed that lack of knowledge and the fear factor associated with seafood preparation continues to hinder sales.
Dierbergs and Kings both offer recipe ideas, fishery stories and information about new species being offered directly on the seafood counter, and in its ads, store magazines and websites as effective ways to educate and reach the customer.
“The drawing power of seafood really depends on how much you can portray and share with your customers,” said Wangles in “The Drawing Power of Seafood at Retail” seminar.
“We try to have a great presentation as you walk up to the case and a good selection and variety of items. It's about the experience, not only visually, but as [customers] communicate with our associates.”
Not only are many customers a little leery of how to go about cooking seafood, research shows that many of them are confused about seafood sustainability as well.
This is unfortunate, since sustainable fisheries have become a growing point of concern for much of the seafood industry, and sustainable sourcing has become an growing point of interest among retailers and foodservice operations.
Many seminars at the show addressed sustainability and research presented in the “Consumer Insights on Sustainable Seafood” seminar, which indicated that the industry, and more specifically, retailers, need to step it up on the education front.
Only one in five consumers recognize the sustainability message in the marketplace. And about 65% of consumers don't think about sustainability when purchasing seafood, according to research from the Perishables Group. Lutz of the Perishables Group referred to it as “a glass 65% empty.”
Matt Owens, director of operations at FishWise, an organization that works with retailers in developing and implementing sustainable seafood programs, said that good messaging is key and that the price markup for a sustainable item should always be less than $3 in order to be effective with consumers.
“In the long term, I don't think there should be a markup. I think what we're working towards is industry change,” Owens said, adding that if sustainability were a business requirement, the additional costs would be spread out across the industry.
“We need to look at messaging, demographic and region, and find the best formula,” Owens said. In every case, however, retailers need a department-wide approach and it needs to be credible and attainable, he added.