BOSTON — Keeping it simple was the mantra at the Retail Showcase Seminar at the International Boston Seafood Show last week, in a session where officials from Encore Associates, Alpha Gamma Seafood and Price Chopper discussed topics ranging from operations and merchandising to procurement and sustainability.
“Five key elements retailers must provide consumers include quality, variety, food safety, consumer information and knowledgeable store associates,” said Tom Demott, a retailer for 30 years who is now chief operations officer and managing partner, perishables and sales, for Encore Associates.
Demott stressed that retailers must make a commitment to earn the trust of their consumers and that having interaction between store associates and consumers is very important.
“Seafood's role in the store is a major strategic decision,” Demott said, arguing that retailers need to define a quality standard for the category and communicate that standard to shoppers as well. An evaluation of shopper expectations in each market should be made to establish plans for variety and merchandising.
“Consumers need to drive variety, not suppliers,” Demott said.
Challenges in selling seafood include the fact that it is generally more expensive than other proteins, such as meat and poultry, and consumers are not as familiar with seafood cooking and preparation techniques as they are with those other options. As a result, having front-line employees who can help shoppers and communicate that information is critical.
The best way to encourage more at-home consumption is to train store associates to provide information on preparation, Demott said, adding that an unanswered consumer question is the equivalent of a lost sale in this category.
Yet, while full-service seafood departments can generate great sales and profits, if they aren't done well, they can be a cash drain and a money-loser that creates a negative halo effect.
Demott said that the most successful service departments have the right combination of demographics, and are placed in stores that already enjoy strong sales and steady customer traffic. Successful service departments also require a significant commitment in terms of time, money and training. For these reasons, he advised against offering full-service seafood departments in all stores, and encouraged retailers to take a more targeted approach. Major chains may only have 5% to 10% of stores eligible for service operations, he said, adding that he believes Whole Foods is a gold standard for service in seafood departments.
Self-service seafood departments, on the other hand, don't generate the same high expectations and don't have as much of a halo effect — positive or negative. As the simplest solution for the category, they offer most retailers an opportunity for success in selling seafood, since information about cooking and preparation is usually already on the package, and it's easier for retailers to train staff.
Demott highlighted Costco, Kirkland, Wash., which features 24-foot self-service seafood cases in 400 of its stores, as well as the Queen Anne Metropolitan Market, Seattle, for its five shelves of self-serve seafood and 12 feet of self-serve cases, which generate approximately $30,000 per week in sales, he said.
He concluded that serviced seafood departments don't always produce profits, and that poor service seafood operations hurt the entire seafood industry.
“It's actually easier to communicate good information to customers on a self-service package,” he said. “Training of associates is much easier and focused. Customers will recognize a good-quality product in a package of seafood, and I think this offers most retailers the best chance of success with customers and the best chance of overall financial success.”
Phillip Walsh, director of business development for Alpha Gamma Seafood Group, told the audience that the right item, the best quality, a working description of the item, fair prices and correct venue are key to successful merchandising.
Walsh stressed that even in full-service departments, product information needs to be written either on a sign or on the package itself, because training isn't always consistent. He also suggested that retailers offer service seafood only where full-service meat counters exist.
Lee French, director of seafood merchandising, Price Chopper, Schenectady, N.Y., focused on what procurement means at Price Chopper — product, potential and price were key words he used. Every item is reviewed for its potential opportunity, French explained.
“How will operations be affected by the new product? How will the product be displayed?” French said.
French also said he believes that as a retailer, he needs as much information as possible about his local market when interacting with suppliers, since it is important to evaluate from the customer's viewpoint what the demand will be and how a certain product will fit into an existing program.
“We need to become marketers and not merchandisers,” he said.
“Business and intelligence are resources we have available to us. ACNielsen data can help with planning. We use our own internal scan data; we have a loyalty card that gives us information, drilling down to the consumer. We know their purchasing habits.”
French added that he wants to know from suppliers what stores and what items he should be focused on for increased revenue in his market area.
“I can't emphasize enough: It's OK to be No. 3 or 5 on ACNielsen, but what is the plan to move it up?”
Price Chopper also uses a Web-based tool called Market Track, which analyzes advertising and promotional activities in their market, French said.
“We can actually go on and see all the competitors' habits. Market Track allows me the info about what our competitors are doing.”
The company is also involved in computer-generated ordering and reverse auctions.
French said that Price Chopper evaluates potential opportunities by using all of these tools to assess all of these factors — demand, performance, ads and promotions, and customers. “The amount of information available to us is just incredible,” he added.