BOSTON — Returning from a difficult 2008 and facing a gloomy outlook for 2009, retailers, suppliers and restaurant owners gathered here for the International Boston Seafood Show last week to discuss ways to increase or simply maintain profit in an industry struggling with changing consumer purchasing behaviors and rising prices on many items.
“This has been a year of never-ending change, and one key characteristic of the true seafood leaders this year has been one of resilience,” said Lee French, vice president of seafood marketing, Price Chopper, Schenectady, N.Y. “Resilient to costs, retails, customer wants and needs, efficiencies, changes, timing and basically any other word that you can come up with.”
Speakers at various educational sessions presented throughout the show agreed that in order for retailers to improve their seafood operations, they must prioritize and promote value, quality, freshness and safety, variety, service, consumer education and sustainability.
“Value — what it doesn't mean is cheap; what it does mean is a great, quality shopping experience at a fair price,” said Tony Ruccio, director of seafood sales and merchandising, Kings Supermarkets, Parsippany, N.J., during the “From Port to Point of Sale” session.
Consumer trust also came up frequently as one of the biggest obstacles for seafood departments. Because consumer trust must be earned, retailers must ensure that customers have a superior shopping experience by providing quality service and quality products. Speakers stressed the fact that despite the economy, paying slightly higher wholesale prices for better quality will pay for itself in the end.
“Superior quality should be expected with all products, and stringent specifications should be followed without compromise,” French said.
“The highest level of freshness is expected by our customers. Freshness should not be compromised, because when that happens, the safety of our food becomes compromised. Food safety must be kept in highest regard.”
At the “Fresh Seafood Consumer Trends in the Supermarket: How Purchase Patterns Change in a Tighter Economy” session, Steve Lutz, executive vice president at The Perishables Group, West Dundee, Ill., told attendees that with consumer confidence steadily declining from 2006 to 2007 and 2008, it is critical to understand how consumer purchase decisions are evolving.
“If you don't know what's driving their purchases, it's very difficult to get in front of them with the product mix at a certain price point,” Lutz said, noting that the number of households that purchased finfish in 2008 declined 10.3% over the prior year, as retail prices rose.
“Consumers are fulfilling basic over discretionary needs, and seafood is taking a bigger hit than other proteins like steak, beef and chicken. Trading down is occurring within and across categories.”
French of Price Chopper agreed in a separate session.
“Within the store, many departments are seeing dramatic inflation with retails — but with seafood, the customer is buying down. So, we are not seeing a blended increase in retails,” French said. “Yes, of course many retails are up, but the customer is buying down — for example, buying 51-60 cooked shrimp vs. 31-40 cooked shrimp, buying 20-plus king crab vs. 9-12 king crab.”
Lutz and fellow speaker Butch Brougher, associate client director for The Nielsen Co., both agreed that more promotions would benefit retail seafood departments.
“The number of promotional dollars declined by 12.4% in 2008 for finfish. Not only are [retailers] promoting less, but when they do promote, the discount is not as deep as it was a year ago,” Lutz said. “Unlike other departments, fresh seafood dollars declined in conventional supermarkets. That may very well be a result of reduced promos and higher prices.”
In the “Merchandising for Profit” session, Tom DeMott, chief operating officer and managing partner, perishables sales, Encore Associates, boiled marketing tactics down to five categories.
First was products: ensuring variety and selection; second was placement: creating planograms and schematics. Third was pricing strategy and guidelines, and here DeMott argued that in order to profit, pricing strategies need to support consumer expectations. Fourth, DeMott focused on promotions and advertising, suggesting more in-store promotions.
“Including seafood in all ads can have a strong halo effect for the store and generate sales,” he said, adding that retailers could try promoting at least one low price point a week, or surrounding promotions around a theme, such as value, “first of the season” or “catch of the day.”
Communications was the last point DeMott stressed, emphasizing the need to communicate with customers and employees on current issues and to hire friendly, outgoing people for seafood service departments. Company leadership should also express top-down support and commitment to its service departments, he added.
“Seafood strategy needs to be developed, written down and very simple — easy to communicate and understand not only from within the organization but outside the organization. It needs to be revisited periodically to evaluate how well you're performing and to see what needs to be changed or modified [to make] sure that you stay on track,” DeMott said.
“Developing resources … is very critical to the staff, because these folks at your stores are the people that the customers see day in and day out. And hopefully they're seeing the same people, not different people, so there's a direct correlation between the quality of your store staff, their expertise and [your company's] financial success — which is ultimately to satisfy your customers.”