IN A ROUNDTABLE DISCUSSION, SIX EXPERTS PRESENT STRATEGIES FOR PUTTING FISH BACK IN FAVOR

LOUISE KRAMER

It's been a tough year for seafood. Supplies have been tight. Consumption is flat. The glare of the media spotlight doesn't seem to be dimming. And operating costs haven't gotten any lower. Then, of course, the seemingly age-old challenges of controlling shrink, training staffers and educating shoppers will probably never go away.

What's a retailer to do? To answer that question, SN gathered together four retailers and a wholesaler from different markets across the country, along with a packaging manufacturer, for a special roundtable discussion in Boston, an area particularly hard-hit by tight supplies. Rather than despair over the future of the department, the participants in the discussion voiced a surprisingly optimistic note and shared measures they are taking to keep the supermarket seafood department alive. Participants included Jeff Franzblau, seafood merchandiser at H-E-B Grocery Co., San Antonio; Rich Catanzaro, director of seafood at Mayfair Super Markets, Elizabeth, N.J.; Lance Singleton, corporate manager of seafood sales and merchandising at Fleming Cos., Oklahoma City; Paul McGillivray, director of deli, seafood, bakery and cheese at Roche Bros. Supermarkets, Wellesley Hills, Mass.; Rick Cavanaugh, seafood department manager at Queen Anne Thriftway, Seattle, and Don Smith, director of marketing for poultry and seafood packaging at Cryovac, Duncan, S.C.

The thread that ran through the morning-long discussion was that the seafood industry, from suppliers to retailers, needs to tout its virtues better to keep its share of the protein dollar.

Another key to success that was frequently mentioned is to be eminently flexible in terms of supply. Rather than rely on one or two major sources and rather than become too dependent on one item, such as shrimp from China, retailers need to cast their nets out for other species -- fish that may require them to provide education for their staffs as well as for their customers.

Pressures of operating the department can be alleviated by making careful decisions to reduce some service merchandising, but quality must not be sacrificed. For Cavanaugh, self-service has been so successful that one of the few major problems he has is finding enough top-quality products to meet demand.

But self-service isn't for everyone. Fresh seafood sold from the service case still has an enduring appeal for shoppers, participants said. It also has an ability to create a fresh image for an entire store. Self-service done wrong can be a disaster.

Those who gathered in Boston said they want a national voice for the seafood industry to help them sell more fish. In the meantime, they are training their staffs in customer service, and creating materials to help their stores ensure better quality products. There was a feeling at the session that enough is enough with all the bad publicity about the seafood department in the past few years.

"We want to get away from negative issues," said Singleton of Fleming Cos., who serves as chairman of the seafood committee of the Food Marketing Institute in Washington. At FMI's next seafood conference, slated for Oct. 9 to 11 in Chicago, Singleton wants to focus on increasing sales. "What we want to have is people sharing what they do that is successful. I guess it is a commitment to the seafood department. It is a commitment to enthusiasm. I think it's time to develop the positive aspects," he said.

On the following pages is an edited transcript of SN's seafood roundtable.

The discussion has been divided into key topics: Seafood as Image Maker, Buyer-Supplier Relationships, Service vs. Self-Service, Case-Ready Seafood, Variety, Tight Supplies, Food Safety, The Media and Promoting Seafood.

SEAFOOD AS IMAGE MAKER

SN: Does service seafood belong in a supermarket?

McGILLIVRAY: For the more upscale full-service types of stores, I think absolutely, even given some of the setbacks that the seafood industry has had. In terms of pricing and supply and some of the safety issues over the past two or three years, I think we're going forward.

SN: And do you view it as a profit center? McGILLIVRAY: Yes, we do. I don't think anyone would tell you that seafood is the most profitable part of the supermarket, but it does make a profit and it does contribute to store profits. It is part of the whole picture, the draw and that's really a key word. It brings a lot of people in there. CATANZARO: I think seafood is one area very similar to produce where the quality of the product is the differentiating point in terms of supermarket competition.

SN: What do you see as the real challenge in running your seafood operations today because of tight supplies and labor issues and the profitability question?

FRANZBLAU: I guess we're all driven by contribution. And profitability. We need to contribute to the store. We have to bring the bottom line up.

SN: What are you all doing to try to address this problem? Or are you still looking for answers?

SINGLETON: I appreciate the key point about driving sales. Being part of the FMI Seafood Committee, we want to get away from negative issues. We just had a meeting to put together our agenda for the upcoming conference, and our emphasis will be on sales. We want people sharing what they do that is successful. I guess it is a commitment to the department, a commitment to enthusiasm. I think it's time to develop positive aspects. The negatives are going to be there. SN: Jeff, you mentioned that image is an important contribution that the department brings to the store and to the overall company. Is this a message that's difficult for you to convey to your upper management? FRANZBLAU: They want to have the best shopping experience a shopper can have at any of our stores. Part of that is with their seafood purchase. When they go home, what better way to sell more seafood than if they have a delicious catfish filet? They'll be back for more and they'll be back to H-E-B seafood for more.

SN: Do you have any trouble convincing senior management that they should make a commitment to the seafood department?

CATANZARO: We're in a good position right now. Our chief executive officer is very perishables-oriented. He came out of a meat background. From what I see, that meat background, the understanding of perishables, is very important in developing our programs.

This is a fellow who pretty much has said, "I really want to be involved." I think the CEO's buying in is the most important factor. That is where the success will begin or end. Treating the department as if it's a necessary evil is probably the worst scenario: "We have to have seafood because the guy down the block has seafood."

BUYER-SUPPLIER RELATIONSHIPS

SN: Are you getting the quality you need?

McGILLIVRAY: Our program, we offer them the Foley Fish branded seafood program. We buy from just that one source.

SN: How did you develop that relationship?

McGILLIVRAY: It's been ongoing for well over a decade, in terms of signing with one store and then going companywide. We market it and brand it in the seafood case as a product of Foley Co.

SN: In terms of working with your suppliers to develop programs like that, is there a different challenge from a 10-store operator to a 100-plus?

FRANZBLAU: Yes. Paul, perhaps it gets direct-delivered to your stores? We have to deliver to our own stores just because of distance. We have to get the product to the stores as quickly as possible, especially in perishables. We do our own trucking. If it's not within 24 hours of H-E-B by truck, we

are freighting it. It adds a twist to the cost that affects the profitability that some of the people back East don't have to contend with. I'd love to be in Boston where it just comes right in on a truck.

McGILLIVRAY: There's no question that my geographic location here has solved a lot of problems I don't face that a lot of these gentlemen do.

SN: How are buyer-supplier relationships?

FRANZBLAU: In our industry, fish is a lot tighter network than, I think, beef or pork or canned goods or grocery. We all tend to talk to suppliers. It's pretty open conversation, I think. We try to work together.

SMITH: How many suppliers do you need to handle your seafood requirements?

FRANZBLAU: It's by species.

SMITH: The number of people you have to deal with to get your seafood product, is it 30? 50?

FRANZBLAU: I deal with six majors and 30, 40, 50 minor players. There's a cost to doing business with one of them for periods of time. Doing more minor purchasing, there's a cost. It'd be great if we had one-stop shopping.

SINGLETON: There are frozen suppliers and there are several fresh suppliers who try to provide that one-stop shopping.

SN: But don't you think that your supplier should be providing those services?

FRANZBLAU: We've taken it a step further and we use technology. We have satellite TV for training in all of our stores. It really works well.

SERVICE VS. SELF-SERVICE:

SN: I hear stories about major operators pulling out service and thinking about self-service only. Is that a wrong impression?

FRANZBLAU: I don't think it's pulling out service. It may be a re-emphasis on self-service. Rick has had so much success on his self-service program, everyone looks to him. Not every market needs full-service or self-service. You have to look at the individual geographic and demographic areas and see what they need. There has to be an assurance to the consumer that the self-service is just as good as the full-service. Once we get that, I think we'll see more and more self-service in all the stores.

CAVANAUGH: We're real proud of what we do with our self-service and there are no real tricks involved. It's all in the quality of the merchandise and the display. It all started when our owner, who's now retired, about 10 years ago took a trip to Japan with a group of grocers and saw that all the seafood in Japan was packaged. "Why can't we have this kind of quality back in Seattle?" he asked. Even though Seattle's known for its seafood, a lot of the grocers there in their service cases dedicate a two-foot space to it and it never really looked too good.

It shows your dedication to quality. We went from two feet to what is now five levels on 12 feet, so 60 linear feet of seafood that does a fair percentage of the store's business. We have the capability to run 60 varieties of fish.

SN: Are you considering going to some service?

CAVANAUGH: We're planning a remodel and we really don't want to get away from doing self-service, but surveys that we have taken of people in our market area say they want fish on ice.

There's still the perception that fish on ice is fresher.

SN: What are the benefits of having 100% self-service?

CAVANAUGH: Well, it's lower labor, first off. And also, every single package has a date on it. You don't get your products mixed up as far as rotation. The cross-contamination is minimized by having everything wrapped.

SN: Who fabricates the product?

CAVANAUGH: A lot of it, we cut ourselves. We buy whole fish, cut it and filet it. Most of it is in the quality of the product coming in the door. But also, a big part of it is the display. I notice that some people in the meat industry just schlop it in the tray and throw it out there. There's not the care for it, nor the concern that it is somebody's meal. Everything's got to look good enough to eat. There are no exceptions.

SN: If you could have your dream department, what would it be?

FRANZBLAU: Half and half. Partial full-service. One that could be run with lower labor. Maybe one person on at a time who could help the customer who maybe needs a special order, or else a self-service department where there's a person out there during peak hours talking seafood, sampling seafood, helping the customer pick a piece of seafood that's on the multideck.

CATANZARO: There's a lot of self-serve and the worst scenario is a self-serve department that doesn't have any staff. That package has to be as good as what's in that fresh case.

FRANZBLAU: If not better.

CATANZARO: If not better, because one bad experience, you lose 10 customers.

SN: Lance, how do you think that would work for 4,000 outlets?

SINGLETON: While there is a certain mass appeal that you have to abide by, there is a definite need and whether it's so much service or so much self-service, I think is predicated on who is that customer base and who am I trying to target, and maybe one of the things we've done wrong in the supermarket industry is we've tried to go for mass appeal. Today, I see more and more retailers going into niche marketing and really trying to understand who their customer is and then focusing in on that core customer.

SN: How much customer interaction is there from your department, Rick?

CAVANAUGH: A lot. We're really proud of the responses that we get back from our customers and we pin them up there. We really try to be out there as much as possible and get to know people on a first-name basis. Just because you put out prepackaged fish doesn't mean you can't have customer service.

FRANZBLAU: We shouldn't say self-service. Let's call it prepackaged fish.

CASE-READY SEAFOOD

FRANZBLAU: What about case-ready, Don? Is the industry swinging that way?

SMITH: It requires a true partnership between the processor and the retailer, ourselves and the packer. And getting commitment from all three parties. And we found that the way to get that commitment is the strength of our retailer. That's the way boxed beef got into this.

The retailer is demanding higher quality and we're getting involved through our processor. We can improve the quality and extend the shelf life. SN: Don, what is the state of technology? What exists today that would facilitate the kind of self-service activity we heard about just now?

SMITH: There is vacuum-packaging for fresh fish, which is used by several folks up in New England. That can help stabilize the price when you're buying a product for next week. And then there is the individual prepacked package that has had some success. That involves putting it on a tray in a vacuum-packed, oxygen-permeable bag and this is a process that's been approved by the United States Department of Commerce. SN: When you say extended shelf-life, what do you mean by that? How many days?

SMITH: It depends on the species and the quality, but I think they've seen in the laboratory beyond 25 days.

FRANZBLAU: We're not looking for extended shelf-life but consistent quality. Extended quality is where we want to be. We're not looking for the 25 days. We enjoy it, but we're looking for longer quality on the fish. Am I safe in saying that?

SMITH: What kind of waste do you have on product? Are the high numbers for shrink or product thrown away because it doesn't meet your quality standards?

CATANZARO: You're going to have some shrink. Larger volume stores can cover some of that.

CAVANAUGH: For chicken, the radical change was bringing it in prepack. Everybody had said iced chicken was the only thing you could possibly sell. Nobody wanted it. Nobody wanted chicken.

SN: Do you feel the seafood department is ready for such a radical change to having prepacked, supplier-provided seafood?

FRANZBLAU: As long as you give them a favorable shopping experience or fish purchase, they'll keep coming back.

McGILLIVRAY: There'll probably be a situation similar to chicken maybe 10 years down the road, once the technology is established. All we have to do is establish the technology. Where it may not be on the top of our list right now, extending shelf-life is not necessarily the top priority we have as seafood operators right now.

VARIETY

SMITH: How broad a variety do you have to have? Can you have a limited variety of product in self-service, but high quality?

FRANZBLAU: I think that's up to the market. Even within my market, I have different markets. Submarkets and micromarkets. We can get away with less variety. Our business is driven by low variety, yet we carry a wide variety.

SINGLETON: I still go by the 80-20 rule. And I think adding variety is one means to bring an extra customer to the department. And to differentiate yourself from someone else's marketplace is to offer that unique difference or special of the week.

McGILLIVRAY: It's kind of difficult on the suppliers' end of the seafood business because seafood is so different across the country, so different from store to store.

While everybody has the top 20 types of chicken parts, with seafood you're going to get into a situation where somebody's going to want a different program.

SINGLETON: I think the success story in the seafood industry for the last two years has been the catfish industry. They've grown from nothing to 400 million pounds. But in that, we've gone from ice-pack to tray-pack programs and the logistics of getting the product. Basically, all of us can get in fresh catfish in 24 hours. I'm the exception here, with 36 hours.

SN: How many times a week on the fresh side do you get your deliveries?

CAVANAUGH: As many as seven days a week. Usually five or six.

FRANZBLAU: Seven.

McGILLIVRAY: From the warehouse to the stores?

FRANZBLAU: Both. To the warehouse and to the stores. Of course, the smaller stores will go down in number of deliveries.

TIGHT SUPPLIES

SN: How have you compensated for tight supplies this year? FRANZBLAU: It's forced us to look for other species. We've been looking for something for the seafood customer who is willing to try something that she's not or he's not used to buying. And we've had a lot of success with that.

SN: How did you do that?

FRANZBLAU: Basically, the best way we do it is through advertisement and through employee education.

SN: What do you do, Lance, in terms of ensuring that you have the supplies?

SINGLETON: It goes back to longer term relationship with a fewer amount of suppliers. It truly goes back to allegiance. It's very critical that as supplies are dwindling in certain species, that you have a partnership where they can count on you, that you're not going to drop them should their prices rise because of lower supplies. You have to have those relationships throughout the system. You've also got to go out and seek those alternatives. Shrimp was a prime example last year, where many retailers in many markets who use Chinese product simply couldn't get it, so they had to convert to other products.

SN: What's been the impact of tight supplies?

McGILLIVRAY: The biggest problem as far as availability isn't where you're going to get fish, but at what price? And at what pricing will we be able to sell it and still have the value for the customer. What we're trying to do is actively promote some of the other available species whether it be hake or ocean-catch.

We've taken the strategy where we have one or more of those items out every week at a price point that you may have seen cod at two years ago. And we're trying to educate consumers that this is still a good fish and still a good value. SN: What do you all think of the Hazard Analysis Critical Control Point plan and the fact that retail isn't targeted in the new Food Code?

FRANZBLAU: We are already on the HACCP plan. We're working toward 100% trained and certified in seafood. We can only see it as helping us. It's a differentiation. A competitive edge.

FOOD SAFETY

SN: What are the challenges of going to an HACCP program? FRANZBLAU: The training's very costly but the benefits over the long term will well outweigh the cost of getting into the program. SN: Does HACCP have a discernible effect on the quality?

SINGLETON: Many of the practices that exist with a model such as HACCP are already there. Most retailers take the time to display and sell a wholesome product. The challenge is to develop something in writing.

How this all shakes out in the next 18 months will be very interesting. The burden of education unfortunately is, just like the nutritional labels, on the retailers and it should be on the whole system. SN: So it becomes almost a marketing tool for suppliers, but it's also becoming a part of doing business.

SINGLETON: It's not a marketing tool for suppliers.

SN: I'm very surprised that suppliers aren't taking this as an opportunity to sell themselves to you. Does anyone else find that?

FRANZBLAU: Seafood is a cottage industry. A lot of the time, we're dealing with people that are two- or three-people operators. They're not huge companies with 20 people. On the other hand, the catfish people, of course, take advantage of these opportunities.

McGILLIVRAY: For every Foley's, there's 25 little guys.

FRANZBLAU: There's a cost that comes down to our cost of goods. So if our competitor's not using an HACCP-certified program, then we have a higher cost.

SINGLETON: We'll look back five years from now and the assurance of the consuming public in the United States Department of Commerce will be the very same thing the United States Department of Agriculture accomplished with poultry. Not that there's a perfect inspection process, but the assurance and the satisfaction that this product was inspected and it's safe to consume this product will be there.

McGILLIVRAY: The consumers sometimes don't buy the way they talk. They say they want safety. They say they want quality, but they buy on price. With our program, which is a little more expensive than our competition, that's a question we ask ourselves regularly. Is the consumer buying fish from us because they're assured of the quality or are they buying it at the competition strictly on price? And part of it is educating consumers as to what they're really paying for.

FRANZBLAU: I think it comes down to value-added. Is HACCP value-added? What does it cost per pound for each extra program -- per pound of fish the shopper is willing to pay for. It's something that we as retailers have to worry about. SN: Do you think it could backfire on the consumer, discussing HACCP? Do they need to have a lot of education? Or is it better to try just to convey an image of quality?

CAVANAUGH: It's an ongoing challenge. Consumer education is key.

THE MEDIA

SN: What effect do you see in terms of sales on your perishable products on account of constant negative media coverage of the seafood industry ?

FRANZBLAU: Actually, we increased sales. One thing customers at H-E-B look for is a wholesome product and they thought we were doing a better job than they were portraying on Prime Time Live.

SINGLETON: We were hit substantially after the Consumer Reports article. But I think part of what's happening now is that the consumer is trying to be more educated and more quality-conscious.

SN: Did you have any impact from the Consumer Reports article?

CAVANAUGH: Actually, we had an increase in sales from previous years during that period. I don't try to address the issues directly by saying "We're inspected." What I'll do is put the picture of the fisherman we got the fish from, or the farmer we got it from, to kind of take it away from that kind of an issue to more that we care about who we're buying from, and downplay the issue of food safety. But we're still prepared to address it if we have to.

PROMOTING SEAFOOD

SN: Why is consumption down? It's sort of shocking. I get such a negative picture from what I've been reading in the mainstream press about seafood.

CAVANAUGH: Maybe that's the problem. Nobody's printing the positives. We've got to put it into the light of "Hey, this is a great product." It's wholesome. It's low in fat. It's got all the nutritional things we want.'

SN: It's amazing to me that this message needs to be put out today given the interest in health and nutrition. Do you feel the lack of a national voice for the seafood industry is a problem for you in marketing?

SINGLETON: It's a major issue of the last three years.

SN: Don, does the lack of a national voice in seafood impact you? Do you see, in your work with the beef industry council, that they have an opportunity to sell more beef, which the seafood industry doesn't have?

SMITH: Well, I think the beef industry has had tremendous success with their campaigns. But their campaigns are very, very expensive. Cattlemen themselves finance that.

SN: Do you all agree that the consumption is down?

SINGLETON: I guess, if you believe what you read, but in my case, I say no.

FRANZBLAU: Same with my sales, and Rick is a totally different market. His market's used to seafood, more so than Texas or Oklahoma.

McGILLIVRAY: The same situation with us. We're happy with our business.

SN: Tell us how you're trying to sell more fish.

FRANZBLAU: With education, and by creating excitement and romance.

SN: How do you create excitement and romance?

FRANZBLAU: Just by having someone behind the case who's enthusiastic. A salesperson who's excited about what they do for a living. Excited about the buys they get. Excited if they're getting aquaculture products. Excited that they're getting these fresh shrimp where the boats go out to shrimp especially for H-E-B product.

We've done some advertising also. We've done some television advertising with our shrimp company where we've shown three generations of our shrimpers. It's very romantic and it shows us inspecting the product. It's the reason why they're buying shrimp at H-E-B -- because we inspect the product above what the government asks. We show the boats going out and fishing at night. That creates the romance and excitement.

You have to hawk your fish. Walk around the store with your fish. Throw your fish like they do in Seattle. Everyone stops to watch that. You don't see the butchers throwing cows around do you? SN: Rick, how has your department changed in the last two or three years?

CAVANAUGH: We haven't done much and that's the incredible thing about our sales crew. We haven't really added any space. We haven't done anything to be different. It's really just the trust in customers and building on that trust. And repeat sales. That's really what it comes down to. If repeat customers like it, they're going to come back and they're going to tell their friends. We just keep building on that until it snowballs.

One thing we've definitely stepped up is our demo program. We sometimes have three different demos in the store a day, with seafood usually three or four times a week. You have to get it out. People have to try it and see. There are a lot of people who don't know what's for dinner until they come into the store. There's a real opportunity there. Especially in seafood.

I'd say more than half the shoppers walk up to the seafood case and I ask them if they're looking for anything in particular, and they say, "No, I'm just looking around, getting ideas."

SN: Where does training come in?

McGILLIVRAY: One of the biggest challenges is getting ultimately to the consumer. How do you convince them that your product is a good quality product, and make them feel confident that they're going to get safe, wholesome product from your department, and when they get it, they'll know what to do with it?

It's easy to train staff in terms of logistics of how to handle the product, but training them in how to communicate some of those aspects to the consumer so they can continue to drive sales I believe is the biggest challenge.