Why supermarket seafood purchasing is dropping

TOP TAKEAWAYS

Inflation and its after effects are helping to create a frosty fresh seafood merchandising environment.

Average per-pound prices for finfish were up 17.5% for the 52 weeks ending August 7, contributing to a 12.8% volume sales decline, reports Information Resources Inc. (IRI), a Chicago-based market research firm. Fresh shellfish, with a 3.8% average price increase, had a 22.2% volume sales decline.

Salmon and shrimp, two of the most popular species, had volume declines of 3.9% and 17.9% respectively, along with double-digit price increases.

On the bright side, volume sales of finfish and shellfish are up 6.1% and 5.7%, respectively, versus the three-years-ago period prior to the pandemic, and prices for some shellfish species are declining as supply chains strengthen and more cold storage space becomes available, said Chris DuBois, IRI senior vice president of the protein practice. Shellfish sales, he forecasts, “are going to pick up in the back half of this year.”

Nevertheless, changing shopper purchasing habits continue to impact category activity. Because many consumers perceive seafood to be a premium option, more are switching to familiar lower-priced proteins, including meat and poultry, said Anne-Marie Roerink, president of 210 Analytics LLC, a San Antonio-based market research and marketing strategies firm and publisher of the Seafood at Retail report.

In addition, while cost-conscious beef purchasers may switch from filet mignon to a less-expensive ribeye or strip steak, or move from lean ground beef to more affordable grinds with a higher fat content, seafood shoppers are more likely to drop out of the category, or confine their purchases to the most recognizable selections, Roerink stated. 

“It is unlikely that we will see inflation resolve meaningfully across many commonly purchased grocery categories,” she said. “That means concern about food inflation will continue to impact food purchases and consumption and may put prolonged pressure on fresh seafood sales.”

Related:Going beyond the conventional can boost seafood sales

WHAT'S THE SOLUTION?

To better maintain seafood’s appeal, merchandisers should spotlight products’ nutritional benefits and emphasize the cost savings from preparing seafood at home versus dining out, Roerink noted. 

Such initiatives are important as the active seafood shopper is a major contributor to overall store revenues. The average retail basket with fresh seafood totals $97.74, versus $47.85 without seafood, IRI reports. “Seafood customers are among the most valuable shoppers, so it is important to keep them energized, enthused and fully engaged in their store,” DuBois said.

Because more consumers are willing to switch stores for savings, operators should focus on offering enticing prices for the most popular selections, such as salmon, while publicizing the products with large feature ads and prominent in-store signage, he added. “Salmon is the anchor of the case and is part of the decision-making on where the consumers who drive big baskets will shop,” DuBois said. “Keeping competitive on price matters.”

Among the active salmon merchandisers is Seattle-based PCC Community Markets, which was spotlighting its buy-one-get-one-free offering for wild Alaska coho silver salmon in a recent promotion, according to David Sanz, meat and seafood merchandiser for the chain of 16 Seattle-area stores. “Inflation is making shoppers more frugal, which stalled the movement of some goods,” he said. “Because there is more supply than demand, I expect a trend toward pricing corrections as a result, which will be good news for consumers at checkout.” 

Higher seafood pricing also is leading to reductions in available seafood species in many outlets as operators seek to reduce the prospect of waste from declining shopper interest in less-familiar varieties, DuBose said. Such items include Chilean sea bass and catfish, which had year-over-year average price increases of 35.2% and 23.8%, respectively, and sales volume declines of 42.3% and 27.5%.

“Retailers will expand the number of species that they offer as prices come down, but now many are concentrating on just a few,” DuBois said. In the meantime, he added, retailers can help revitalize the seafood case by rotating additional species every few weeks and aggressively promoting the items. “That makes it seem they have more variety in the case without adding much,” he noted. “Finding creative ways to drive traffic and sales is a big deal.”

Indeed, providing shoppers with alternatives remains an important way to attract additional customers, said Russell Zwanka, director of the food marketing program and associate professor of food marketing at Western Michigan University in Kalamazoo. “There is a constant balance between controlling shrink and offering enough variety to satisfy the consumer’s need for variety and trial,” Zwanka said. “Not everyone wants salmon every time they eat fish.”

Operators, meanwhile, can make higher-cost options, such as halibut, more appealing by cutting the selections into portion sizes and spotlighting the per-portion rather than the per-pound price, Zwanka said. “A good seafood department offers a full range of options at multiple price points and portion sizes for customers,” he noted. “If you have the demographic who is willing to pay for the more expensive fish, keep carrying it.”