Riding The Wave
Stabilized seafood sales are coming ashore for many retailers, with promises of greater yields in the year ahead, finds PG's 2011 “state of the seafood department” report.
“Steady as she goes” aptly sums up the consensus of the majority of retail seafood executives polled in Progressive Grocer's annual Seafood Operations Review, when describing the department's overall performance in 2010.
Indeed, while most supermarket executives angled mightily to keep retail seafood prices on an even keel during the last year to stimulate sales, 35.4 percent of PG's 2011 seafood operations survey participants reported Increased sales during 2010, which, while roughly three points lower than the previous year's study, Is nevertheless encouraging for the high-shrink/labor-intensive department. Equally telling of the more stable retail seafood sales climate is the 44 percent of retail executives who reported status quo same-store seafood sales, paced by a considerably smaller 20.5 percent who lamented decreased comparable seafood sales vs. the previous year.
As the only retail seafood study of its kind in the marketplace, PG's annual “state of the seafood case” is based on the direct Input of senior meat and seafood officials surveyed from around the country who have “sole” responsibility for category procurement decisions for their supermarket(s).
Further Indicative of many retailers' renewed commitments to showcasing seafood more prominently in tandem with more nutrition-and health-conscious shoppers making their way to retail seafood counters, self-serve and frozen cases, seafood department profits were higher among 28.2 percent of this year's survey respondents. And although keeping seafood prices at competitive retails when battling rising labor and commodity expenses remains among the most vexing duties for retail seafood officials, nearly half (49 percent) of survey participants managed to keep afloat, reporting unchanged comp seafood profits. For another 22.4 percent of seafood survey respondents, however, seafood profits declined.
Lettuce Eat More Seafood
The National Fisheries Institute (NFI) is among the many industry and consumer groups vigorously cheering the recent release of the 2010 Dietary Guidelines for Americans (DGA), which recommend, among other things, that Americans increase their intake of fruits and vegetables, replace refined grains with whole grains, and increase the amount of seafood in their diets by replacing some meat and poultry.
For the first time, the U.S. government is also advising all Americans, including pregnant and breastfeeding women, to eat seafood at least twice a week for heart and brain benefits, vs. the twice-a-week recommendation that was previously limited to heart patients. In terms of recommendations for increased seafood consumption, the guidelines note that “moderate evidence shows that consumption of about 8 ounces per week of a variety of seafood, which provides an average consumption of 250 milligrams per day of EPA and DHA, is associated with reduced cardiac deaths among individuals with and without pre-existing cardiovascular disease.”
“The new dietary guidelines provide the scientific rationale for the health benefits, and now we need to focus on making fish and shellfish a more regular part of our meals,” says Jennifer McGuire, manager of nutrition communication for McLean, Va.-based NFI.“Seafood has gotten lost in the American diet, and as a result, we are missing out on the meaningful health benefits that the omega-3s in seafood provide.”
Perfecting the delicate balancing act between price and profit margins is indeed a tricky scenario all fresh food department leaders confront daily, but perhaps nowhere in the store is it more of a challenge than in the fresh seafood department, which must continually strive to keep prices affordable while absorbing a certain percentage of unit loss at the expense of “big-picture” gains.
SweetSpring Salmon Gets 'Super Green' Nod
As more seafood suppliers angle for a sustainable ethos, Seattle-based freshwater farmed-salmon company SweetSpring Salmon recently received “Super Green” status from the Monterey Bay Aquarium's “Seafood Watch.”
Recognized as a step above Seafood Watch's requisite “Green” designation, the “Super Green” ranking indicates a “Best Choice” seafood based on extensive laboratory testing required to establish PCB and mercury levels well below those typical of most wild salmon.
“We worked incredibly hard on developing our food science and seafood technologies program, which has resulted in our production of the healthiest salmon,” notes Dr. Phillip David, SweetSpring Salmon CEO.
The California-based aquarium's international Seafood Watch program is a widely recognized standard in seafood sustainability. With the goal of keeping oceans healthy by helping consumers and businesses make good choices about the seafood they buy, Seafood Watch publishes a guide that ranks the environmental effects of various types of seafood using color-coded categories based on “Best Choice” (green), “Good Alternatives” (yellow) and “Avoid” (red).
Wegmans Helps Seafood Leaders Stay Afloat
In the face of spiking commodity and fuel costs, Wegmans Food Markets at presstime pledged to hold the line on the prices of 40 key food items, covering about 200 SKUs and including a trio of the most popular seafood items: salmon, tilapia and tuna.
Nearly all of the products are sold under the Wegmans brand. “We can be more aggressive with pricing for our own brand because we have better access to information on the factors that determine costs,” explains Jo Natale, the Rochester, N.Y.-based grocer's director of media relations. “These products are already the best value in their respective category, and for that reason, they are also usually the top-selling brand in a category. Costs for many of these products have risen and may continue to rise over the next nine months,” notes Natale, adding that if retail prices reflected the true cost of goods, “it would mean an additional $350 to $400 annually for a family of four.”
Citing escalating fuel costs to transport products that are also placing additional upward pressure on prices, among other factors, Wegmans began a series of print ads in late February informing customers of the price freeze.
“News that food prices will rise is worrisome for our employees and our customers,” affirms the 77-store chain's CEO, Danny Wegman, “especially when folks are also dealing with higher gas prices. We hope that it will help knowing that prices will stay the same for the essentials, and that our commitment to consistent low prices overall is still in place.”
In the roundup of key challenges facing retail seafood executives, survey respondents cited shrink as the perennial top concern, followed by sourcing.
Another favorable indicator revealed in this year's Seafood Operations Review is the 46 percent of retail executives (vs. 40 percent last year) who reported offering full-service seafood departments in their stores, which, again, aptly reflects industry estimates that some, but not all, supermarkets, employ fresh fish and related seafood specialties as a destination department.
In the roundup of key challenges facing retail seafood executives — who were again asked to rank the seriousness of various issues on a scale of one to six — survey respondents cited shrink as the perennial top concern, followed by sourcing, which climbed from the fourth to the second rung from last year to this year, as the second-ranked culprit. Signifying heightened consumer awareness, and corresponding retailer interest in sustainability and product knowledge, environmental/social issues landed on the third rung of the hot-button issues lineup, paced closely by grocers' perennial point of apprehension, competition. Imports, meanwhile, rounded out the list of key concerns pinpointed by seafood survey respondents.
Shrimp, Salmon Top PG's Seafood Leaderboard
Shrimp, salmon and entrees rate among the fastest-growing/ best-selling seafood stalwarts, according to participants in PG's 2011 Seafood Operations Review survey, a breakout of which includes:
• Entrees
• Farm-raised Seafood
• Frozen Filets
• Hispanic Seafood/Fish Items
• IQF Filets
• High-quality Frozen Seafood
• Salmon
• Seafood Salads
• Shrimp
• Single-serve Filets
• Salmon
• Salmon filets
• Tilapia
• Value-added/Ready-to-cook
A breakout of costs relative to combined meat and seafood sales finds product costs, not surprisingly, garnering nearly two-thirds, or 67 percent, of the total pie. Departmental overhead costs were cited as the next-highest consideration, at 15.6 percent, followed by labor and packaging costs, at 11.4 percent and 5.9 percent, respectively.
When evaluating operational estimates for the combined fresh meat and seafood categories, this year's annual survey found the average selling space of both departments comprising approximately 2,375 square feet total, 86 percent of which is dedicated to fresh meat (all species), with the remaining 14.2 percent devoted to seafood, the latter of which appears to be picking up more space in the frozen and self-serve cases over the fresh service seafood case, vs. previous years' studies.
Restaurants Right at Home
When the economy took a dive, Americans took to dining at home. And while some say the worst is over, consumers have yet to return to restaurants with their pre-recession gusto. According to a January 2011 report from The NPD Group, based in Port Washington, N.Y., restaurant traffic has been down since 2008, and the number of U.S. restaurants declined by 1 percent in 2010, equating to a a loss of 5,551 restaurants, from 2009.
Research indicates that as consumers continue to give restaurants the cold shoulder, frozen foods have become a hot commodity. The results of a fall 2010 consumer survey from Packaged Facts Fall found that 19 percent of consumers said they were eating more frozen foods since the recession began. Of those consumers, 66 percent said they were eating less often at fast-food restaurants and 61 percent said they were eating less frequently at sit-down restaurants.
“A lingering effect of the recession is that consumers are eating at home more,” says Don Montuori, publisher of Rockville, Md.-based Packaged Facts. “This trend has had a positive impact on the frozen foods market, as consumers turn to the freezer aisles to supplement more expensive fresh produce and meats. Additionally, microwaveable frozen products provide a quick and easy lunch at work for those looking to avoid pricey lunches out.”
A growing number of savvy restaurant chains have realized that if their patrons won't come to them, they can continue to reach customers through the frozen food case of local supermarkets. P.F. Chang's, Jamba Juice, Romano's Macaroni Grill and many more restaurant brands are now available conveniently frozen and reasonably priced for value-conscious shoppers.
The average retail seafood department's 2.7 percent share of total supermarket sales remained unchanged from last year. Seafood department gross margins were estimated at 31.7 percent this year, vs. last year's 32.6 percent tab.
With the average supermarket employing an estimated 4.6 full-time meat and seafood associates and 2.2 part-time staff members, an estimated 5.7 full-time store equivalents are working 224 total weekly employment hours, with weekly sales per employee hour totaling $208. As a percent of total meat/seafood department sales, the average combined labor cost was found to be roughly 11.8 percent. Of the combined meat and seafood department, seafood accounts for 12 percent of the total pie, a figure that has been bolstered in recent years by more store-made signature specialty seafood items, including oven-ready/value-added and convenient table-ready options.