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Retail Report: Lobster economics
Sales volume skyrockets when prices drop
August 05, 2011
As the economy bottomed out in 2008 and 2009, average retail lobster prices dropped 31.1 percent from a high of $11.41 in 2007 to $7.86 in 2009. As the price came down, volume skyrocketed, with total volume in stable stores increasing 149 percent from 2007 to 2009, bringing weekly store sales up to $248.
Through this time period, retailers used promotions to move volume and consumers responded. The percentage of volume sold on promotion increased from 40.7 percent in 2006 to a high of 57.7 percent in 2009, the same year with the highest volume percent lift on promotion at 320 percent for the year. In 2010, the average retail price increased almost 6 percent to $8.29. As the price started creeping back up, volume declined by approximately 9 percent, which brought overall weekly dollars per store down to $238.
According to SeafoodSource, the recent boom of prosperity in China has increased the demand for the now iconic symbol of wealth, American lobster. This demand has continued to drive the price of lobster back up, with the average retail price during the 52 weeks ending April 30, 2011, increasing 10.4 percent from the prior year. Weekly lobster supermarket dollar sales per store decreased 3.6 percent, while the seafood department as a whole only decreased 1.3 percent.
Nationally during the 52 weeks, weekly lobster sales averaged $241 per store. Sales peaked during the week of Jan. 1, at $934 per week per store, corresponding with Christmas and New Year’s. The second major peak for lobster was the week of Feb. 19 due to Valentine’s Day. The weeks with the lowest sales were the last week of October and first week of November, with sales of $88 and $111 per store, respectively.
The East region had the highest average weekly lobster sales with $639 per store, 165 percent higher than the national average. The East accounted for 49 percent of all supermarket lobster sales in the nation. Lobster sales in the West decreased the most in the past year, from $211 per store to $182 in the 52 weeks, as average retail prices increased 27.6 percent. Lobster in the East region contributed the most to seafood department sales, at 6.4 percent, while the West ranked second at 3.5 percent.
With increased Chinese demand for American lobster, prices will likely continue an upward trend. With the U.S. economy still in a fragile state, higher prices could continue to drive lobster volume sales down in U.S. supermarkets.This sales review is provided by Perishables Group, an independent consulting firm in Chicago focused on innovation and creating value for clients in the fresh food industry. Reported results are for the 52 weeks ending April 30, 2011, compiled from grocery stores nationwide, representing 63 percent of national supermarket ACV share. Sales data provided by Perishables Group FreshFacts® powered by Nielsen.