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Global Retail: Dodging headwinds

Value-added growth a welcome tonic for fish sales

By Jason Holland
November 01, 2012

The economic crisis hasn’t been kind to Europe’s retail industry. A declining grocery market, forged by a record drop in consumers’ disposable incomes, has chipped away at the bottom lines of many supermarkets. As the most expensive protein, seafood has been in a vulnerable position throughout the recession, as households switch to less expensive options. And yet there is new cause for optimism in the market.

Edward Garner, director of international consumer research group Kantar Worldpanel, told delegates at the Value Added Seafood 2012 conference, held in London at the end of September, that while a sobering air of austerity remains, there is “some positive bouncing back” in the U.K. chilled fish market after almost six years of stagnation.

The growth of chilled fish [fresh, sometimes previously frozen] sales started to slow in 2006, two years ahead of the economic crisis, as a result of the high retail prices. At the same time, frozen fish sales started to creep up for the first time in many years, while sales of chicken — the cheapest protein on the market — soared. 

Value-added products, sales of which have grown 13.5 percent year-on-year, are driving chilled seafood’s growth. Several factors have contributed to this welcome resurgence, including a greater emphasis on customer convenience and value, while inflation has fallen from last year to improve the economic backdrop.

In volume terms, the frozen fish category remains larger than chilled, but because of the retail prices paid for the latter — an average of £10 (€12.46/$16.10) per kilogram — compared with frozen at £6 (€7.48/$9.66) per kilogram, chilled is the dominant market. It should be noted the average price of chilled fish has grown 5 percent year-on-year.

Overall, chilled fish sales have grown at 6.8 percent this year, generating an additional £89.4 million (€111.4 million/$144 million) in a sector that is now valued at £1.4 billion (€1.7 billion/$2.3 billion), which is almost double that of frozen fish at £760 million (€947.3 million/$1.2 billion). 

Garner says the growth is all the more commendable because it hasn’t been achieved by simply putting prices up. He confirms chilled fish prices have increased by 5 percent over the last year but that the volume sold has grown by 1.7 percent. 

“That’s good news for the sector — to see prices and volumes both go up,” he says.

But while supermarkets dominate U.K. retail fish sales with approximately 80 percent of the market, they face the same consumer headwinds that have always plagued the category: Consumers perceive it to be expensive, they’re often unsure how to cook it and it has a short shelf life. And more recently, shoppers have become better informed about issues at sea and have anxieties about sustainability. 

And yet, the fish category is not bereft of tailwinds. Garner says there’s a lot of customer-enticing “retail theater” that comes with fish counters; there’s the acknowledged health of a diet comprising seafood; and sustainability can be a positive story if appropriately communicated.

“There’s also the guaranteed cooking success of value-added products, which is one way of getting past the kitchen anxiety,” he says.

One of the most successful recent value-added retail launches is Asda’s Fish Made Simple initiative, which combines the theatrics of a fish counter with the convenience of a cook-ready product.

Launched in March, the Fish Made Simple campaign has in-store fishmongers help shoppers choose from around 20 species of fish; customers then select their preferred marinades, sauces, flavored butters or crumb toppings; and finally, they choose a cooking method so it’s handed over in either a ready-to-cook microwave bag, oven bag or BBQ foil tray. 

David Mainon, Asda’s senior technical manager for meat, fish and poultry, says the idea was developed a few years ago when the retailer realized its fish sales weren’t where they needed to be, despite having 3 million of its 18 million weekly customers buying fish on a regular basis.

The Walmart subsidiary therefore decided to seek inspiration from fishmongers both home and abroad, as well as from other protein sellers, most notably McGee’s Butchers in Northern Ireland. On evaluating its research, it concluded that it wasn’t appropriate to offer customers masses of flavored fish from its counters and that it would be more cost-effective and give more theater if it offered toppings as a free addition.

“Customers need inspiration on how to cook a product so we’ve now got our fish trainers going around the stores, advising colleagues on how to prepare fish and how to deal with customers and meet their expectations. We’ve reduced the headwinds but we know we haven’t got it right; we know there’s more work to do,” says Mainon.

“It’s about getting the repeat purchase; you need them coming back, week after week.” 

Recent data suggests Asda has hit upon a winning formula with Fish Made Simple: Its fish sales have increased 12 percent year-on-year, contributing to an overall growth of 19 percent. And yet Mainon concedes that supermarket fish counters are rarely profitable in the U.K. market; they are more of a tool to attract the desired customer.

“With any food that you sell, on some lines you’ll make a profit, on others you won’t,” he says. “The idea is you entice your customers in with good quality products and if you make a profit we’re all happy. But you have got to meet your customers’ needs and sometimes that means you are not going to make as much money as you would want to.”

Garner agrees with Mainon’s assessment, saying that it isn’t necessarily a problem if a store has an unprofitable fish line. 

“You have to look at what else customers are buying, because without a fish counter the whole store would suffer,” says Garner.

“The larger retailers will have a fish counter in the same way that they will have a bakery department; it sends a strong message about fresh food to the public.” 

In capitalizing on the rejuvenation of chilled, Garner reckons future retail innovation should reflect both the austerity of consumers’ wallets as well as the obstacles that seafood traditionally faces, like lack of cooking confidence. At the same time, retail leaders like Mainon have learned that doing too much often confuses consumers; they need a simple concept that they can immediately buy into or they will shop in another department.

Meanwhile, Melissa Spiro, fish buyer with Waitrose, says fish should play more on the emotions of consumers. As part of an ongoing research program, Spiro recently went shopping with one of the store’s customers, a housewife, and then went home with her afterward to discuss what she had bought and why.

“Almost everything she had bought was on a list; the only extra item she put in her basket was because of an emotional attachment to it,” reveals Spiro. “It was, ‘I know my son will eat that for breakfast and he needs some good food inside him before he goes to school.’ I don’t think we have fully used that emotion with fish — where it comes from, the health benefits, etc. I think that’s a big opportunity.

“We want to prepare wholesome food for our families but time pressure means we quite often can’t do that from scratch. Value-added provides a solution to that problem; the product is much simpler for the customer but the end product is still wholesome. And people love to eat fish; they know it’s good for them,” she says.

Contributing Editor Jason Holland lives in London

November 2012 - SeaFood Business    


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