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What's in Store: Supermarkets streamline to constrain shrink

Retailer offerings cut down on waste, product losses

United Supermarkets limited its SKUs to increase turnover and reduce shrink. - Photo courtesy of United Supermarkets
By Christine Blank
December 01, 2013

As the culprit of millions of dollars in annual losses in fresh seafood departments, shrink is probably retailers’ most elusive problem. As a result, many seafood retailers — along with their distributors — have developed programs and techniques to combat waste. 

Things began to turn around in the world of fresh seafood shrink after the 2008 economic crash forced the issue. Reducing waste in every facet of retail became an absolute necessity.

As a result, many supermarket chains began carrying fewer varieties of fresh seafood, cut down on the amount of seafood purchased or both. They stepped up their use of technology to track seafood purchases and shrink. Whereas in the past, supermarket seafood departments offered nearly every kind of seafood item their customers might request, seafood directors and buyers now understand that it is OK for customers to wait on a unique item that needs to be special-ordered.

“We tried to be all things to all people. If two or three customers asked for Dover sole, we would start carrying it,” says Scott Nettles, senior director of perishables for Lubbock, Texas-based United Supermarkets.

But around two years ago, United undertook a massive “SKU rationalization” effort in its fresh seafood department, examining the volume of each species sold weekly. “We used to have 70 to 80 different SKUs in some of our cases and we have cut back to around 30 items. We now carry the best-selling items, which made our sales go up and increased our [product turnover],” Nettles says.

Now, United keeps plentiful supplies of catfish, farmed salmon, wild salmon, wild shrimp, farmed shrimp and tilapia on hand, along with cod, snapper, halibut and more. And, instead of carrying unusual items such as frog legs behind the seafood counter, stores keep those specialty items frozen in the back, ready for when customers request them.

“Our shrink rate has gone from 18 or 20 percent down to around 10 percent. [SKU rationalization] has saved us around $30,000 a week,” Nettles says.

The two-store Casey’s Market in Western Springs, Ill., has reduced shrink by ordering smaller amounts from its distributor and comparing sales for the upcoming week to last year’s sales during that week. “We keep track year-to-year what we are doing, so we know a certain week is going to be slower because of an event going on,” says Joe Lane, manager and seafood purchaser for Casey’s Market

Casey’s shrink has dropped from between 15 and 20 percent to 10 percent or less by ordering smaller amounts of less-popular species. “We have a great supplier: Fortune Fish. If I just want 4 pounds of something or even 2 pounds, they sell us just that amount,” Lane says. While the lighter volume causes Casey’s to run out of a particular item from time to time, “customers would rather see us run out toward the end of the day than have stuff sitting there the next day,” Lane says.

Fortune Fish in Bensenville, Ill., supplies a fresher product than some of Casey’s previous suppliers, Lane says, which also increases shelf life and reduces shrink. In addition, Casey’s customers have gotten used to ordering specialty seafood items the day before, and don’t seem to mind that those items are not featured in the case daily.

Distributor Pier Fish in New Bedford, Mass., is delivering more small packs to retailers to reduce shrink. “For some retailers, we do pack sizes as small as 5 pounds and for others, we do pack sizes as small as 2 to 2.5 pounds,” says Chuck Anderson, director of retail sales for Pier Fish.

Pier Fish has also improved its fish packaging and plant technologies to extend seafood’s shelf life. “We use ozone throughout our plant, so, when the fish leaves the plant, they typically have a shelf life of between seven and 14 days,” Anderson says.

Training of seafood department staff is also essential for reducing shrink, retailers and distributors agree. “We teach them how to rotate products in the cooler and in the case. We talk to them about ordering products every day and ordering less of certain species,” says Anderson, a retail seafood veteran. Retailers can also improve shrink by rotating species. “For example, you can get grouper in on Monday and snapper in on Thursday. Then, you are most likely to have one or the other for the customer [at all times],” Anderson says.

Another effective shrink-reducing technique for United stores is daily tracking of the seafood items that are thrown away. 

“Each week, the stores pull their list of the top 10 shrink items. If they see they are constantly having a problem with the same item, we focus on that item,” Nettles says.

In addition to reducing the number of top-shrink items ordered, United’s seafood staff makes an effort to sell more of those products. “Since we demo items regularly, we try to get new people to try it,” Nettles says.

Contributing Editor Christine Blank lives in Lake Mary, Fla. 


Find other SeaFood Business articles discussing shrink here.

  December 2013 - SeaFood Business 

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