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What's in Store: Fresh promotions
Exclusive Perishables Group data shows promo spending tied to department performance
By Christine Blank
July 01, 2009
Looking back at the biggest seafood sales gainers and losers
in 2008, retailers can learn a thing or two about the way they
are marketing species such as crab, lobster and tilapia. A
decline in supermarket promotional dollars allotted to
promoting tuna, tilapia, trout and swordfish in 2008 may have
contributed to a decline in sales of these items compared to
previous years.
According to new data provided exclusively to SeaFood
Business by The Perishables Group, crab and fresh tuna
experienced the biggest drop in supermarket sales in 2008,
while seafood sauces and seasonings, and fresh scallops,
lobsters and catfish were among the categories that had sales
gains. In light of the economy, the good news is that overall
seafood department sales in 2008 remained relatively flat with
a 0.1 percent increase, says the Chicago-based market research
firm that tracks and analyzes supermarket sales data of fresh
foods.
"For crab, volume and dollars were down significantly. It
may be a shortage of product that put weakness on the market,"
says Steve Lutz, executive VP of The Perishables Group. In
2008, sales of crab dropped a whopping 18.1 percent and
crabmeat sales were down by 9.6 percent.
Seafood sauces and seasonings are likely selling well
because shoppers are preparing more seafood at home, rather
than eating out in a recession. And catfish sales rose in 2008,
likely because it is an attractively priced product with a mild
flavor, similar
to tilapia.
"Our frozen catfish fillets [sales] are up 15 percent this
quarter, compared to the same quarter last year, and our fresh
catfish fillets are up 32 percent," says Scott Nettles,
director of meat and seafood for United Supermarkets in
Lubbock, Texas. Catfish is United's top-selling seafood item
behind tilapia, which also realized significant sales gains for
United in 2008.
Still, a drop in promotional dollars spent by grocers on
catfish, tilapia, trout and tuna in December 2008 seemed to
correspond with a decline in sales for those species.
"Catfish had a [nearly] 30
percent decline in promotional
dollars during December. You can see the impact that this had,"
says Lutz.
While catfish sales rose by 6 percent and volume increased
by 4.7 percent throughout 2008, sales and volume growth last
year was not as high as in past years.
In addition, promotional dollars for tilapia fell 36.2
percent in 2008, trout dollars were down 48.3 percent and tuna
dollars dropped by 26.5 percent.
Tilapia sales posted a modest 1.2 percent sales increase in
2008 over 2007, while tilapia volume dropped 11.1 percent for
the year, says The Perishables Group. Tilapia prices rose by
13.8 percent in 2008, which explains
why sales were up while
volume was down.
"The data a year ago really showed that the tilapia growth
was coming at the expense of catfish. [In 2008], catfish may
have benefited from the reduction in tilapia volume," says
Lutz.
China's tilapia production had dropped as much as 80 percent
in early 2008, according to the Food and Agriculture
Organization's "Tilapia Market Report" for April 2008.
Still, some seafood merchandisers have learned to promote
the department more heavily during a recession through ads and
events, and have benefited from those efforts.
United maintained its seafood promotional dollars in 2008
and early this year, instead of cutting back in a tough
economy.
"Our circular in general is smaller, but our space devoted
to seafood is not any less. In
addition, we have tried to put
information in the ad on omega
-3 [fatty acid] content along
with recipes," says Nettles.
As a result, United's seafood sales account for around 1.25
percent of total store sales in 2008, which is up from around 1
percent in 2007.
"In the fresh seafood area, I think we are gaining some
share from our competitors. We have put a big focus on
procurement, and we retail lower than Whole Foods and [HEB's]
Central Market," says Nettles.
Meanwhile, the increase in catfish sales in 2008 can also be
attributed to the state of the U.S. economy. While the Texas
economy is not suffering as much as other areas of the country,
shoppers are still buying lower-priced finfish such as tilapia
and catfish and, for the most part, avoiding higher-end
selections such as orange roughy and halibut,
says
Nettles.
According to The Perishables Group, orange roughy sales
suffered in the first quarter of 2009, realizing a 21 percent
drop in dollar sales in supermarkets compared to the first
quarter of 2008, while halibut sales fell 27 percent during the
same period.
Fresh tuna sales dropped 3 percent last year, and shrimp was
down slightly, by 0.3 percent. Shrimp - one of the most popular
seafood items among grocery shoppers - saw a 3.1 percent drop
in volume and a 2.9 percent price increase in 2008.
Once again, though, spending on promotions and competitive
pricing helped some retailers in the shrimp market.
"Last year we introduced a private label frozen shrimp
program, and saw a 30 percent increase
in sales [of frozen
shrimp],"
says Nettles.
Meanwhile, in the first quarter of 2009, lobsters showed
the highest sales and volume
increases in supermarket seafood
departments, according to The Perishables Group.
Snapper, haddock and tilapia also showed healthy gains
during the first quarter of this year. Lobster sales jumped
52.5 percent and volume soared by nearly 130 percent during the
period, thanks to lower retail prices. In 2008, lobster sales
also did surprisingly well in a tough economy, rising by 6.7
percent over the previous year. Canadian lobstermen report a
lack of demand for lobster, resulting in excess supply and
lower prices.
Still, for many supermarket shoppers, lobster is out of
their price range.
"In our area, this economy has priced a lot of people out of
the market. Our overall lobster sales are way off, and our
whole lobster sales are down 15 percent from last year," says
Nettles.
In other good news for supermarkets this year, snapper sales
grew 21 percent in the first quarter compared to the same
period in 2008, while haddock continued its growth spurt with a
30 percent jump in dollar sales in the same period and a 51.3
percent increase in volume.
"Double-digit increases look an awful lot like there was a
change in availability, especially with a reduction in price,"
says Lutz of The Perishables Group.
Contributing Editor Christine Blank lives in Lake Mary,
Fla.