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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.


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