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Case Study: Competition crunch

Jensen's makes fresh fish work in the desert

Specialty retailer competition in the Coachella Valley
    puts the pressure on Jensen's. - Photo courtesy of Jensen's
By Lisa Duchene
June 01, 2008

When retail prices for Copper River salmon topped $20 per pound in 2003, Frank Dorame learned an important lesson about his customers. The meat and seafood buyer at Jensen's Fine Foods in Palm Desert, Calif., worried the price had climbed too high.

But Jensen's customers didn't flinch. "Our customer wants what they want, when they want it," says Dorame.

Dorame works directly with a Cordova, Alaska, buyer and typically has Copper River salmon in Jensen's stores within 24 hours of the fishery's mid-May opening, about a week ahead of his competitors. This gives him the luxury of setting his price for the prized salmon.

Last year, Jensen's customers paid $30.99 per pound for the season's first Copper River kings. This year, Dorame expects they will shell out $37 a pound, meeting a forecasted retail price driven up by a weak U.S. dollar and the recent closure of wild salmon harvests on the West Coast.

Despite customers' willingness to dig into their pockets for what they crave, Dorame must stay on his game as the number of specialty retailers competing in the Coachella Valley region is only increasing.

To compete, Dorame continually looks to promote special bonuses and added values like Cypress Island salmon farmed in Washington state, the season's first halibut and Dungeness crabs sold cracked and cleaned at $6.99 per pound when plentiful. Earlier this year, Dorame promoted Florida grouper and stone crabs at $16.99 and $17.99, respectively, providing mallets and printing the famous Joe's Stone Crab recipe for mustard sauce as part of the newspaper ad.

Such promotions are moneymakers and boost sales in the rest of the case and store, says Dorame.

"Those are some of the things that bring some excitement and let people know, 'Wow, their fish must be fresher than anybody else's,'" says Dorame. Ideally, seafood products must "eat right, have great presentation and the bells and whistles I can sell."

For most of its 68-year history, Jensen's had the area's specialty foods market largely to itself. Gene Fulton purchased the business in 1981 from founders Einer and Marie Jensen, who opened the original market near Lake Arrowhead in 1940. The Fulton family still owns and operates the markets, which now number six. Three stores are in the region's desert cities (Palm Springs, Palm Desert and La Quinta) and three are located in nearby mountain towns (Lake Arrowhead, Running Springs and Wrightwood).

The Running Springs and Wrightwood stores offer self-service, frozen seafood while the Lake Arrowhead store and all three of the desert stores offer full-service, fresh seafood cases.

Palm Springs, a destination area for retirees, snowbirds and empty-nesters, is in the midst of a growth spurt - 16 percent from 2006 to 2011, well above the national projected population growth of 5 percent, a fact hardly lost on food retailers. Costco in late 2006 opened a store about 25 miles away in La Quinta, its second store in the region. Bristol Farms opened a 40,000-square-foot store in Palm Desert in January 2007. Whole Foods has mentioned Palm Desert as one of 27 stores in development in California. Tesco operates two Fresh & Easy stores in the Coachella Valley.

Henry's and Trader Joe's have been players in the region's specialty food market, which also includes traditional grocers Ralphs and Vons.

The recent openings have taken a bite out of business, says Dorame, but seafood sales seem to be recovering. "We're either seeing more population growth or people are coming back."

The fierce competition is all the more reason Jensen's must understand its customers.

Jensen's customers tend to have a fair amount of disposable income, are well-educated and ask a lot of questions. Many of them are personal chefs.

The four full-service seafood departments each offer a 16-foot case, 75 percent of which is finfish sold fresh if it's in season or previously frozen if out of season. Popular species include wild and farmed salmon, Chilean sea bass, halibut, cod, Pacific snapper, Petrale sole, swordfish and No. 1 ahi tuna. Dorame sells Washington White Cane-branded sockeye salmon caught by a legally blind fisherman, at a promotional price of $18.99 per pound.

Shellfish species dominate the remaining 25 percent of the case and include U-10 scallops from California's Baja Peninsula, Prince Edward Island mussels and East Coast littleneck clams. Due to customer concerns about farmed shrimp, Dorame instead sells 90/120 wild Canadian sweet pink shrimp, and four sizes of Mexican wild, no-chemical-added shrimp. The 21-25 count is sold raw for $16.99 per pound, then cooked in-store and sold peeled and deveined as 26-30 for $19.99 per pound. The U-15 Mexican shrimp sells for $20.99 per pound raw or for $25.99 cooked, peeled and deveined in a 16-20 count.

Jensen's sells a handful of value-added items including lemon pepper and Cajun catfish, salmon pinwheels and seafood kebabs. Value-added items have done well in the meat section, not in seafood, he says, adding that may be due to a higher percentage of personal chefs shopping for seafood or a misperception that the value-added items are made with older fish.

What's certain is that Dorame will keep tweaking his approach to value-added products until he finds what works.

"I'm looking for those little niche things," he says.

 

Contributing Editor Lisa Duchene lives in Bellefonte, Pa.

 

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