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Case Study: Competition crunch
Jensen's makes fresh fish work in the desert
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.