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Case Study: Damage control

When bad headlines hit, provide answers - fast

No communication can be the worst PR move a retailer
    can make in times of crisis. - Photo courtesy of Safe Harbor and Bristol
By Lisa Duchene
May 01, 2008

When headlines piled up over the past year about toxins in fish farmed in China, consumers nationwide took note. Russ Casteel, seafood merchandiser at Haggen's, operator of 33 supermarkets in Washington and Oregon, saw sales of Chinese tilapia drop dramatically following New York Times reports in late 2007 that the fish is raised in polluted waters and fed illegal drugs and pesticides.

While the seafood industry refuted the newspaper's report, that mattered little to Casteel's customers, who stopped buying tilapia. He took swift action, working quickly with Haggen's suppliers to source tilapia from Ecuador instead of China (tilapia was the only species the retailer sourced from the country). The Food and Drug Administration, which last July began detaining imports of Chinese farmed basa, catfish, shrimp, eel and dace (a carp relative) because of drug residues, did not take action against Chinese tilapia. Even so, once he saw the drop in tilapia sales, Casteel was concerned that consumers would believe all seafood from China was unsafe.

"We're just trying to be a 
consumer advocate in our business place," says Casteel, "and take precautionary steps and go beyond what the government expects of us to make sure customers get the best quality of seafood."

Casteel's response was precisely what supermarket loss-prevention experts recommend retailers do when news of a recall, toxins or other negative news make headlines: React quickly and tell your customers about it.

Besides failing to act when tainted food is at issue, the next-worst thing retailers can do is neglect to tell customers what action the store took to protect them, says Dan Raftery, president of Raftery Resource Network, in Antioch, Ill., who counsels retailers on damage control and reducing losses.

"The negative connotations that go on with a lack of communication can very easily be greater than the actual negatives of the situation," says Raftery.

Another common mistake retailers make is not addressing the issue fast enough, he says. "You've got to have a plan in place and in shape that includes different levels of communication response. You have a 24-hour period [following headlines] in which to respond."

De mand is great among supermarkets for Food Marketing Institute trainings in how to best deal with recalls, says Bill Greer, FMI spokesman. [See SFB April '08 Trend Watch, p. 38, for more information on handling recalls]. American shoppers' confidence in the safety of grocery store food dropped to 66 percent in 2007 from 82 percent the previous year, according to FMI research conducted in January 2007.

The FDA issued about one dozen seafood-related recalls or warnings between January 2007 and March 2008, none of which captured national attention like the issues over Chinese seafood and a January New York Times story that mercury levels in sushi from five of 20 Manhattan establishments tested higher than 1 part per million, the level at which the FDA can pull fish from the market. (The National Fisheries Institute countered that the story was unfair and inaccurate.)

Regardless, headlines often get the attention of typical seafood consumers, who tend to be middle to upper class, well-informed and well-educated.

"Our customers are extremely educated," says Marty Gaul, seafood buyer/merchandiser at Heinen's, a 17-store upscale grocery chain in Cleveland. "So when something happens we will get the calls."

Customers often ask about methylmercury, and Heinen's employees tells them the benefits of eating seafood outweigh the risks and "everything in moderation" is a wise rule to follow. Heinen's handles each question and often receives positive feedback from customers on how it has answered their questions and concerns, says Gaul.

Heinen's holds regular training sessions for its seafood managers and associates. In case of a problem, Gaul is the information conduit, tracking down and relaying information to everyone.

When retailers face a recall or news over toxins in seafood, says Tom DeMott, COO of Encore Associates in San Ramone, Calif., the biggest mistake is not taking the issue seriously.

"The retailer needs to be asking those questions before the customer comes into the store asking those questions," says DeMott. "I'm the buying agent for the consumers that shop in the store. They're seeing and reading and watching the same news that everybody else is watching and they're going to have questions. It's not so much whether I believe it or not. My position is not to defend the industry. My position is to take care of my customers."

DeMott's advice:

• stay on top of information;

• know in advance who in the company will comprise an emergency team in the event of a recall. The team should include people from the company's public relations and legal departments;

• take appropriate action;

• make decisions about whether to take voluntary action, such as sourcing around the product of concern;

• arm associates with information about whether you still carry the product and why; and

• follow up with stores as an issue unfolds to gauge the level of customer concern and, if necessary, tweak the message.

Some retailers are taking a proactive stance on mercury. This spring, Haggens plans to launch a mercury-testing program with Safe Harbor, a testing company in San Rafael, Calif. On Haggens' behalf, Safe Harbor will test a sample of every 25- to 50-pound case of finfish and crabs the retailer sells. The products, which will be tested at the supplier level, represent 90 percent of the seafood in Haggens' case. At point-of-sale, they will bear Safe Harbor-certified signage, indicating mercury is below a level that varies by species and is stricter than that of the FDA, according to Safe Harbor. Brochures will also be available to consumers at Haggens' seafood departments to explain the mercury testing, says Casteel.

Bristol Farms near Los Angeles and Holiday Quality Foods in Northern California are among other retailers using Safe Harbor's seafood testing.

Haggens is investing in mercury testing on behalf of its customers and to ensure their confidence in purchasing seafood at its stores.

"To us, that's worth the value," says Casteel.


Contributing Editor Lisa Duchene lives in Bellefonte, Pa.



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