« December 2007 Table of Contents
Case Study: Fast feedback
Seafood retailers slow to adopt category management tools
By Lisa Duchene
December 01, 2007
A fabulous week of salmon sales for your store may be 10,000
pounds. Then again, if your competitor a half-mile down the
road sold 20,000 pounds that same week, it wasn't such a good
week after all.
To know the difference between celebrating sales and fixing
a big problem, you'd have to know the total amount of salmon
sold in a geographic region where your company has stores.
Retailers well versed in category management have this kind of
Category management helps retailers analyze past sales to
improve future performance. Most retailers have plenty of their
own sales data, but not sales of an entire category of product
sold in a specific region.
"Knowing you're not with everybody else helps to understand
why business might be off in that area," says Joe D'Alessandro,
senior director of seafood merchandising for The Great Atlantic
& Pacific Tea Co., a 400-store Northeast c h ain that
utilizes category management.
D'Alessandro's team turned to category management a little
more than a year ago to realize seafood sales at the company's
Super Fresh stores in Baltimore trailed their competitors.
Pricing and quality was an issue, so the store negotiated
better cost for better quality product and lowered prices.
Those stores now run a high positive sales trend, says
"If we're not No. 1, we're trying to find out why," he says.
D'Alessandro can't imagine retailing without category
management as a tool. Doing so would be like writing a book
without use of a dictionary, he says.
"There's so much information in there if you know how to
filter it," he says.
Another Northeast retailer that has used category management
for about a year says that since retailers sell seafood in
different departments - frozen shrimp and fish sticks can often
end up in the center of the store instead of the seafood
department - the data must be used carefully.
"It is a good tool for benchmarking," he says. "With that
tool, combined with other things, we might make all sorts of
different decisions," such as changing pricing or increasing
the frequency of advertising, says the retailer.
Retailers familiar with category management are likely in
the best position to compete in high-stakes perishables
categories like seafood.
"Unless you have a category-management business plan laid
out, you're not necessarily competing with all of your guns
blaring at an important time," says Tom DeMott, COO of Encore
Associates, a perishables consulting firm in San Ramon, Calif.
Encore sells analytical tools and templates to help retailers
analyze category sales data.
In recent years, competition from super centers and
specialty retailers has eroded sales at traditional grocers,
which had to elevate their perishables status to compete.
According to a recent Packaged Facts market report,
supermarkets still dominate perishables sales by a comfortable
margin. Excluding the frozen foods and floral departments,
supermarkets rang up 71 percent of total retail fresh foods
sales in 2005, or about $163.8 billion, versus 13 percent, or
$29.8 billion, in super centers.
Until recently, the data that allows retailers to use
category management in the center store wasn't available for
Information Resources Inc.(IRI) in Chicago tracks sales data
for packaged products, or those bearing a UPC code placed by
the manufacturer. But that method leaves out "random weight"
products like fish fillets, apples or lettuce that typically
aren't coded until they're rung up at the cash register.
DeMott, at Encore, worked with Nielsen 10 years ago to
capture some of that data and offer it to retailers and
suppliers. Fresh Look Marketing, a firm that spun off from IRI
in the last few years, now sells that random-weight data.
The Perishables Group, also in the Chicago area, for the
last two years has sold various packages of random-weight data,
gathered by A.C. Nielsen, to retailers and suppliers. Prices
range from $5,000 to hundreds of thousands of dollars,
depending on the data package. Nielsen captures store data from
the majority of U.S. grocery retailers, explains Steve Lutz,
executive VP of the Perishables Group and author of SeaFood
Business ' monthly Retail Report.
"Generally speaking, we're going to capture two-thirds of
the seafood dollars generated by grocery stores nationally,"
says Lutz. "It's higher in some markets and lower in some
markets where the reporting is not available."
There is no firm data about what percentage of grocery
retailers are using category management techniques for their
seafood departments, but DeMott estimates it's fewer than 25
Jim Wallace, VP of perishables procurement at C&S
Wholesale Grocers in South Hatfield, Mass., agrees the number
is small. "If they do have that data," says Wallace, "then no
one knows about it."
Seafood buyers are much more likely to use category
management for their frozen, packaged seafood products like
branded fish sticks and seafood meals, says Wallace.
Compared to all the perishables categories, seafood has been
the slowest to adopt category management, says DeMott. He
suspects in other categories a large supplier or marketing
board purchases the data and makes it available to
Another potential reason the retail seafood department has
been slow to adopt category management is the sheer number and
complexity of seafood products. But such complexity requires an
objective picture of performance, says Lutz.
Contributing Editor Lisa Duchene lives in Bellefonte,