« June 2007 Table of Contents
One on One: Joseph Sabbagh
By Steven Hedlund
June 01, 2007
Ask Joseph Sabbagh what it takes to turn a profit retailing
seafood, a task most conventional supermarket chains can't pull
off, and he'll give a surprisingly simple reply: labor.
The Danbury, Conn., native learned the art of customer
service hocking seafood out of a van in Fairfield County 28
years ago and mastered the skill working as a consultant for
Whole Foods Market in Austin, Texas, and Wild Oats Markets, in
Boulder, Colo., for nine of the last 14 years.
Prior to Whole Foods and Wild Oats, Sabbagh worked in nearly
every facet of the seafood trade, including ShopRite
Supermarkets in Edison, N.J., Anthony's Pier 4 in Boston,
Flying Goose Ltd. (now Lyons Seafoods Ltd.) in the United
Kingdom and the Canadian government.
But Sabbagh's passion lies with retail seafood. As president
of Sax Maritime Associates, a Los Angeles retail-seafood
consulting firm, he's lending his expertise to an unnamed
Midwestern supermarket chain. In late March, Sabbagh shared his
knowledge with SeaFood Business , talking candidly about the
importance of customer service, the fallacy of loss leaders and
the principles behind the nation's largest natural-foods
HEDLUND: Why are most retail
seafood departments loss
SABBAGH: [Most conventional supermarket chains] set their
expectations too low, because for years it's been such a sore
spot for them. I believe a seafood department can do 10 percent
of your store's sales. I really do, if you do it properly. They
want to see the return before the investment. I've never seen
any type of financial agreement that works like that. I've
never believed in loss leaders. You're basically telling the
customer, "Wait till we put it on sale before you buy it." This
year, 6/9 [count] king crab is a great deal. So a lot of
retailers are selling it for $9.99. They sell a lot of it at
$9.99. But when they raise it to $14.99, it sits in the case
and they have got to shrink it out, and the customer waits for
it to go back down to $9.99. You can make a lot of money in
seafood, and it can be a real bright spot in your store. It's
not too late to change.
Ahold is switching from full-service seafood to self-service
of its Stop & Shop and Giant stores.
I hope they do. Because why waste fish? Why lose money? That
just sours [retailers] on the [seafood] category. The first
thing [retailers] should do when they open a new store is look
at the marketplace. If you're right next to a company like
Santa Monica Seafood or in a state like Iowa, you have got to
think about what you're doing. But unfortunately, they don't.
[Ahold] realizes that theater doesn't work.
What sets Whole Foods apart from the competition?
Labor is the key to their business. They commit to labor, in
terms of paying and training people. No national retailers are
even close, except Wegmans. That's why [Whole Foods] is so
successful. Unfortunately, seafood is an afterthought for most
retailers. [Whole Foods] made seafood a priority. There's no
substitute for having knowledgeable people behind the counter.
[Whole Foods Chairman and CEO] John Mackey had the vision and
dedication to do it.
What is Whole Foods' Achilles' heel?
Their seafood department is way too big. They talk about
sustainability, then they build an 80-foot fresh case. When I
walked into their Austin store late one evening, it was kind of
run down. It looked like a luge course. You don't need that.
They talk about reducing their carbon footprint, then they
build an 80,000-square-foot store in London. I think they get a
little carried away sometimes. When I see departments that big,
I think shrink, I think excess labor. Anything over a 12-foot
display of finfish and a 12-foot display of shellfish is too
much. A 24-foot enclosed fresh case should just about do it,
[in addition to] a frozen case. It's theater, and I think it's
hurting their bottom line.
Whole Foods halted live lobster
sales last year because it
said the crustacean is handled inhumanely.
Is that true?
Most retailers lose money on live lobsters because of [tank
maintenance], mortality. That's really why they did it. [The
move] was genius.
Is Whole Foods superior
to Wild Oats in any way?
Whole Foods had the best marketing and public relations that
I'd ever seen. Wild Oats had the worst. Wild Oats spent more
time figuring out what to tell the customer about what they
don't sell [than] what they do sell. They announced that they
don't sell orange roughy. Why would you want to announce that?
One of their biggest accomplishments, in their minds, was
putting these ridiculous mercury warning signs [in seafood
departments]. They thought that was a good thing. What's
happening out there is confusing the daylights out of the
customer, from astaxanthin and canthaxanthin to mercury. Why
add to that?
Is Whole Foods inferior to Wild Oats in any way?
Wild Oats' buying system is better than Whole Foods' - 100
percent better. There's no comparison. [Wild Oats] is getting
product to their stores as fresh as, or fresher than, [Whole
Foods] and at much lower prices, because [Wild Oats] has a
system that utilizes local vendors and isn't locked into its
own bad investments. Whole Foods runs a lot of [product]
through their Seattle and Gloucester [Mass.] processing
facilities to justify them, and that hurts them a lot. [Whole
Foods] pays a lot [for seafood] at the door, and they have all
this extra labor and all this extra shrink. So what do you do?
You have got to raise your prices, and there you go with the
"whole paycheck" thing.
What does the proposed Whole Foods-Wild Oats merger mean for
the seafood industry and consumers?
It's very good, because any time Whole Foods opens a fish
counter it means more seafood sales. It raises the bar in the
area. There are some local [vendors] that may wind up losing
business. Wild Oats has some great category managers and field
merchandisers, and unfortunately a lot of these people may go
by the wayside.
Associate Editor Steven Hedlund can be e-mailed at