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Retail Survey: Seafood sales are up, but so are wholesale prices
For most retailers, profit margins stay the same
By Steven Hedlund
September 01, 2006
Rising wholesale prices, consumers' lack of knowledge and
increased competition from big-box retailers like Wal-Mart are
the three biggest challenges seafood retailers face, according
to the results of SeaFood Business ' biennial retail
Despite the obstacles, nearly two-thirds of survey
respondents say their seafood sales are up from last year, and
23 percent say their sales are holding firm. Only 12 percent
say their sales are down from 2005.
S ales alone never tell the entire profitability story at
retail. Only 32 percent of the respondents say their seafood
profit margins are up from last year, while 46 percent say
their margins are about the same and 22 percent say their
margins are down. That's a clear indication that wholesale
prices are on the increase.
In fact, more than half the respondents cite rising
wholesale prices as one of the three biggest challenges seafood
"Prices have really jumped in a lot of areas - salmon,
halibut, Dungeness crab," says Tim Caluya, co-owner of Tim's
Seafood in the Seattle suburb of Kirkland, Wash.
Those three species are Caluya's best sellers.
Perhaps no fish exemplifies rising wholesale prices better
than Copper River salmon, which hits the market in mid-May,
marking the unofficial start of Alaska's summer salmon
At the onset of the harvest, Seattle-area retailers paid $15
to $16.50 a pound for fresh whole kings, up from around $13.50
a year ago.
Wild salmon prices are up from last year, especially kings,
due mainly to this year's tightly restricted Oregon and
northern California fishery, intended to protect Klamath River
kings from overfishing.
Halibut and Dungeness crab prices are also higher than last
year. By mid-August, wholesalers paid as much as $5.25 for
fresh whole halibut, $1 more than a year ago, and up to $3.50
for whole cooked 2- to 2.5-pound Dungeness, compared to $3 a
Rising wholesale prices are forcing Caluya to be as
efficient as possible. "I watch my buying," says Caluya, who
opened his store last summer. "I try not to buy too much. I try
to be aware of what I'm ordering."
He minimizes shrink by using trim to make salmon, halibut
and Dungeness crab cakes. He smokes the salmon collar, the rich
triangle of flesh behind the gills that's usually discarded.
And he vacuum-packed and froze his last two sizeable deliveries
of Copper River sockeye to sell in the off-season.
Despite rising wholesale prices, "We're kicking the crap out
of what we were doing last year [in sales]," says Caluya.
Not so for Jeff Grolig, owner of River Falls Seafood Co. in
Potomac, Md. His seafood sales are essentially flat, "up maybe
3 or 4 percent from last year," he says.
Grolig, who opened his store in 1999, recently began selling
other proteins, such as beef, to augment static seafood sales,
though seafood remains the core of his business.
He also cites rising wholesale prices as a huge challenge;
75 to 80 percent of the seafood items in his case retail for
more than $20 a pound. Farmed species like Atlantic salmon and
rainbow trout are the exception.
"At $24 a pound for halibut," says Grolig, "people may think
twice about buying it."
In mid-May, Grolig was retailing Copper River kings for
$29.99, up from $24.99 a year ago.
"But our customers will pay for it," says Grolig. His best
sellers are crab cakes, followed by Atlantic salmon and steak
fish, such as halibut, tuna and swordfish.
It certainly helps that River Falls Seafood is in an
affluent suburb of Washington, D.C. In fact, Potomac has the
nation's highest median household income - nearly $129,000 -
among communities with a population of more than 30,000,
according to the 2000 census.
"I remember when I started, 7-inch [spiny] lobster tails
were $4 a pound," quips Dirk Fucik, owner of Dirk's Fish &
Gourmet Shop in the well-to-do Chicago neighborhood of Lincoln
Park. Fucik has been in the seafood business for 30-plus years.
"Now they cost more than $20 a pound.
"Sometimes you have to raise your prices," he says. "You
don't want to, but you have no choice. Sure, there comes a
point when you ask yourself, 'Where do I draw the line?' You
can't just charge anything you want."
Second on the list of the three biggest challenges seafood
retailers face is consumers' lack of knowledge, reported by 46
percent of survey respondents.
Some consumers are afraid to buy seafood at retail because
they assume it's difficult to prepare and cook at home.
"A lot of seafood [retailers] don't take the time to educate
people," says Caluya. "I try to educate people. In the Pacific
Northwest, people are more aware of seafood. But some people
still thaw frozen seafood [at room temperature], and I tell
them not to do that" because it's unsafe.
Misinformation surrounding the presence of toxins, such as
methylmercury and PCBs (polychlorinated biphenyls), in seafood
is also scaring some consumers away from the protein.
Fucik says methylmercury causes more confusion among his
customers than any other issue. Methylmercury is a neurotoxin
found in long-living predatory fish like tuna and swordfish;
the Food and Drug Administration prohibits the sale of seafood
containing more than 1 part per million of methylmercury.
"It's been hyped so much [in the media] that people take it
with a grain of salt now," says Fucik.
"People trust us," he adds. "A big part of our business is
Fucik's staff is trained to field customers' questions about
methylmercury. He also hosts cooking classes twice a month,
except in the summer, and is constantly handing out seafood
samples. Both opportunities are used to allay customers'
concerns about methylmercury and other toxins.
"I still get inundated with questions about PCBs in farmed
salmon," says Grolig.
The questions stem from the 2004 Hites et al. study that
claimed farmed salmon contain higher levels of PCBs and dioxins
than wild salmon; the study received a lot of press. Grolig
explains to his customers that the PCB levels found in farmed
and wild salmon are well below the Food and Drug
Administration's tolerance level of 2 parts per million. It
must be working, because Atlantic salmon is his best-selling
Third on the list of the three biggest challenges seafood
retailers face is increased competition from big-box retailers
like Wal-Mart, cited by 38 percent of survey respondents.
Wal-Mart's "everyday low prices" are forcing conventional
supermarkets to either cut their seafood prices or reduce the
size of their full-service seafood counter.
That's benefiting independent seafood retailers who are
trying to get an edge on the competition.
"There's a QFC across the street," says Caluya. "Some people
shop there, then they buy their fish here. It's cheaper there,
but the quality is higher and the service is better here."
In fact, 61 percent of survey respondents cite freshness as
their customers' No. 1 concern, followed by price at 11
percent, how to cook at 9 percent and convenience at
Grolig isn't worried about conventional supermarkets
(there's a Safeway in the same shopping center as his store and
a Giant within 10 miles) nearly as much as high-end and
natural-foods chains that offer quality seafood at reasonable
There's a Whole Foods about 10 miles from Grolig's store
that he says has "the best seafood department" of all Whole
Foods locations in the Washington area.
"I wouldn't want to go up against a new Whole Foods or
Wegmans," says Grolig. "I'd be terrified if a new Whole Foods
or Wegmans opened near me."
This was the 19th SeaFood Business retail survey, which is
conducted biennially. The survey was mailed, faxed and e-mailed
to 2,000 SFB retail readers, targeting managers and buyers of
seafood at the store level.
A total of 189 surveys were returned for a response rate of
10 percent. Surveys were analyzed by Diversified Business
Communications' Market Research staff. Respondents consisted
of a single store in a supermarket chain (46 percent), a
seafood-only store (38 percent) and a single-unit grocery store
(16 percent). They were located throughout the country,
including the Northeast (30 percent), the Midwest (27 percent),
South (22 percent), the West (18 percent) and outside the
continental United States (3 percent).
Look for results of the SFB foodservice survey in the
Associate Editor Steven Hedlund can be e-mailed at