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Tidal Wave Of Opportunity

Luring shoppers to purchase fresh fish more often during murky economic times is a familiar, albeit trying, expedition for grocers, PC's annual seafood study finds.

Research by Debra Chanil / Analysis by Meg Major

Although the hook is baited with heightened consumer awareness of the health benefits of more frequent seafood consumption, a lingering undercurrent of rising commodity costs and higher retails finds many retail category leaders angling for a prolonged surge of stronger sales, according to results of Progressive Grocers 2012 Seafood Operations Review.

Indeed, after a more hopeful yearago period, the latest findings of PG's annual "state of the seafood department" study found that a tough year brought forth a smaller pool of overall sales gains among this year's panelists, 28.8 percent of whom saw increases and 26.9 percent of whom posted decreases, paced by 44.3 percent who reported status quo seafood sales in the past year, collectively netting a 1.2 percent decline in sales.

Somewhat calmer waters were detected in the same-store seafood sales tallies of this year's retail seafood study, which increased for 32.2 percent of participants alongside comparable-year decreases for 24.6 percent, with the remaining 43.2 percent holding steady on seafood sales versus the previous year, representing a -0.9 percent net decline.

Findings for PG's 2012 Seafood Operations Review were again tabulated from the direct input of retail meat and seafood officials, surveyed from around the country, who are responsible for category procurement decisions for their supermarkets' fresh and frozen seafood items.

Further indicative of the choppy retail seafood climate that finds seafood directors charting a course to grow margins with less pricing flexibility to aggressively promote when battling rising costs and mounting competition from alternative competitors, a smaller percentage of survey participants (46.7) this year posted profit gains versus last year. Meanwhile, 26.6 percent of seafood survey respondents posted declining profits in the past year, while a higher number of panelists (26.7 percent) this year also posted no change in either direction, affirming that there's ample opportunity to pick up the pace in a department where the balancing act between price and profit is admittedly more complicated than in most.

The percentage of stores with full-service seafood cases also declined slightly to 43 percent in this year's study, which might reflect a shifting tide toward more flash-frozen seafood offerings, which are becoming increasingly popular in the frozen case, thanks to new packaging applications and higher-quality convenience-oriented options.

In the rundown of key challenges facing retail seafood executives — who were again asked to rank the seriousness of various issues on a scale of one to six — survey respondents, not surprisingly, cited shrink as their top concern. Competition — which jumped up three slots this year — washed ashore as the second most problematic issue facing seafood department heads in the past year, while environmental/social issues held steady as the third-place hot button. Imports landed on the fourth rung of key concerns pinpointed by seafood survey respondents, while sourcing rounded out the shortlist of most pressing department challenges.

Drilling down to the operational estimates for the combined fresh meat and seafood categories, this year's survey found the average supermarket employing an estimated nearly five fulltime meat and seafood associates and two part-time staff members, good for 5.9 full-time equivalents working 227.8 total weekly hours; weekly sales per employee hour, meanwhile, were found to tally $219, with 12.1 percent of total meat/seafood department sales equating to the average combined labor cost.

A breakout of costs relative to combined meat and seafood sales reveals product costs far surpassing the remainder of items among nearly two-thirds, or 62.3 percent, of respondents. Departmental overhead costs were cited as the next-highest consideration, at 20.8 percent, followed by labor and packaging costs, at 12 percent and 4.8 percent, respectively.

The average retail seafood department's 2.7 percent share of total supermarket sales remained unchanged from last year, while seafood department gross margins dipped ever so slightly to 31.3 percent this year versus last year.

Value-added, oven-ready fillets topped the hit list of the fastest-growing seafood, paced by frozen seafood selections. Even though shrimp remained a top seller, higher prices may have slightly grown sales, while salmon and tropical varieties also likely stole some of shrimp's thunder as more consumers gain familiarity with the easy preparation and cooking attributes of the popular

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Seafood Department Category Performance

Total U.S., 52 Weeks Ending Oct. 29, 2011

Perishables Group Chart Analysis

During the 52-week period ending Oct. 29, 2011, seafood categories saw increases in average retail price nearly across the board, most substantially in the shrimp and crustacean categories. Crustaceans posted the greatest decline in both dollar and volume sales, thanks in part to the category's rise in average retail price, which tabbed the greatest increase across the entire department.

In the prepared seafood supercategory, surimi, or imitation seafood, is gaining popularity as a more affordable alternative to fresh seafood. The average price of surimi held steady compared with the previous year, and as a result, volume per store per week grew 4.3 percent.

Like other fresh departments, consumers are increasingly turning to prepared seafood items to save preparation time. Along with the increases in surimi sales, prepared seafood meals and other prepared seafood increased both dollar and volume sales; prepared seafood meals' growth was the most significant, increasing 27.3 percent in dollars and 23.9 percent in volume despite a 2.8 increase in average retail price.

In common with the meat department, the seafood department saw diminished emphasis on promotions. Each of the 10 categories had decreases in volume sold on promotion compared with the previous year. Crustaceans continued their downward trend, with the department's largest decline in volume sold on promotion.

Data provided by The Perishables Croup is for the traditional/conventional supermarket channel only. It doesn't include Walmart, club stores, small independent chains and alternative-format retailers such as Whole Foods Market and Trader Joe's. The data represents 62 percent all commodity volume (ACV) and 13,000 stores. It's not projected to total 100 percent U.S. ACV. Find out more at





Progressive Grocer Market Research, 2012

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