The record inflation in fresh seafood and across the grocery store this year has led to some innovation promotions and “value” merchandising in the fresh seafood department.
Particularly in seafood, value is of equal importance to shoppers as price, meat and seafood executives say.
“What we have learned from studying consumer buying behavior is that value is just as important as price. Sustainability and quality are also important to our customers as being competitively priced,” said Jason Pride, vice president of meat & seafood at West Des Moines, Iowa-based Hy-Vee.
“Customers are looking for value while looking for healthy options, and seafood addresses both,” agreed Deb Kreider, director of meat and seafood at The GIANT Company in Carlisle, PA.
“Seafood continues to be a focus within The GIANT Co.’s promotional plans. Efforts to drive value through highlighting seafood remain at the center of our planning now and moving forward,” Kreider added.
To promote its value proposition, Hy-Vee is “better merchandising products to ensure that customers see value in buying seafood, including having products that are ‘no touch’, and can go from the case or pan right to the grill,” Pride said.
In addition, the retailer has increased its promotions and started holding display contests to “heighten the appeal of our seafood products across stores,” according to Pride.
And, as consumers continue to choose to have meals at home rather than frequent restaurants, it’s an opportunity for Hy-Vee staff to provide “that level of expertise to help our customers learn to cook and enjoy seafood rather than be intimidated by it,” Pride said.
Grocers are Offering More Deals
While value is the primary focus, Hy-Vee boasts “very aggressively retailed” daily, weekly, and weekend event deals, Pride said.
“We have seen that daily deals are important to our customers, so we make sure we offer quality items and price them competitively,” Pride said.
For instance, Hy-Vee aggressively promoted wild Alaskan salmon, along with shrimp, and snow and Dungeness crab — which are ideal for grilling — Pride said, for the Fourth of July. In addition, its stores were stocked with a variety of shrimp and seafood dips that are more cost effective.
“We also want to make sure we add value to our seafood promotions, including additional fuel saver rewards with certain offers,” Pride added.
Hy-Vee is focused on saving shoppers money in seafood and across the store, after announcing earlier this year that it would cut around 600 corporate positions and make other cutbacks due to an impending recession.
In advertorials published in several newspapers across its operating region, Hy-Vee said it would deeper discounts via digital “daily deals" that are featured on TV, text message, social media, weekly ads available online, and in stores.
“The majority of consumers are now being forced to focus on necessities and make their dollars stretch, just so they can afford the most basic of staple items, whether that be milk, butter, and grains, as well as proteins like eggs, poultry, pork and beef,” wrote Hy-Vee Executive Vice President, Chief Merchandising Officer, and Chief of Staff Donna Tweeten in the advertorials. “We need to do everything in our power to keep prices down and provide the very best value, especially when it comes to the rising costs on those most basic essentials.”
Meanwhile, Bellevue, Wash.-based QFC is now utilizing more “percent off” or BOGO sales, “which customers seem to respond to, said Adam Branin, meat and seafood merchandiser. “We also lean into digital coupons as well, which have been successful.”
Unfortunately, fresh seafood sales have fallen more dramatically than fresh meat, according to Branin, which QFC’s seafood sales down around 10 percent in sales and volume versus last year.
“I could have chipped away about half of that had I gained some retail inflation by raising retails as fast as costs have increased. However, I’ve been weary to go up too high too fast and have not passed on all cost increases to my customers in hopes of keeping folks shopping in the department,” Branin noted.
Species such as halibut, scallops and cod, which have seen the greatest increases in recent months, have also realized the greatest sales drop, Branin said.
It is difficult to say whether seafood presents a value compared to other proteins, according to Branin, due to the extremely wide price range of fresh seafood. "We could be selling shrimp as low as $5.99 a pound right next to king crab at $59.99 per pound.”
The GIANT Co. has also experienced erosion within seafood sales for “specific categories where the market or the supply reduced promotional opportunities,” Kreider noted. As a result, the chain “monitors the markets closely and works with its supplier partners to stay ahead of opportunities to promote various seafood commodities.”
The GIANT Co.’s circular includes meal deals and meal solution ideas featuring seafood options. In addiiton, the retailer is providing a “host of” digital and clip coupons on shrimp, salmon, crab, and lobster tails, Kreider said.
Seafood SKUs expanding
While it may seem intuitive to reduce assortment during times of high inflation, most retailers Supermarket Perimeter talked with are growing fresh seafood assortment.
Hy-Vee has expanded the varieties it offers, including barramundi which is growing in popularity, according to Pride. “Salmon is our top-selling species, including fresh responsible farm raised, as well as high-quality sustainable wild Alaskan and Prince William Sound Sockeye varieties.”
“We have not reduced anything offered; we’ve actually added some offerings,” Branin said. “We want to do all we can to attract people to the department and that means continuing to push the envelope on new and innovative ideas and products to sell more.”
The Giant Co. has also not reduced its assortment of fresh fish or shellfish. Instead, “variety has been key to engaging our customers to continue to shop in our seafood departments,” Kreider said. “We have expanded offerings during the weekends by adding fresh fish varieties such as rockfish, halibut, and blue catfish.”
On the other hand, 210 Analytics Principal Anne-Marie Roerink said some grocers have closed fresh service counters and have reduced fresh seafood selection in response to inflation. “Some retailers have closed service counters altogether to save on labor and shrink; others have reduced operating hours, and others are simply putting out less on display,” she noted.
Many grocers are also retooling seafood’s total package size, similar to changes in the meat department, to keep the unit price within a certain range, according to Roerink. “Many items have what we call a price cliff, a maximum after which you see a much steeper drop-off in volume, and retailers are often very aware of where they need to sit for the total package price,” she said.
Poway, Calif.-based Barons Markets has reduced its selection of fresh seafood and is now only carrying the top selling SKUs, said Rachel Shemirani, senior vice president at Barons. “This helps reduce spoilage as well.”
Fresh seafood sales have been impacted “quite a bit” by inflation — more so than other departments in the store besides meat, according to Shemirani. “We’re seeing costs go up by dollars, not cents (like before), and in turn our prices on fresh fish go up. As prices go up, customers are buying much less fresh seafood than before,” she said.
But, for fresh seafood items that the retailer has discontinued, it has found a replacement in its frozen foods department, which is working out well,” Shemirani said.
Since its fresh seafood departments are now visually smaller, Barons replaced the empty space with fresh items that are less expensive, such as chicken. “It makes the department still look full and fresh and appealing to the customer, Shemirani explained.
Shemirani notices significant changes in customer shopping behavior. “We’re seeing customers buy only what they’ll need for a few days from our fresh department while stocking up on larger format products in our frozen and grocery departments,” she said.
Barons’ pre-made meals, rotisserie chicken, and grab n’ go salad and hot bars are still performing very well, “since we keep prices low on these items,” Shemirani added.