Seafood: Merchandising, marketing tactics to grow shellfish sales
As the deflation in shrimp, crab and other shellfish — along with consumers’ economic woes — have resulted in lower dollar sales, experts are encouraging retailers to step up discounts, assortment, and promotions.
Overall shellfish sales declined in the second quarter of 2024, due to both deflation and comparisons with a strong second quarter of 2023 — which included a later Easter holiday than this year, said Anne-Marie Roerink, principal at 210 Analytics, during the Seafood in the U.S. Retail – Q2 2024 webinar sponsored by MSD Animal Health.
Fresh shrimp prices fell 4.9% in the quarter, according to Circana data for the 13 weeks ending June 30, resulting in a sales decline of 7.6% while pounds fell 2.8%. In August, fresh shrimp prices declined 3%, and dollars followed suit, dropping 3.3%. That month, pounds fell only slightly (0.3%).
“Unfortunately, due to the current US economy’s continued inflation and record high consumer debt levels, there has not been a broader acceptance to trigger increased shrimp demand based on the lower prices,” said Jason Resner, president at DNR Sales & Marketing Strategy Advisors and former meat and seafood sales, merchandising, marketing, and procurement lead for Fresh Thyme Market. “Everything costs more, so even though shrimp in general are staying at historically low costs, customers are not seeing more value in the other proteins per se, but just can’t afford what has been an incremental seafood purchase like in the past.”
Overall, shellfish prices declined 1.9% in the quarter, but crab prices plunged 7.6%. As a result, crab sales dove down 12.7% and pounds decreased by 5.5%. Comparatively, crab pound sales surged 25% in the second quarter of 2023.
“Last year, crab had a monster first half of the year. That means a very high bar to meet for crab to go up against, and a bar that is proven to be too high in the light of the economic pressure,” Roerink noted. “However, when you were to look further back, you can see that crab demand is still very strong.”
The prolonged inflationary and higher interest rate environment pushes seafood lower on the shopping list — if it makes it on it at all — for most consumers, Resner explained. For instance, lobster, one of the few shellfish to increase in price in the second quarter, realized a price hike of 17%. As a result, lobster pounds dropped a significant 20% and sales fell 6.3% in the second quarter.
“Seafood more commonly seen as a ‘luxury ’item across most demographics — especially when you get outside of the coastal states. Lower retails are not equating to increased or sustained movement,” Resner said.
Additionally, while the recent performance for shrimp is better than earlier in the year, grocers should recognize that any year-over-year trends that are positive are mostly cycling negative trends from 2023 for the majority of the industry.
“It is critical for both retailers and suppliers to look at the two-year and three-year stacked comps to get an idea on how they are really performing on both sales and volume impacting consumer consumption,” Resner explained. “Simple year-over-year gains might be a false sense of security depending on how the previous two and three year sales stacks look like.”
As a result, grocers’ promotional ad space and promotional markdown investments have not been generating the historical lifts and incremental foot traffic for shrimp in particular as they had in the past, “without going notably lower than historical ‘front-cover ’advertised retails,” Resner said. “And, even though most shrimp is staying at moderate lower costs this year, the needed depth of retail investment to move the volume needle is not conducive to a retailer’s P&L based on the diminishing returns.”
Merchandising, marketing tactics to grow shellfish sales
Given Americans’ increasing cost-of-living expenses, discounts and promotions are vital. It usually takes six to 12 months, depending on the category, for consumers to truly react to deflation — especially for items that are only purchased a few times per year, Roerink explained.
“So certainly, retailers would benefit from pointing the more favorable pricing out to consumers to prompt re-engagement with the category.”
“Since it appears that promotional frequencies have dropped off across the country due to lack of demand, to help generate more incremental demand, retailers could ideally better utilize shrimp and shellfish to lead limited day sales events with a little deeper invested promotional retails,” Resner said. “With the right marketing elements behind the event, the odds are in their favor of generating incremental foot traffic to drive more volume to create more profit dollars on the items as well as help build the shopping basket around the seafood items.”
For instance, retailers could market fresh — not frozen then thawed — Colossal Wild Caught shrimp as a limited day event. That type of event could spur some consumer interest, “especially if the retailer can advertise ‘by-the-each ’on this item versus ‘by-the-pound ’and have a marketing campaign behind it with meal or recipe suggestions,” Resner said.
The keys to growing shrimp sales and volume include consistent promotional frequencies, tiered sale retails across the sizes, and pulsing incremental weekend events at “shock and awe” retails in attempts to generate new incremental customer traffic, Resner said.
Resner was effective when leading Fresh Thyme’s seafood sales with numerous weekend and week-long promotions on snow crab last year. Digital and social marketing was a critical part of the success during those types of promotions.
Retailers can also try increasing assortment to grow sales.
“Improvements in assortment are always important because so much of the fresh seafood dollar is clustered in that top 10 percentile of seafood shoppers that represent 45% of seafood sales,” Roerink said. “These are the shoppers that like to experiment, like a wide variety of seafood items plus are very comfortable preparing just about any seafood item.”
The average assortment of fresh shellfish items in retailers rose 0.7% in the second quarter to 13.4 weekly, according to Circana, compared to frozen shellfish assortment, which plunged 7.9% to 27 items weekly, providing more opportunities for the fresh department.
Including shellfish in the lucrative prepared meals segment is another great idea.
“The restaurant headlines are quite depressing at the moment, with one chain after another announcing closures, bankruptcies or moves to value as consumers are unable to absorb the cost increases from the past few years,” Roerink noted. “That means some two-thirds of Americans are trying to recreate restaurant meals at home.”
In the deli prepared area of the store, consumers are comparing meal prices to those at restaurants — and grocery meals are typically a value in comparison.
In addition to white tablecloth restaurants that typically feature luxury seafood including lobster and crab, shoppers are comparing prices at QSR and fast casual eateries with grocery deli prices.
“Pointing out that the store has time-saving AND money-saving solutions, can help secure these kinds of meals,” Roerink said.
As a result, retailers can feature items like fish sandwiches, shrimp po’boys, sushi, poke, and seafood salads.
Roerink added that more retailers are including shrimp in prepared seafood dishes.
“This includes the ready-to-cook meals such as shrimp alfredo, but also cold shrimp and seafood salad and kababs. Additionally, I’m seeing retailers get creative with having shrimp in pre-packaged seafood areas of the store. Sometimes that’s just shrimp, but other times, retailers are adding herb butters or dipping sauces for that extra value add. By having shellfish — in particular shrimp given its high household penetration — be merchandised in multiple areas of the store means that visibility will help drive trips.”
Deli prepared items also allow consumers to try something they haven’t had before or try a different flavor than they would normally make themselves.
“This means great opportunity for marinated salmon, cod or shrimp — all items with high household penetration,” Roerink said.
Additionally, many consumers still are not comfortable preparing seafood at home even if they eat at a restaurant, according to Roerink. So, oven-ready dishes — whether it is seafood alone or a full meal that contains seafood as a component — are an ideal solution for the less-than-confident cook.
Education’s role
Retailers can also benefit from appealing to the shoppers who would like to cook seafood meals themselves, with recipes and other education and marketing.
As Americans continue to prepare meals at home more, grocers should show shoppers how easy shellfish — particularly shrimp — is to prepare at home.
“Shrimp is extremely versatile as it can be added to just about any entrée or appetizer as an ingredient in addition to being part of a main course,” Resner said.
Retailers should also leverage their marketing departments to better advertise how versatile shrimp is — along with its nutritional benefits — via their social media and digital channels, Resner believes.
“Solely relying on price and promotion and not digital marketing will not increase demand as it had in the past.”
It also makes great marketing sense to utilize events and holidays for shellfish sales and promotions.
Maximize National Seafood Month throughout October, for example, “to put these seafood items front and center with more attractive promotional events and increased digital marketing to get more seafood into more carts throughout the month,” Resner said.
If retailers are successful at increasing seafood transactions and at-home “center of the plate” meals, customers will likely be enticed to come back for the holidays with seafood top of mind, Resner explained. And that’s where shellfish shines: cooked shrimp and cocktail sauce trays are typically top-sellers for holiday entertaining, and consumers are also willing to spend a little extra during holidays, Circana research finds.
This article is an excerpt from the October 2024 issue of Supermarket Perimeter. You can read the entire Seafood feature and more in the digital edition here.
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