Strategies to Combat Rising Costs in Supermarket Seafood Departments

The escalating operational costs of supermarket seafood departments have made expense containment increasingly essential for efficiency-minded merchandisers. Various factors, including shrinkage and rising equipment and packaging prices, are contributing to these higher costs, but labor remains the largest expense, often exceeding 20% of sales, according to Chuck Anderson, vice president and partner at Certified Quality Foods, a Dallas-based seafood quality analyst. With prior experience as the vice president of seafood procurement for Ahold USA and category manager for seafood at H-E-B in San Antonio, Anderson emphasizes the challenges posed by high labor costs.

“This significant labor expense presents a major hurdle to the profitability of service seafood departments,” Anderson stated, highlighting that this cost includes both initial and ongoing training, which is crucial for successful operations.

Department overhead, particularly for display cases, can also be substantial. “Everything needs refrigeration, requiring expensive cases, freezers, and ample square footage. The initial capital investment is high, and seafood departments typically consume more energy and water than others,” Anderson noted.

Additionally, seafood packaging costs can account for 1% to 3% of sales and are typically expensive due to the need for leakproof containers that ensure safe product transport, as well as boxes and cartons capable of holding live seafood like lobsters and other shellfish.

To manage seafood expenses effectively, retailers should meticulously track and budget each cost element. “What gets focused on gets fixed,” Anderson explained, though he stressed that boosting sales should be the primary concern.

“The store’s volume, location, and demographics are crucial for the success of service seafood,” he advised. Merchandisers should analyze seasonal sales fluctuations and compare trends to the previous year to determine the optimal staffing levels for each shift.

“It is vital to allocate the right number of hours to avoid wasting labor costs,” Anderson said. Increased hours should be planned for holidays, the January dieting season, and promotional events, while hours should be reduced in late summer and fall when discretionary spending typically declines.

However, seafood counter staffing should not be mandatory due to varying store traffic, Anderson pointed out. “How many sales happen early in the week between 8 and 9 a.m. or 8 and 9 p.m.?” he queried. Tracking hourly sales is essential for making informed staffing decisions.

Ensuring that self-service cases offer the necessary variety and volume is key to driving sales when service counters are not staffed. Attractive options include case-ready seafood, such as raw fish fillets; raw and cooked shrimp with extended shelf life; and value-added ready-to-eat and ready-to-cook seafood. It is crucial for retailers to use packaging that extends product shelf life, enhances quality for customers, and minimizes shrinkage in self-service seafood cases. Regular rotation and promotion of selections, alongside eye-catching signage, can further stimulate sales.

While transitioning low-volume service seafood departments to self-service cases can reduce costs and, in some cases, even boost sales, Anderson cautioned that this change might negatively affect the high-quality image and superior service perception of the overall store.

Retailers can improve efficiency by positioning the full-service seafood counter adjacent to the meat counter or deli and training workers to manage all three areas. This strategy ensures that knowledgeable staff are available even when a seafood specialist is not present. “Cross-training employees on the essentials of each department is crucial to prevent potential customers from leaving unserved,” Anderson stated.

Reducing employee turnover is another effective cost-saving measure, as newer employees often lack the efficiency of their experienced counterparts, leading to lower sales and increased shrinkage. “Seafood departments benefit from having one or two qualified fishmongers who can cut fish, provide product handling and preparation advice, and train other staff,” he added.

Implementing cost-saving strategies throughout the seafood department can help offset the increasing expenses associated with hiring and retaining employees. Shrink reduction can also significantly cut costs, as retailers can minimize waste by maximizing sales of best-selling items while reducing slow-moving inventory.

“Monitoring every penny of expenses should be a collective goal,” Anderson emphasized. “Equipping employees with proper training and tools to perform their tasks effectively is vital. Maintaining close oversight on orders, sales, quality, shrink, and all expense lines is crucial for effective cost control.”