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Photo by Laura Lee Dobson Retail Survey Retailers face higher costs but note that consumers' price resistance is eroding. At a Hy-Vee store in Keokuk, Iowa, the seafood department has cut out about four seafood species that are typically priced higher, such as jumbo king crab legs, ac- cording to Tonie Jensen, meat department manager for the store. Many other retailers are Counter intelligence Biennial survey shows retailers suffering under rising prices, reducing case variety BY CHRISTINE BLANK R ising wholesale prices continue to plague seafood re- tailers and put a damper on their sales. In fact, cost is retailers' No. 1 challenge in SeaFood Business' biennial retail sur- vey. Fifty-six percent of retail- ers said their biggest challenge for 2012 was rising wholesale prices, compared to 42 per- cent in 2010. Other major challenges cited by retailers include: shoppers' price resistance, consumers' lack of knowl- edge about seafood, compe- tition from supercenters and sustainability-related issues. "Our wholesale prices have gone up 20 to 25 percent over the past year. Several other fish markets have gone out of business, but we hang on," says Susan Shebilske, man- ager of one of four Madi- son, Wis.-based Te Seafood 44 SeaFood Business October 2012 Center stores. To stay in busi- ness, Te Seafood Center stores do not invest in new equipment, and they have been forced to raise retail prices twice over the past year. In addition, some of the com- pany's stores have slashed their daily fresh seafood options from around 30 different spe- cies to around 20 species. Wholesale prices at the Nantucket Shoals Seafood Market in Albuquerque, N.M., have also gone up 25 to 30 percent over the last year, says owner Nancy Chavez-Berg. "It is probably because I am very small — I am not a Walmart that can buy in bulk — but it is also because of the high cost to get it here," says Chavez-Berg. She's watched air-freight costs rise $1.15 a pound on average to ship seafood. "Some prices have come down from last year, but most of them are up. It's hard to keep your margins and you don't want to scare people off," says Ray Mullio, con- sultant for Original Fish Co., a fish market and restaurant in Los Alamitos, Calif. As a result, Original Fish Co. is carrying more of the seafood items that have declined in price this season, such as fro- zen halibut and shrimp, and less of species such as Alaska king crab that have been priced higher this year, ac- cording to Mullio. Unfortunately, 54 per- cent of retailers surveyed said rising wholesale prices have hurt their seafood sales. "Tere seems to be a ceiling on how much you can charge for certain species. Some- times you have to take a little loss on something to sell it all and make people happy," says Shebilske. In addition to oth- er cost-saving initiatives, Te Seafood Center stores now carry less expensive seafood species. "We are trying to get customers to try new species that they may not have heard of before and may be just as tasty, such as corvina instead of grouper," she says. taking similar measures to cut costs. Sixty-one percent of the retailers surveyed said that consumers are switching to cheaper seafood species and 32 percent said their shoppers are switching to other center- of-the-plate proteins. While retailers are con- cerned about rising whole- sale costs, they believe that shoppers' resistance to higher seafood prices has declined. Forty-nine percent said that customers' price resistance was one of their biggest busi- ness challenges, compared to 55 percent in 2010. Instead, freshness and quality are shoppers' top concern — 51 percent — in 2012, accord- ing to the retailers surveyed. Sustainable sense Shoppers are still con- cerned about whether their seafood is sustainable, but retailers say it is less of a chal- lenge for them to handle than in past years. Only 19 percent of retailers said that sustainability-related issues were one of their biggest op- erating challenges, compared to 30 percent in 2010. Still, retailers say the vari- ous sustainable-seafood lists and labels cause a lot of con- fusion among both shoppers and retailers. "Tere are all these lists — five or six differ- ent ones. On one list, the fish may be listed as 'avoid,' but on another it might be listed as a 'good' choice. It is very Visit us online at www.seafoodbusiness.com