Retail execs: Supply chain issues have "gone from bad to worse"

The pandemic flipped the seafood industry on its head with widespread and long-term shutdowns of restaurants and large foodservice venues. Although those sectors are not yet running at full capacity, they are far more robust than they were a year ago, according to representatives of several leading seafood retailers. But ongoing supply-chain disruptions have darkened the short-term outlook, they said.

Speaking during a panel discussion that kicked off the Alaska Seafood Marketing Institute’s annual All Hands On Deck conference on 9 November, Greg Jeffers, director of Purchasing for Gorton’s, said his company saw a significant increase in sales as a result of panic-buying and pantry- and freezer-loading in 2020. For this year, the goal shifted from simply trying to keep up with the demand of new consumers to “keeping them in the category for a long time,” according to Jeffers.

That target has grown increasingly difficult to hit, especially in the last few months, according to most members of the panel, as supply chain disruptions have increased.

“The supply chain challenges are starting to hit us more now than they ever have before,” Publix Super Markets Seafood Director Guy Pizzuti said.

But the challenges and opportunities in this still-new marketplace are sending industry leaders into new territory, yet again, he said.

“We’re scrambling to change ads at the last minute, switch out similar products,” Pizzuti said.

Supply-chain woes are slowing access to product as well as packaging and equipment, he said.

“We’re sitting on 27- to 28-week lead times on equipment,” Pizzuti said. “Supply chain is going to be the biggest thing moving forward.”

Sysco Canada Seafood Category Manager Peter Vasil said food-transportation problems have worsened in recent months.

“It has gone from bad to worse,” he said. Whether those may be shored up soon is anyone’s guess, but the outlook is not bright, he said.

Nordstrom Food and Beverage Director Keith Brunell said his company has also noticed a deepening of the strain on its supply chain. Those delays are adding to the constraints of responding to market demands for many retailers, pushing back new store openings, remodeling plans, and the ability to implement new processes or product segments, he said.

“If anything, it’s worse right now than it was six to nine months ago,” Brunell said.

Despite the challenges, in 2020, many seafood retailers, including Publix, boasted record sales. And then in October 2021, Publix surpassed last year’s total seafood, according to Pizzuti.

Pizzuti said he’s noticed a shift to selling frozen as a marker of freshness. Where frozen seafood used to have the reputation of being an inferior product, now consumers understand that seafood frozen close to the source may be even fresher than fresh. And convenience by way of frozen items became a major factor when shoppers reduced trips to the store during lockdowns, Pizzuti said.

“Typically our fresh case would dominate – people would buy for cooking today or tomorrow,” he said. “Frozen really became a viable option for people making fewer trips to the grocery store.”

New England Seafood International CEO Dan Aherne said the frozen trend is likely here to stay.

“The model really has moved to getting it frozen as quickly as possible, so you can lock in the goodness,” Aherne said.

In addition to convenience and quality, seafood buyers are increasingly interested in how their habits of consumption affect the world around them, according to Stephanie Mitchell, senior manager of culinary training and support for Sodexo. Consumers are seeking out products that make them feel connected to their food suppliers, Mitchell said.

“Our consumers wanted their food choices to align with their values,” Mitchell said.

Awareness of and concern about climate change is also driving changes in consumption patterns, Aherne said.

“Increasingly, one of the big things we’re going to be seeing in our market is a real ranking and clarity on the climate impact. Seafood has an incredible opportunity. It’s as good as it gets – low-carbon, low-water use,” Aherne said. “During the pandemic, people have had no choice but to slow down and think. I don’t think people are going to slip right back into old habits.”

Pizzuti said in the past, what consumers purport to care about on a survey versus what they end up buying hasn’t always been in alignment. But that may well be changing.

“It used to be a very niche customer that cared about that stuff,” he said. “It’s almost becoming table stakes. If you’re not able to tell that story, you’re going to get behind the eight-ball with a growing and vocal group of customers.”

One old habit that doesn’t seem to be fading is the effect of consistent branding, Pizzuti said. The mystique of Alaska’s seafood brand puts it just enough out of reach to be exciting, but not so far as to be unfamiliar, he said.

“If I’m in Florida, product from North Carolina isn’t local. But Alaska is,” Pizzuti said.

Reporting by Jes Hathaway

Photo courtesy of Alaska Seafood Marketing Institute