Frozen seafoods’ dollar store success

The typical consumer heading out to the store for their weekly grocery-shopping trip may not think of the local dollar store for seafood, but that is changing rapidly. Over the past three years or so, most dollar-store chains have added refrigerated and frozen sections to their stores, featuring a variety of packaged seafood items.

Take the 10,000-store Dollar General chain based in Goodlettsville, Tenn. A recent visit to one of its larger stores turned up several frozen seafood items among its three-door frozen foods section. While pizzas, P.F. Chang’s frozen meals and appetizers make up the majority of the section, seafood was well represented with Gorton’s 18-count fish sticks for USD 4.15 per box, 12-ounce SeaPak Popcorn Shrimp for USD 4.50 each and 10-ounce SeaBest (from Beaver Street Fisheries) cooked shrimp for USD 6.35 each.

Shoppers are finding similar frozen seafood options at the 4,400-store Dollar Tree chain, presented in a different way. Since Chesapeake, Va.-based Dollar Tree sells primarily items for USD 1 each, its frozen seafood portions are small. At a Central Florida Dollar Tree, Ocean Market’s four-ounce pollock and wild flounder fillets were priced at USD 1 each. Small bags of breaded fish sticks and popcorn shrimp were also offered for USD 1, along with Great American Seafood’s individually packed 4-ounce tilapia filets, Tastee Choice’s 4-ounce cooked salad shrimp and 4-ounce packs of LaMonica breaded clam strips.

The dollar-store chains have found a formula that seems to be working. They have benefitted not only from growing consumer interest in saving money, but also from consumers who live in “food deserts” and need to pick up a few grocery items quickly.

In fact, Texas-based Dollar General executives attributed the company’s strong third-quarter earnings to sales of “consumables,” along with seasonal and electronic products. Consolidated net sales for the quarter ending May 17 soared 11.5 percent to USD 1.72 billion and comparable store sales grew 5.6 percent. In fiscal year 2011, consumables — which includes cleaning products, beverages, health and beauty products, food and pet food — accounted for 73.2 percent of the chain’s total sales.

Late last year, Dollar General also announced plans to open 40 new stores, which feature fresh meat and produce, in 2012 based on the strong performance of 25 Dollar General Markets that opened in 2011.

“Because the product mix includes more consumables, the margin percentage is somewhat lower, but the raw dollars from the high volume are very impressive,” says David Tehle, executive VP and CFO of Dollar General on an investor conference call. Dollar General Markets generate average sales of USD 4 million to USD 5 million per unit, versus USD 1.4 million at traditional Dollar General stores, Tehle added.

Click here to read the full story which ran in the September issue of SeaFood Business >