What should my story be about, so far it's going nowhere
In my opinion, you can do a mermaid story, but try to put it in a new perspective. You can as well do stories about humans or about your city state. To write a good story, you will have to read some story books to generate ideas from them.
Why would you bother writing a story if you don't even have a plot line?
Make a fiction story with maybe science fiction in it too. Or whatever you like . How about a person that can feel other peoples emotions or a story about ghost :p or whatever floats your boat