RICHFOOD TO POSITION FARM FRESH UPSCALE

BECKY BULL

RICHMOND, Va. (FNS) -- Richfood Holdings here said it plans to dust off its newest acquisition, the Norfolk, Va.-based Farm Fresh chain, and position it as a major upscale operator in its trading area.

Its plans are already under way. A new logo and advertising campaign were rolled out immediately after the acquisition closed March 4. In the next few years, Richfood will pump millions of dollars into the grocery chain. And a new promotional campaign will be implemented.

"We want to position the chain as an upscale grocery store where ambiance and service are emphasized," John Stokely, president and chief executive officer of Richfood, told SN. Richfood will invest between $80 million and $90 million in store renovations in the next few years. Construction will start immediately and the renovations will be dramatic, Stokely said. The changes include expanding stores, creating new traffic patterns and updating decor.

Farm Fresh, which operates 45 stores, appealed to Richfood because of its hold on the Tidewater, Va., market, Stokely said. The company has been in business for more than 30 years, but in recent years it didn't make a lot of capital investments in its stores.

"It's lost a little of its luster," Stokely said.

As a result, Stokely said, Farm Fresh wasn't approached by real estate developers to open new stores in prime locations. Stokely said he hopes that changes as Farm Fresh updates. While the company wants to expand in existing markets, it has no plans to move into new markets soon, Stokely said.

Farm Fresh will also implement new promotions and advertising. Stokely declined to elaborate on the promotions. The company switched from advertising on Sundays to Wednesdays, which Stokely said is a better day to reach shoppers.

Despite the attention from Richfood headquarters, Farm Fresh will operate as its own company in Norfolk. And none of its 5,700 employees will be laid off, Stokely said.

Before the acquisition, Farm Fresh was one of Richfood's biggest customers, accounting for 9% of the wholesaler's 1997 sales. This inside connection helped Richfood officials learn Farm Fresh's weaknesses and strengths before the acquisition closed. Richfood worked on Farm Fresh plans for 18 months, Stokely said.

"Nobody in the country knew them better than we did," Stokely said.

The Farm Fresh acquisition fits well with the company's expansion plans, Stokely said. Since the 1991 fiscal year, Richfood has bought six companies, which have contributed significantly to the company's bottom line. Stokely said Farm Fresh is not the last acquisition Richfood will make.

"We're opportunistic people," Stokely said. "We're not looking for the right time, we're looking for the right opportunity."