FUTURE OWNERS OF STAR MARKET ARE PLANNING RAPID EXPANSION

ELLIOT ZWIEBACH

CAMBRIDGE, Mass. -- The prospective new owners of Star Market Co. here plan to accelerate the chain's expansion in the next few years, Henry Nasella, the incoming chairman, president and chief executive officer, said.

"Star hasn't grown and expanded rapidly in the recent past, and this will dramatically change in the years ahead," Nasella said.

As reported, American Stores Co., Salt Lake City, signed a definitive agreement earlier this month to sell its 33-unit Star Market division to Investcorp, an international investment banking group, for $285 million in cash and assumption of substantially all outstanding liabilities. The deal is expected to be completed by early September.

"Star's smaller stores will be expanded and/or reformatted in the next couple of years to update the merchandising and services offered, while larger superstores will be built in new areas or as replacement stores in existing trading areas," Nasella said.

The first changes customers are likely to see, Nasella said, will

include improved service areas, particularly checkouts; improved perishable product quality and selection, and more one-stop shopping convenience.

Nasella, one of the investors in the deal, spent 20 years at Star, serving as president in 1986 and 1987, before leaving the company to co-found Staples, the stationery superstore chain.

Star posted sales in 1993 of $840 million. The stores average about 34,000 square feet.

Nasella made his comments about his plans for the chain in a series of questions and answers provided to the media by Star. Nasella himself could not be reached for further comment.

Growth plans already in place prior to the ownership change include new superstores in Medford and Milford, Mass., later this year and in East Boston and Allston, Mass., next year, Nasella said.

Store expansions are slated for Star units in Lynn, Quincy, West Roxbury and Hyde Park, Mass., Nasella added. While some of those expansions had been planned previously, a couple were added by Nasella, a Star spokesman told SN.

"Many stores will be remodeled or expanded to broaden customers' one-stop shopping needs, and several new stores will open in the metropolitan area [the 40-mile area surrounding Boston in which Star currently operates] each year," Nasella said.

"Store closings will only occur if the availability of space to expand or reformat cannot be accomplished or if a better location is available to serve a specific trade area," Nasella added.

Star does not intend to avoid racially troubled neighborhoods, he noted. "Star will join partnerships of neighborhoods and local government to explore all the opportunities to expand its network and better service the needs of diverse communities," Nasella explained.

He also said Star's current management team will be retained, with "new talent added" as new opportunities presented by the company's aggressive growth plans arise, he said. There will be no layoffs, he added.

American decided to sell Star because "[it] was its smallest division," Nasella said. The decision was also prompted, he explained, by "the opportunity to focus on larger divisions as well as an attractive offer." With sales of $850 million, "Star has been a consistent performer for American Stores, and we obviously believe local ownership with broad employee involvement and empowerment can improve these results," Nasella added.

"Retail is all about taking good care of customers and managing details while empowering and motivating all the associates who serve your customers' needs."