Farm Fresh closing is doubly bad news

Farm Fresh is closing its less-than-a-year-old store in Gateway Plaza next month. Mark this as a victory for Harris-Teeter, which opened its own new store less than a mile away shortly before Farm Fresh opened its new store in a location formerly occupied by Winn-Dixie. Farm Fresh offered some of the same amenities that Harris-Teeter had and probably hoped to steal away some Harris-Teeter customers. Both stores had nice salad bars, extensive cheese and fresh bread selections and nice beer and wine selections.

But there probably wasn't enough room in Wilson for both stores. Food Lion and Wal-Mart offered shoppers cheaper grocery prices, but Harris-Teeter and Farm Fresh aimed for the same customer base of more affluent and discriminating shoppers who appreciated higher quality and more extensive selections of fresh foods. Both stores also provided greater customer service. Farm Fresh's location was just a stone's throw from Harris-Teeter's old location, which remains vacant. Customers would have to pass Farm Fresh when traveling from the old H-T space to the new, larger store.

Harris-Teeter shrewdly lured its old customer base to its new location by mailing $20 coupons for any $50 purchase. Later, the coupons were for $10 off on a $40 purchase. Holders of the store's VIC cards got the coupons in the mail. The deep discounts were enough to keep shoppers coming to H-T and countered Farm Fresh's efforts to lure those customers away. Farm Fresh relied on extensive newspaper advertising and its pledge to forgo the loyal customer cards H-T, Kroger and Food Lion use. But the twice-weekly ads weren't enough to counter H-T's dollars-off coupons and customers' loyalty, so Farm Fresh will close in February, leaving a big hole in the shopping center where Home Depot is also trying to attract customers from an entrenched competitor.

Farm Fresh's closing is especially bad news for The Wilson Daily Times on two counts: The loss of substantial advertising revenue will further hurt the already-reeling newspaper's bottom line. The closing also discredits the power of newspaper advertising. The newspaper ads didn't succeed for Farm Fresh. The direct-mail worked for Harris-Teeter. Other retailers are likely to take notice.

The paper has already laid off better than 5 percent of its work force (count me as Exhibit A), and this revenue loss will put more pressure on the paper to cut costs. My contacts at the paper tell me that Farm Fresh is not the only bad news. Sears and BB&T are also cutting back their advertising in the WDT. For the WDT, hard times might be just beginning, despite the tremendous increase in Wilson's retail structure over the past five years.