How $36 billion grocer Ahold is experimenting with smaller stores

For a retailer with more than 3,000 locations, $36 billion in 2014 revenue, and a narrowing profit margin, going small might seem a strange strategy. But a new small-format grocery store from Dutch grocery giant Ahold that is integrated into a neighborhood streetscape — rather than sitting behind a massive parking lot — may be the key to attracting a young, discerning urban shopper who ordinarily frequents farmer’s markets or Whole Foods.

Ahold USA, which has head offices in Carlisle, Pennsylvania, and Quincy, Massachusetts, created a new unit called Fresh Formats LLC in 2014 with an eye toward spawning new store formats. The first brand to emerge from Fresh Formats is bfresh, which opened in early September in Allston, Massachusetts, a part of Boston that is populated by students, recent graduates, and a significant Asian and Russian population. Bfresh offers a large selection of natural, organic, vegan, gluten-free and international foods, as well as fresh-baked breads and a wide selection of prepared, ready-to-eat meals.

Though technically part of Ahold – which operates chains including Stop & Shop, Giant Food, Martin’s Food Markets, and online grocer Peapod – Fresh Formats is a wholly separate company. And before opening the 10,000-square foot bfresh store this year, Fresh Formats set up an even smaller “learning lab” store in Philadelphia last December.

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