Dive Brief:

• Ahold Delhaize is halting development of its Bfresh concept, according to The Philadelphia Inquirer. The company, which operates three Bfresh stores in Massachusetts, planned to build three locations in Philadelphia, but now says it will reevaluate the use of those sites. The company plans to fold its Massachusetts Bfresh stores along with its Eastside Marketplace store in Providence, Rhode Island into the Stop & Shop banner, according to Supermarket News.  
• The retailer said it will close its Bfresh location in Brighton, Massachusetts, this weekend, along with its Everything Fresh store in Philadelphia, which opened in 2014 and served as a prototype for Ahold Delhaize’s small urban stores.
• “We will apply key learnings from Bfresh and the Eastside Marketplace — such as innovative technology, fresh prepared meals, a health-focused assortment and exciting ways to engage customers digitally and online — to Stop & Shop stores more broadly and to future alternative and small format store opportunities,” Mark McGowan, president of Stop & Shop said in a statement, according to Supermarket News. 

Dive Insight:

In 2014, Ahold opened Everything Fresh, a 3,700 square-foot store in Philadelphia that featured an array of produce, organic groceries, bulk bins and an open layout. The location, which Philadelphia magazine called “a supermarket with a big heart,” caught on in the neighborhood and helped inform the next evolution of small urban grocery stores for Ahold: Bfresh, which opened its first location in Allston, Massachusetts, the next year.

At around 10,000 square feet, Bfresh stores were larger than Everything Fresh, but they shared the prototype’s focus on fresh produce, natural and organic products and prepared foods. The stores, which catered to urban millennials, also had attitude. “NOT COMING SOON: lame foods, this for that, high prices, bad attitudes,” the company’s Twitter handle announced back in 2015, shortly before opening its first location.

Bfresh’s slogan was “no tradeoffs” — that is, customers could get high-quality goods at affordable prices. But by the time Ahold Delhaize was ready to open its third Bfresh store Somerville, Massachusetts, earlier this year, it seemed the concept wasn’t living up to its promise.

As Supermarket News reported back in February, Ahold Delhaize tweaked the assortment in its Somerville location to include more private label products and fewer high-price specialty items. The company also added more meal kits to its prepared foods lineup, and revamped its bakery with more local selections.

Ahold Delhaize had national ambitions for BFresh. It’s not clear why the company has chosen to halt development at this point, though fierce industry competition likely played a role. Target is rapidly deploying small-format stores in cities across the country, with plans to have 100 in place within three years. Whole Foods continues to open 365 stores. Convenience stores have entered the fray, as well, with food-focused stores being developed by the likes of Sheetz and Wawa.

Ahold Delhaize stresses that this is all a learning process. That’s the right approach to have here, because urban grocery retailing is a hot opportunity. According to researchers at the University of California and the University of Pennsylvania, 23 of the country’s 25 largest cities have seen growth in the number of college-educated residents under age 45 since 2000. With the right format, the retailer known for running conventional supermarkets could find a big growth opportunity in thinking small.