Sir Stelios Haji-Ioannou's plan to extend the easy brand into food retailing has received a setback after a London council rejected his easyFoodstore launch plans.
Croydon council in south London has refused the entrepreneur's application to open a budget store, which under the easyJet founder's vision would stock about 100 items such as tinned goods, pasta and rice and cleaning products. Haji-Ioannou believed that basing the first branch in his own building in the London suburb would give him time to experiment with the format at little cost.
The council has approved plans to house an easyHotel and offices at the former MetLife building opposite East Croydon station. But the building, which Haji-Ioannou bought last year, is outside the town's retail zone and the council will not make an exception to its rules to let easyFoodstore open there.
The easyGroup billionaire is instead planning to trial a mock-up of the shop at the site before deciding whether to open stores in other less affluent parts of London. The test store, where customers can browse but cannot buy goods, is due for completion in the next few weeks.
He will invite consumers from his target group and retail experts to give their verdict on the shop before deciding whether to press ahead with opening stores in the second half of this year.
An easyGroup spokesman said easyFoodstore might still open elsewhere in Croydon but added that other parts of London with people on low incomes were now under consideration. Possible sites could include Peckham, the location for Only Fools and Horses, which is one of Haji-Ioannou's favourite TV shows.
Haji-Ioannou's spokesman said: "There is still a considerable amount of work to be done in evaluating possible locations for any rollout. However, this will be a major priority over the next few months."
EasyGroup said Croydon council had been helpful with its application to turn four floors of the building into a hotel but would not shift on allowing a shop to open outside its retail zone. A spokesman for the council was not available to comment.
Haji-Ioannou told the Guardian in January that easyFoodstore had taken longer than expected to develop because the retail business was a new frontier for easyGroup. He also said he had been occupied with other projects in his empire.
On Friday, easyHotel announced plans to float on the stock market. The chain of 20 hotels is the first of Haji-Ioannou's businesses to go public since easyJet's flotation in 2000. Haji-Ioannou said he got the idea for easyFoodstore from the growing number of food banks in Britain, which showed that people were struggling to put basic food on the table.
He plans to offer prices below those of the hard discount grocers Aldi and Lidl by selling non-branded staples in basic surroundings – possibly with limited opening hours. Some retail analysts have questioned whether the venture will be able to undercut the prices offered by Lidl and Aldi and other value chains in an increasingly competitive market.
B&M, the Blackpool-based discount retailer that sells dozens of non-fresh food items, has set out ambitious plans to expand in the south of England.
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