Easy Jet’s retail venture fires gun for another race to the bottom

Food retail prices could hit new lows, with the opening this week of a discount food chain where all items are 25p.

Budget airline Easy Jet is behind the venture, called “easyFoodstore”, which has just opened its first pilot store in Park Royal, London.

Prices are so low that it is possible to buy one of every product on sale – 76 items – for just £20.

The company’s founder Sir Stelios Haji-Ioannou is marketing the rock-bottom priced store as a form of social enterprise, filling the gap between food banks and discount retailers.

However, it is unclear whether the company is driven by commercial or social interest and, if rolled out effectively on a national scale, it could add further pressure on the grocery market to lower prices. 

Sustainability in question

© Matthew Chattle/REX Shutterstock

Sian Edmunds, partner at Burges Salmon, said she questioned the sustainability of easyFoodstore’s model.

“It is possible that this could trigger a further race to the bottom. I query which suppliers will be willing, and able, to supply at those pricing levels long term but I can see the attraction for cash-strapped customers who are struggling to make ends meet.

“However, easyFoodstore will have to sort out the reliability of its stock if it wants to compete with Aldi and Lidl in the longer term and not be seen as simply a commercial gimmick. 

“The fact that products are selling out so quickly will not help with this unless they can manage it as a mere short term ‘promotional’ blip.”

The retailer’s products are tinned or packaged cupboard food. However it is selling potatoes, peas, mixed vegetable, green beans and mushrooms, although it is thought these are also tinned. 

Discount format taken to “extremes”

Head of food and farming, Phil Bicknell said: ““Formulating products and developing smaller pack sizes to hit price points is something that we’ve seen across food retail. Similarly, discounters have developed a low-cost store format that has ultimately allowed them to win shoppers and market share.

“This concept appears to take this to extremes. Some may question the quality, but it’s the sourcing strategies and the underlying treatment of the supply chain that farmers will question. Strong competition is nothing new, but are businesses in their supply chain making a profit?”   

The store was forced to close today after shoppers completely emptied the store following media coverage.

After February the price of all items will increase, but is likely to rise to no more than 50p.

Discounters Aldi and Lidl have been experiencing double digit growth as the public has become more savvy and shopped around for deals. This has added pressure to the larger supermarkets and clawed market share away from them.