Cheap as chips? EasyJet sets up budget supermarket chain

It is a lucrative market: Britain’s grocery business was worth more than £163bn last year. But Sir Stelios believes he’s found a gap in the market: “a niche below some of the current budget operators such as Aldi and Lidl.”

The tycoon says he was inspired by the rise in the number of people seeking help from food banks as they struggle to cope with household bills: latest figures show half a million Britons are now turning to them for help.

The food bank charity the Trussell Trust said last month that numbers had soared by 21 per cent since April because of the government’s benefit cuts.

The new easyFoodstore will provide a limited range of non-branded canned and packet goods, or as Sir Stelios puts it, “reliable day-to-day provision of basic foodstuffs”.

A pilot store will be set up in Croydon, on the ground floor of a nine-storey building which his company already owns: his other fledgling enterprises, easyHotels, easyOffice and easyGyms will also be housed there.

If the initial store does well, there are plans to roll out the concept on a much wider scale. Sir Stelios hopes that the current slump in property prices means he will be able to snap up retail space relatively cheaply.

Counting the pennies

There are also plans for a customer loyalty and incentive scheme intended to rival Tesco’s club card and Sainsbury’s Nectar scheme.

It is a bold move in an uncertain economic environment, but the budget end of the grocery market has been doing well among those looking for good value on tight budgets.

Kantar Worldpanel research shows there has been a long-term polarisation of the market, with Waitrose performing well at the top end, while Aldi and Lidl have gained ground at the cheaper end.

A satisfaction survey by Which? also puts Waitrose, Aldi and Lidl out in front, with the traditional big four supermarkets suffering by comparison, squeezed by the hunt for bargains and the best value for money.

The award-winning food blogger Jack Monroe, who writes about having to cope on a family food budget of just £10 a week after losing her job, has launched her own drive to help those struggling to feed their families.

She launched a campaign on the social networking site Twitter, with the hashtag #22mealsforacoffee, urging people to donate £3 to food bank charities rather than spend it on their usual morning drink.

Budget basics

Her campaign has already attracted more than 100,000 hits, and she says, “Ocado and Tesco have expressed an interest in adding a ‘food bank pack’ to their online shop as an option for people to donate”.

At the turn of the last century, Britons habitually spent around half their household income on food. Nowadays, thanks in large part to the cut-throat price wars of the big supermarkets, which have led to the widespread availability of cheap food, that figure has slumped to just 10 per cent.

As the food critic Jay Rayner says: “Suddenly the supermarket isn’t just a convenience, it’s a necessity”. Sir Stelios is gambling that at the most basic, cheapest end of the market, he has found a niche.

It worked with airlines: easyJet is now worth £2bn. Whether he can move as easily from the check-in to the checkout, remains to be seen.