Sir Stelios Haji-Ioannou opens the orange door into the shop and walks down the brightly lit aisles marked out by orange signs. He is pointing out products and talking prices.
The shelves of the shop in Croydon, south London, are full of the basics such as instant coffee, baked beans, rice and pasta. In the freezers are pizzas, chips and vegetables.
EasyFoodstore is the easyJet founder’s latest venture – an ultra-budget grocer for people struggling to put food on the table. Outside, an orange sign announces his big idea: “No expensive brands, just food honestly priced.”
“We have two types of coffee but not Nescafé. Can you get enough people to turn up without stocking the big brand? Can you run a store without Coca-Cola?” he says, pointing at a shelf of no-name cola.
Just about the only ingredient missing is customers. For this branch is not on the high street: it is a mock-up operation on the first floor of a building the billionaire bought last year, near East Croydon station.
It is more than a year since news broke that Haji-Ioannou was planning to go into groceries. He hoped to open his first branch before the end of last year but the food business proved more tricky than he had expected.
The idea of opening the shop on the ground floor of his building came up against Croydon council’s planning restrictions, so he opted for the mock-up store and hopes to start trading by next summer. “Rather than open downstairs and piss off the council, I decided to take it more slowly,” he says.
The plan is to sell non-branded goods from wholesale suppliers and to apply a far smaller mark-up than corner shops. The average cost of an item will be about 50p. Most foods will be tinned or dried; milk will be longlife to reduce waste. A jar of generic coffee, supplied by the cash-and-carry wholesaler Bestway for 70p, could cost 80p.
A tin of beans would cost less than 30p – though big rivals like Tesco and Asda charge about 24p for a can of value range beans, and about 50p for a 100g jar of instant coffee.
The test branch also stocks pet food and basic non-food items such as cleaning materials and toilet roll.
“It’s creative,” said one retail analyst who has seen the store but declined to be identified. “Stelios is going to have a go at doing things differently. Retail is about deciding on the balance between price, range and service and Stelios is saying price, price and price again.”
Haji-Ioannou decided to enter the cut-throat British grocery business after reading about the growth of food banks and witnessing demand for his Food from the Heart charity programme in Cyprus, which hands out 4,000 sandwiches a day at a cost to him of about £1m a year.
EasyFoodstore sits between his charitable activities and the plethora of businesses bearing the “easy” brand. He hopes to make money out of the venture but he says if it covers its costs or even runs at a small loss he will persist if it meets a need.
“We are not here to put Tesco out of business,” he says, then in reference to the giant grocer’s current problems quips, “although they may manage that on their own”.
He will open stores in poorer parts of London, probably starting in Croydon, whose worst-off areas are among Britain’s most deprived. Subsequent openings will probably be on a franchise basis and the business could go national, he says. The key was persuading squeezed households they could do without a big range of pricy brands, he said.
Haji-Ioannou says keeping costs down is essential but he will not be drawn on whether he will pay staff more than the minimum wage. “I know that is the soundbite you want but we will have to see.”
EasyFoodstore will stock between 100 and 150 items and will probably open for seven hours, five days a week. The shops will not take cash, again to reduce costs, but Haji-Ioannou plans to let customers charge up a card if they have no debit card.
If about 400 people a day buy 10 items, the business will start to make sense, Haji-Ioannou says. As more stores open, he will be able to negotiate lower prices with suppliers.
Kingsley Ofori, project manager of Croydon’s food bank, said the no-brand strategy might be an obstacle even for those who are hard up.
“What he is doing could make people’s benefits stretch a little further but they will have to recognise the value of money over anything else. People still want what they are used to. They want cornflakes, but they want them to be Kellogg’s.”
The UK grocery market has become far tougher since August 2013 when Haji-Ioannou first talked about his plans. The big four chains – Tesco, Sainsbury’s, Asda and Morrisons – are cutting prices to compete with the German value merchants Aldi and Lidl.
Haji-Ioannou says that he is unperturbed by what is going on elsewhere in the sector.
“Whatever Tesco and Sainsbury’s do is irrelevant to this. This is about bringing the cash and carry price on to the high street.”
But veteran retail analyst Nick Bubb said easyFoodstore could struggle to stand out in the market.
“I’m not quite sure what to make of it. I still don’t see the gap below Aldi and Lidl and I suspect we won’t hear much more about it from the great man, but good luck to him I suppose.”
The billionaire, who lives in Monaco, admits the project is an experiment but believes no-brand food retailing can work. He has tried the produce, including cheese, a frozen burger and the coffee. “Don’t worry. I eat everything,” he says.
Ups and downs
Stelios Haji-Ioannou helped revolutionise European air travel when he launched easyJet in 1995. It made him a billionaire but his business record has had its ups and downs.
His biggest mistake, he has admitted, was easyInternetcafe. It boomed briefly after launching in 1999 but was brought down by expensive leases and technical change. “I bought my first BlackBerry and I thought, ‘oh shit, we have a problem’, he said. Records show the business has lost a cumulative £112m.
EasyCinema, which lost £2.9m, was another failure because, he said, he antagonised the film studios and forgot that cinema was about escapism and glamour.
EasyCar also appears to have struggled, losing £72m according to Companies House records, but Haji-Ioannou says the business has been through many permutations and “it is not a number I recognise or have lost”.
EasyBus and easyHotel are successful, notching up consistent profits. EasyHotel was listed on the stockmarket in June, becoming the first of Haji-Ioannou’s businesses to go public since easyJet in 2000. EasyGym and easyOffice are set for expansion and other projects are in the works.
“I’ve tried so many things. If you haven’t had a failure or two, you haven’t tried hard enough,” Haji-Ioannou said.