H&M, the retail group, has been told that it cannot open a €50 million (£37 million) flagship store on the Champs Elysées in Paris because there are already too many clothes shops on the avenue.

The Swedish chain’s application for a 2,800 sq m store on Europe’s most expensive thoroughfare was rejected by the Paris Commercial Planning Committee. Opponents of the plan said that the avenue needed fewer cheap garments and more culture.

“There is a risk that the Champs Elysées could become banal,” Lynne Cohen-Solal, head of planning at Paris’s city council, said. “We have nothing against H&M.” Nevertheless, she pointed out that clothes occupied 39 per cent of the retail space on the avenue, which was “the maximum”.

“We want to maintain a variety of culture, restaurants and shopping,” she said. “It’s important to us that the cinemas and the cafés remain. Oxford Street is a bit the example of what we want to avoid.”

The decision is a setback for H&M, which had asked Jean Nouvel, the celebrated French architect, to design its store.

Although it has nine stores in Paris and 85 in France, its absence from the Champs Elysées the showcase of the French retail trade, is seen as a handicap. Gap and Zara, its main rivals, have shops there.

H&M is understood to be considering an appeal against the planning ruling, which undermines a central part of its strategy in France. H&M France declined to comment yesterday.

Retail analysts say the Champs Elysées is a prize location not only because it attracts half a million people a day — 850,000 on Saturdays — but also because of its symbolic value. “When you go there, you aim well beyond the French market,” Emmanuelle Gaye, spokeswoman for Adidas, whose biggest store opened there in October, said.

Although the Champs Elysées is the third most expensive street in the world for retailers — behind Fifth Avenue, New York, and Causeway Bay, Hong Kong, and ahead of New Bond Street in London — most chains say that the price is worth paying. They say that stores on les Champs — where the average monthly rent has risen from €6,287 per square metre in 2004 to €6,775 — generate bigger sales than those anywhere else in France.

Created in 1640 by André Le Nôtre, the landscape gardener, the avenue was widely seen as down-at-heel in the 1980s before Jacques Chirac ordered an overhaul when he was Mayor of Paris. It has since developed a split personality. Retail chains have swarmed to the sunny, north side, which attracts more pedestrians, while luxury goods groups have gone to the south side. A year ago Louis Vuitton invited Uma Thurman and Sharon Stone to re-open its renovated south-side shop, where its monogrammed bags sell for several hundred euros each.

However, Bertrand Delanoë, the Mayor of Paris, has ordered a “mobilisation plan” to prevent restaurants and cinemas from being squeezed out by the likes of Gap and Guerlain.

Dominique Rodet, who represents businesses with premises on the avenue, backed him.

“Parisians come here for the cinemas,” she said. “If there are none left, people won’t hang around any more.”

Rents league

The world’s most expensive streets, per square foot, for retailers:

Fifth Avenue
New York — $1,350

Causeway Bay
Hong Kong — $1,134

Champs Elysées
Paris — $805

New Bond Street
London — $673

Ginza
Tokyo — $652

Grafton Street
Dublin — $534

Source: Cushman & Wakefield