Essex Timber & Plywood in Southend is next to the primary site for a branch of Lidl at the entrance to the Progress Road Industrial Estate. The project would require part of the timber yard.
The first plans were opposed by residents and rejected by councillors who wanted to retain industrial and commercial land. New plans were turned down last week.
Raife Clarke, owner of Essex Timber & Plywood, said the loss of land would have forced him to close the business. He told the council the family firm had been on the site for 25 years and employed 14 full-time staff.
Local Tory councillor Andrew Moring told the council: "I’m very concerned about Essex Timber and wish Lidl had worked with them to find an alternative location."
