NEXT will not be allowed to set up shop in one of the units on the Spring Valley Industrial Estate in Douglas.
The company had applied to use Unit One to sell furniture, household goods, decorating items and children's wear.
However government planners have refused Next Plc's application for a Certificate of Lawfulness because many of the goods, in particular children's wear, were not considered to be "bulky".
A statement from the Department of Infrastructure said: "Government policy supports retail sale of bulky goods in out of town locations but seeks to maintain the sale of clothing and other types of comparison goods within existing town centres so as to protect their vitality and viability".
Michael Gallagher, director of planning and building control for the department, said: "Although as planners we are keen to support economic growth it is important that this is in a way that does not undermine retailing in Douglas and other town centres.
"This proposal did not comply with the conditions of the existing planning permission for the site which was granted after a planning appeal in 2010."
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