Ocado, the John Lewis -owned online food delivery service, has launched a price war against supermarket giant Tesco, vowing to price match the supermarket giant for all branded grocery products .
Ocado revealed its plans to match prices with the UK’s number one supermarket chain on 3,500 branded products in the hope of attracting more changing consumer perceptions and attracting more customers over the coming months.
The scheme, which will come into effect from tomorrow, will see price cuts on roughly a third of its lines, including items such as Pampers nappies, Coca Cola and Persil washing powder .
Ocado Chief Executive, Tim Steiner, said: “Ocado has a reputation for superior service and excellent quality, but we have been perceived as too expensive and out of reach of many households. From Wednesday, that will no longer be the case.”
Richard Hyman, Managing Director of retail consultancy Verdict, commented: “Whether it’s suicidal or not is hard to say, but this could potentially be quite damaging for Ocado .”
“People aren’t going to switch to Ocado because they have Fairy Liquid at a lower price. If you’re worried about price, you’d go to Tesco . I think it’s a very bold move.”
The move by Ocado, which delivers Waitrose own-brand food and drink alongside everyday branded products, comes despite reported losses of nearly £300 million since its launch in 2000.
It is thought the group made a pre-tax loss of £30 million in 2007, although the company claims it recorded a profit at an operating level. In stark contrast Tesco posted a pre- tax profit of £2.6 billion last year.
The Ocado business has gradually built up a strong customer base throughout the South of England thanks to its partnership with upmarket grocer Waitrose and its focus on providing the best customer service in the market .
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