Ocado, the online grocery chain part-owned by John Lewis, is launching a price war against Tesco.
Despite losing nearly £300 million since its launch eight years ago, Ocado, which delivers Waitrose lines along with branded goods, has vowed to match prices with the UK’s largest retailer on 3,500 branded products, in a bid to attract thousands more customers.
Tim Steiner, chief executive of Ocado, was quoted in The Times saying: “We have a reputation for superior service and excellent quality, but we have been perceived as too expensive and out of the reach of many households. From Wednesday, that will no longer be the case.”
A Tesco spokesman said: “It’s good to see that Ocado regards Tesco’s low prices as a benchmark.”
Ocado is expected to invest some £10m to keep its price pledge. The group is thought to have made a pre-tax loss of £30m in 2007, while Tesco posed pre-tax profit of £2.6 billion last year.
Richard Hyman, managing director of retail consultancy Verdict, said: “Whether it’s suicidal or not is hard to say, but this could potentially be quite damaging for Ocado. If you’re worried about price, you’d go to Tesco. I think it’s a very bold move.”
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