madcomments

Scared of a little competition, Tesco?

Posted in Advertising, Marketing, Latest reporters' blogs, Lucy Tesseras March 17th, 2008 by Lucy Tesseras

Tesco is threatening to go to the Advertising Standards Authority (ASA) after home grocery delivery rival Ocado promised it would match the supermarket on 3,500 household products, in a bid to combat its expensive image.
 
The problem according to Tesco is not that Ocado is trying to outdo the supermarket giant, but that it failed to follow through, still selling more than 2,500 products at a higher price than their competitor.

But the company, which is part-owned by John Lewis and sells Waitrose food alongside branded products, isn’t willing to go down without a fight. Chief executive Tim Steiner has challenged Tesco to send him a list of products that haven’t yet been lowered for his business to match. So give the company a chance.

Ocado’s pledge extends the John Lewis ‘never knowingly undersold’ ethos, in which the department store, although it may not initially have the smallest price, will gladly match it if you find the same product cheaper elsewhere. Meaning you get the benefit of buying from a well respected and trusted store, while still winning in the money stakes.

In a recent survey of online supermarkets carried out by independent information service Which? Ocado came out the clear winner for overall satisfaction.

So maybe it’s the fact that Ocado is now offering a quality service and value for money that is starting to rattle Tesco.

The supermarket big shot is forever telling consumers to compare prices on its Price Check system (which by the way, Waitrose is not featured on) so you’d think it would embrace the competition, rather than getting stroppy about it.

And this isn’t the first battle by any means. Last year a war of words ensued after Tesco boss Sir Terry Leahy questioned whether Ocado had any future at all, causing Steiner to suggest that his smaller food delivery service must be starting to intimidate the food giant in what escalated to a David and Goliath-style feud.

Tesco, the UK’s leading supermarket chain, made billions last year, while Ocado just managed to scrape a couple of hundred million, so in the grand scheme of things Tesco is way out performing Ocado, but it just can’t seem to let it go.

Either Tesco is being pernickety just for the sake of it, or Ocado is really starting to get to it.

Bring on round three.