Waitrose has launched a "never knowingly undersold"-style pledge to match the price of branded groceries on the shelves of the market leader Tesco as it looks to win over budget-conscious shoppers.
The grocer, part of the John Lewis Partnership, has been outperforming its larger rivals for several years and the managing director, Mark Price, said it was investing "tens of millions of pounds" to extend its existing "price match" guarantee. "This is our equivalent of John Lewis's 'never knowingly undersold' pledge," he said.
The squeeze on living standards in the financial crisis has made shoppers increasingly promiscuous, as they hunt down the lowest prices and money-off vouchers. Higher food and fuel prices also mean industry sales volumes are falling, forcing the big supermarket chains to fight tooth and nail to hang on to their customers.
On Thursday Morrisons is expected to report weak first-quarter sales figures after recent market share suggested it was being outgunned in a voucher war at the checkout. Most recently Tesco, which last month announced a £1bn investment in its UK chain after falling sales and profits, was offering £10 off a £80 groceries shop.
The big supermarket groups have previously used the internet to woo savvy customers with Asda and Tesco running internet-based price check services.
Sainsbury's, meanwhile, is running "Brand Match", which generates coupons at the till if branded goods can be bought cheaper elsewhere. Price said the Waitrose approach was "no gimmicks": "You just walk into our shops and the prices on the shelf will be the same as Tesco, so you benefit immediately."
Waitrose has been matching Tesco's prices on 1,000 items since September 2010 and the new investment will see that pledge rolled out to 7,000 lines.
The initiative was announced as the John Lewis annual report showed that Charlie Mayfield, the group's chairman, earned nearly £1m last year.
The supermarket minnow, which has a market share of 4.5% compared with Tesco's 30.7%, has sought to shake off its reputation for being expensive by running more promotions and introducing its budget range, Essentials. "Extending brand price match will give shoppers even more confidence that they can do their entire weekly shop with us, with no sacrifice of quality, range or inspiration," added Price. The grocer started changing prices last week and claimed its analysis showed that as a result it was 0.4% cheaper than rival Sainsbury's on branded groceries.
Shore Capital analyst Clive Black said the move would "reassure" Waitrose shoppers and "nullify" some of the gains made by Sainsbury's on the back of its "brand match" initiative. The move was also bad news for online grocer Ocado, which matches Tesco's prices while charging customers for delivery. Shoppers spending £50 at Waitrose get their groceries delivered for free.
