Ocado joins 'price promise' price war: what's the catch?

Ocado vanKatie Collins/PA

The complex and confusing world of the supermarket price promise has welcomed a newcomer. This one is rather surprising, because upmarket Ocado has joined the throng.

It promises to price match Tesco, and if a comparison shows you would have spent less at Tesco, you'll have the difference refunded - plus 1p. So does this mean Ocado will always be cheaper?
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The deal

As long as you spend over £40 on your shopping, the new tool on Ocado will automatically add up the prices of all participating products in your basket at both Tesco and Ocado. If you would have spent less at Tesco, it will be refunded and you'll get a penny for your trouble. This will come to you as a voucher code that you can use on your next shop.

What is striking is that if there's anything on offer at Tesco, Ocado will match it. This makes it superior to the Waitrose promise, which will only match standard prices at Tesco.
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There is, of course, a catch - or rather there's a handful of them.

You'll only get up to £10 refunded on every shop, and you'll then only have 14 days to redeem the voucher. So if there's a big difference you will lose out, and if you don't do a big shop worth delivering every 14 days you, won't get a chance to redeem it. Plus, of course, it is only matching Tesco, and while it is the biggest supermarket, there is some question over whether it is the cheapest.

To add insult to injury it isn't matching everything - just those things which it considers to be identical to things stocked by Tesco Online. Those items which it checks for price matches are marked LPP (Low Price Promise) on the site, and if it doesn't have the logo, then it's anyone's guess who is cheaper.

Will it be cheaper?

So does it mean Ocado will always be cheaper? Clearly not. It means Ocado will be cheaper than Tesco on certain things, up to the value of £10, for those who shop at least once a fortnight... which is a very different thing.

The trouble with all these price matches is that they all have their catches. Sainsbury's, for example, at least compares prices with Asda and Tesco. However, it's only the branded products that get checked - which makes up a small percentage of any really savvy shop.

Tesco, shockingly, introduced a limit to its scheme after customers started taking advantage. It compares prices in Asda, Morrisons and Sainsbury's, but has a £10 cap.

Asda has what appears to be the most generous scheme, offering the difference plus 10% if the shop would have been any cheaper at Sainsbury's, Morrisons, Waitrose, Ocado or Tesco. However, that too is capped at £15.

And as anyone who is fickle with their shopping, and hunts around for bargains, knows - the small print and rules and regulations means that by far the majority of the time, wherever you shop, the supermarket will tell you they were the cheapest.

It's hardly surprising that last month, a survey by Market Force found that 82% of shoppers didn't take price matches into account when choosing where to shop, and 47% thought they were just a marketing gimmick.

The long and the short of it is that no-one is always cheaper. You have to do the shopping around yourself, and hunt down the bargains. Alternatively, you can go with convenience - and just accept that on certain things you're going to end up paying over the odds.

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High Street casualties
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Ocado joins 'price promise' price war: what's the catch?

Administrators sounded the death knell for Woolworths in December 2008, leading to store closures that left 27,000 people out of work. Since its collapse former Woolworths stores have become a blight in many town centres and more than 100 of the large stores still lay vacant in January 2012.

Loyal customers didn't have go without the family favourite store for long however as it reappeared online as Woolworths.co.uk in 2009, after Shop Direct Home Shopping bought out the Woolworths name.

The greetings cards specialist became the latest highstreet casualty in May with 8,000 jobs on the line when it was forced it into administration. Its biggest supplier, American Greetings, then bought Clintons out of administration and put the retailer through a rebrand including a new logo and complete in-store revamps.

Its contemporary format includes new fixtures and fittings and easier to navigate stores, and will be rolled out to all 400 UK stores at the cost of £16million. Bosses aim to bring the brand back to profit within two years.

Poor sales in the run up to Christmas was the final nail in the coffin for several struggling chains, including lingerie retailer La Senza, which went bust in January 2012 with 146 shops and 2,600 staff. Kuwaiti retailer Alshaya bought part of the business, which saved 60 shops and 1,000 staff.

La Senza has been struggling in a similar way to other specialist shops such as Game and Mothercare, which have been hit by cut-price competition at supermarkets and have no alternative products to help shoulder losses.

Stricken retailer Blacks Leisure, which employed 3,600 staff across 98 Blacks stores and 208 Millets stores, went into administration in Janurary 2012 after failing to find an outright buyer.

Soon after its stores were bought by sportswear firm JD Sports in pre-pack deal - an insolvency procedure which sees a company being sold immediately after it has entered administration – which saw most of Blacks' £36 million of debt wiped out.

Fashion chain Bonmarche, which was part of the Peacock Group, was sold in January when the group collapsed due to unsustainable debts, resulting in 1,400 job losses and 160 store closures. Private equity firm Sun European Partners bought 230 stores, which continue to trade with 2,400 staff.

Peacocks collapsed under a £740 million net debt mountain in January 2012 in the biggest retail failure since Woolworths. Despite being sold out of administration to Edinburgh Woollen Mill in a deal that saved 380 stores and 6,000 jobs, administrators from KPMG were forced to close 224 stores with immediate effect. This lead to 3,350 redundancies from stores and Peacocks head office in Cardiff.

The high street name continues trading as bosses work to stabilise the situation, yet a further blow was dealt this month with news that the firm's pension fund is in £15.8 million shortfall as a result of the collapse.

Game buckled under its £85m debt pile in March 2012 and was placed into administration after being unable to pay a £21m rent bill. Administrator PwC immediately closed 277 shops, with the loss of 2,000 jobs. Soon after, investment firm, OpCapita bought 333 Game stores, saving more than 3,000 jobs.

Game's demise followed a string of profit warnings and the failure of nervous suppliers, including leading names Electronic Arts and Nintendo, to go on providing the latest games, further damaging poor sales.

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