Ocado 'unconcerned' about escalating price war as Christmas sales rise

It comes as Ocado gross retail sales were up 14.8% in December.

Ocado chief financial officer Duncan Tatton-Brown said the etailer’s existing price match against Tesco products will continue despite the UK’s largest retailer slashing prices.

Tatton-Brown said: “We’re not concerned if there’s a little bit more price activity in the market. We haven’t changed our policy. If Tesco drops its prices across product we sell, our customers will benefit from that.

“Do we think we can sustain that? We do.”

He said that the etailer remains more protected than most due to its extensive 40,000 SKU product range. “If one of our competitors acts on price, there are less comparable products in our range,” he said.

Last week Tesco unveiled it had cut the price of 380 branded products, while Asda revealed it was making its biggest ever investment on price across 2,500 “customer favourites”. Sainsbury’s said in November it would invest £150m in prices, and Morrisons is investing £1bn over a three-year period, which kicked off in 2014.

A challenging market

Tatton-Brown conceded that a “price competitive environment is a bit of a challenge” but he added that retailers with growing sales will find it “much easier to cope with” than those in decline.  

Ocado said on its biggest trading day in the run up to Christmas it clocked up £6m worth of sales, 15% up on the previous year.

The etailer said it processed 40% more items in the period than December 2013 as it fulfilled more Ocado orders and also sales for Morrisons.com, which launched in January 2014.

Ocado chief executive Tim Steiner said this demonstrated “the capabilities of our facilities”.

“We continued the solid growth performance from the fourth quarter into the run up to Christmas,” said Steiner. “Our focus remained on delivering the highest service levels at this very important time for customers, while offering the widest range at competitive prices.”

Morrisons partnership

Tatton-Brown said he remained unconcerned about the prospect of the new Morrisons leadership team unpicking Ocado’s partnership with the grocer.  “It’s not something we would necessarily expect and we’re protected by the contract anyway,” he said.

Morrisons showed its chief executive Dalton Philips the door yesterday and is on the hunt for a replacement, under new chairman Andy Higginson. In 2013 Morrisons struck a deal with Ocado that involved the etailer launching and managing Morrisons’ fledgling online grocery business.

Ocado unveils its prelims on February 3.