Ocado’s share price grew just under one per cent on Wednesday following news it would slash prices on 200 more goods to entice customers.
In recent months the tech-driven supermarket, which is owned as part of a joint venture with M&S, has been distancing itself from its reputation as an upmarket grocer with the brand also revealing a string of 100 price cuts in June.
Its share price initially spiked to two per cent before dipping to 0.83 per cent by just after midday.
Its latest round of reductions will see the price of its own-range butter reduced to £1.85 making it the cheapest butter in the market and packages of fruits such as oranges have been cut by six per cent to £1.10.
A competitive price point has proved vital for the success of supermarkets throughout the cost of living crisis with all major retailers slashing prices to retain a customer base.
“Ocado is cutting prices in an attempt to boost demand amid the cost-of-living crisis and stiff commercial competition, particularly from the German discounters Aldi and Lidl which are best known for their low prices,” Victoria Scholar, head of investment at Interactive Investor said.
“While food price pressures have been easing, they remain sharply above the headline rate of inflation, potentially prolonging the problematic inflationary backdrop in the UK.”
“But the recent decisions by supermarkets to cut their prices could help towards cooling food inflation and in turn the overall rate,” she added.
Ocado’s grocery arm has suffered in recent years, its door delivery service proved popular with customers when lockdown rules were in place but since restrictions have lifted demand has faded.
The group posted a pre-tax loss of £501m in 2022 and its retail division made a 3.8 per cent loss.
It also has a strong automation arm which accounts for much of the group’s business and earnings.