In the week that Morrisons reported an 8% increase in like-for-like sales, Tesco's 2.2% growth - and the discounter range that has arguably brought it about - looks neither big nor clever. While Sir Terry and his team argue it has deliberately dialled into deflationary Britain, as City analyst Jonathan Pritchard reports (p23), the shine has gone off the Tesco halo for now. But for how long?

Tesco has made mistakes in the past, of course. One of its strengths has been the speed at which it rowed back when it realised the error of its ways. But with 25% of Tesco shoppers already buying into its strategy, there are no signs of it losing its nerve.

And it will also, surely, feel vindicated by Ocado's decision this week to follow suit with a new discounter range of its own (p5). It's only 21 products at this stage, but it seems Ocado is determined to continue to match mighty Tesco as closely and as literally as it can on price.

On the one hand, this is an extraordinary position for a loss-making minnow like Ocado to take in a bloody supermarket war. It might prove the equivalent of then-Chancellor John Major's decision to track the pound against the Deutschmark.

On the other, it proves Ocado is further distancing itself from the apron strings of Waitrose, in a clear sign that it believes its main supplier's offer is too premium-centric.

Waitrose has never offered a value line, and says it never will. Its focus is on 'quality', taking into account taste, provenance and ethics. The only thing it doesn't take into account is price and Ocado is clearly not prepared to follow suit, which is why, for example, it is bringing in the bacon (and sausages) from Danish supplier Tulip.

Last week's £18m cash injection from P&G and Tetra Pak (see p14) appears to endorse Ocado's position, too, valuing the online retailer at £500m.