The Waitrose Essential range has been a huge success. Now Mark Price wants to challenge the big four on brands. By Adam Leyland and Michelle Perrett

Confidence at Waitrose is sky high right now. It must be, because this week the Bracknell-based supermarket chain decided to take on Tesco on price.

With like-for-like food sales up 3.9% in the half year to 31 July against an industry average of just 1% Waitrose pledged to "underline its value position with a Brand Price Match on 1,000 everyday branded products, using Tesco's prices as the supermarket industry benchmark".

The 1000 lines had been selected, said Waitrose managing director Mark Price, because they were the top-selling brands most frequently part of customers' weekly shop, and would complement the Waitrose Essential range of own-label goods, which now account for 17% of sales.

"Today's move extends our appeal still further," said Price, adding that the commitment would result in a £26m "margin hit" based on current sales.

Price is gambling the "margin hit" will be offset by a further increase in both basket size and shopper traffic metrics that have helped Waitrose to outperform the market.

"A third of a million more people are shopping with [Waitrose] every week, attracted by Waitrose quality at competitive prices," says Price. And the Waitrose 52-week average spend per visit has increased by 6.9% from £31.18 to £33.35 [Nielsen, 52w/e September].

"If they are going to grow sales," Commercial Advantage chief executive Aidan Bocci says, "they will have to appeal to a broader shopper. This is key to locking in their existing shoppers too, so they are not tempted elsewhere."

So how do the two supermarkets stack up on price? Price was as good as his word this week. In fact, better. A price comparison study commissioned by The Grocer this week showed Waitrose matched Tesco on more than 1,347 branded products, up from 794 the previous week. And in a further 582 cases, Tesco was actually more expensive.

The Price Match pledge also saw the overall price of goods on sale in Waitrose (including own label) reduce by 0.9% in the latest Grocer Price Index (see p17), while the price of its shopping basket in this week's Grocer 33 also fell by £1.54 (see p19).

Should Tesco be concerned? Or is Price secretly setting his sights on other rivals closer to home, such as Ocado, Marks & Spencer and Sainsbury's?

Rivals have dismissed the price pledge as a "PR stunt". Carolyn Bradley, Tesco UK's marketing director said: "It's great that Waitrose see us as the benchmark for value. Our customers do too, and they know that even if our competitors do manage to match some prices, Tesco will always offer better value on many thousands more branded and own label."

Bradley's comments were supported by's price comparison analysis, which showed that while the overall price premium on branded lines in Waitrose had reduced from 8.1% to 6.9%, it was still a premium, and the majority of goods (2,344) were still cheaper at Tesco. The price premium on own-label goods was higher still.

RBS analyst Justin Scarborough said the move was more likely to put the M&S pricing structure under pressure.

"I don't see Tesco quaking in its boots. Waitrose tends to look at M&S and Sainsbury's as its competition."

Ocado director Jason Gissing also dismissed suggestions that the move was intended to damage the online retailer.

"While Ocado already price matches Tesco on over 5,000 items, a lot of people still think Ocado is owned by Waitrose, so any publicity that helps to change price perceptions around Waitrose has got to be good news for Ocado too."

Bocci believes the price pledge will also help Waitrose maintain the momentum as rivals up the ante with new premium own-label offerings.

"This is the most intensive promotional environment the market has ever seen. Even wealthy people have become price-conscious. The consumer dynamic is changing. It is almost as if you are discounting to people who can afford it."