Ocado offers loyalty discount as sales slow

Ocado is launching a loyalty scheme that will offer discounts to members in a bid to attract regular customers as it looks to speed up slowing sales.

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The Ocado Saving Pass launches today (19 September) and will offer customers a 10% discount on a range of 500 branded goods, in return for a subscription fee.

Ocado already offers customers unlimited free delivery for a membership fee and says this scheme accounts for over half its orders.

The online grocer claims regular customers could save more than £100 a year through the Ocado Saving Pass, which is in addition to its existing promise to price match Tesco.

Shoppers can opt to pay an annual fee from £1.99 to £5.99 to get a discount on a particular group of products such as household cleaning, or pay a one off annual fee of £8.99 to get the discount across all categories.

Ocado is facing increased competition from Waitrose, which can now deliver within the M25 area following the end of a commercial deal preventing it doing so earlier this year, and is introducing a number of initiatives to differentiate from rivals such as Tesco and Waitrose.

Total sales increased 16.9% to £147.9m for the 12 weeks to 7 August 2011, up from £126.5m in the previous year.

Ocado also reported an increase in the number of weekly orders, up to 110,945, from 92,834 in the equivalent period in 2010.

Customers are, however, spending less as the challenging economic environment puts pressure on household budgets. Average spend fell to £111.08, down from £113.59.

The online grocer also said that its efforts to return customer service to its previously high levels, would hit profit margins for the year.

Ocado co-founder, Jason Gissing says: “We’re proud to bring a whole new way of saving to our shoppers. Not only will the Ocado Saving Pass help lower the cost of a basket throughout the year, it will also offer great discounts in the run up to Christmas, a time when we are all trying to economise. We are really pleased to be helping our customers secure even greater value when shopping at Ocado in a time of economic uncertainty.”

It recently partnered with French supermarket group Carrefour to sell an exclusive range of French specialty products in the UK in an effort to differentiate from other UK grocers.

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