Supermarket giants in online price war

Britain's biggest supermarkets are preparing for a fierce online price war to gain market share and lure shoppers away from rivals.

 Escalating competition between the
dominant players prompted one executive to predict a bloodbath over
internet prices during 2008.

Retailers believe a tipping point was
reached at Christmas, when a record number of consumers had their
first real taste of online shopping. These higher take-up levels are
expected to continue.

At the centre is a bitter rivalry
between Tesco, Britain's biggest supermarket chain, and Ocado, which
has cornered the market within the M25, where it controls an
estimated 50% of grocery delivery sales.

Tesco has half the £2.5bn per
year online grocery business. Last week it sought to attract new
shoppers by launching a salvo of emails giving £10 off
first-time orders of £50 or more, with the offer lasting until
today.