John Lewis has killed off its “Never Knowingly Undersold” promise to customers before its centenary after the shop said that the rise of online retailers such as Amazon had pulled the rug from underneath the pledge.

The business said that the promise – which one expert dismissed as a “psychological sop” – is from a different era and will be retired this summer.

The promise was that John Lewis would match the price of branded products in other shops if a customer pointed out they could find it cheaper elsewhere.

The policy did not apply to online-only rivals and MoneySavingExpert founder Martin Lewis said it was hardly used anyway.

Never Knowingly Undersold has been a cherished sign of trust for John Lewis for a century but it doesn't fit with how customers shop today as more purchases are made online

“The Never Knowingly Undersold promise has always been a bit of a psychological sop to consumers, giving an arguably false impression that John Lewis is cheap,” he said.

“In reality, it allows the store to charge what it likes and know that, for a few price-sensitive shoppers – less than 1% last year – who are bothered to check prices elsewhere after making a purchase, John Lewis will reduce its price but only to that of its high street competitors.”

John Lewis said that it would still monitor prices at its rivals, but that now it will invest £500 million in keeping prices down without customers having to shop around.

The investment is 25% more than was spent on keeping prices down last year, John Lewis said.

John Lewis executive director, Pippa Wicks, said: “Customers are tightening their belts and we’re responding so John Lewis is more affordable for every customer, every day whether shopping in-store or online.

“Never Knowingly Undersold has been a cherished sign of trust for John Lewis for a century but it doesn’t fit with how customers shop today as more purchases are made online.

“Our new £500 million investment means all our customers can trust they’re getting the quality, style and service they expect from John Lewis at great value prices.”

The promise was introduced in 1925 when John Lewis only had two branches.