Wal-Mart Drops Prices for the Holidays

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By Anne D'Innocenzio, AP Retail Writer

NEW YORK (AP) — Wal-Mart, which has ridden low prices to dominate the U.S. retail scene, further stepped up its game in price cutting Wednesday.

The world's largest retailer said it will cut prices each week on thousands of items, from bananas to board games, through the holiday season. The first group of cuts hit Wednesday.

"We will not be beaten on price," said Eduardo Castro-Wright, vice chairman of Wal-Mart Stores Inc. and leader of its U.S. business.

Castro-Wright was addressing analysts at a two-day meeting that began Wednesday in Rogers, Ark., a few miles from the company's headquarters in Bentonville, Ark. The meeting is being broadcast over the Web.

Wal-Mart, also the largest U.S. grocery seller and overall retailer, said it hopes shoppers will see a widening gap between prices at its stores and those of its rivals.

John Fleming, its chief merchandising officer in the U.S., told investors that Wal-Mart's audits show its prices for frequently purchased grocery items were recently at least 14% lower than at leading national supermarkets on the same items. The difference on those items was about 12% a year ago, he said.

Wal-Mart CEO and president Mike Duke said the company plans to grow further in the U.S. and abroad and is committed to paring down its expenses by taking still greater advantage of its sheer size and by increasing sales productivity in its stores.

Duke told investors that "there is no retail competitor — here in the United States or anywhere in the world — that can deliver the kind of growth that Wal-Mart can over the next several years."

But the company also reiterated it is now focusing on building smaller and fewer stores each year. It plans to expand its U.S. stores by 14 million square feet for fiscal 2010, which ends Jan. 31.

But officials said Wednesday the company will add just 11 million square feet the following fiscal year. Those figures would mark the slowest square footage growth since at least 1998, according to John Simley, a company spokesman. Last year, the company added 23 million square feet.

Wal-Mart has frequently used its buying power to undercut rivals. It sells enough products in enough categories to make up for any losses on individual items that it uses to pull people into stores or onto its Web site. But it plans to sharpen its buying power to widen the price gap between its competitors.

The company, which bought $300 billion worth of goods last year, said it plans to build global brands, to reduce the sourcing costs, thereby saving more money. Currently, it buys $100 billion directly from suppliers. The company is looking into developing uniform products like towels that could be sold across the globe, though with different brands, from the U.S. private label brand Canopy to its United Kingdom label ASDA.

The nationwide cuts start this week with bananas selling for 39 cents per pound, rolls of lean ground beef for $1.25 per pound and select board games for $15.

Wal-Mart started a price war on books last week, announcing that its Web site, Walmart.com, would charge just $10, with free shipping, for upcoming hardcover releases such as Sarah Palin's memoir "Going Rogue" and John Grisham's novel "Ford County." That's at least 60 percent off the regular suggested price.

Amazon.com, the largest online book seller, soon matched the prices on specific books.

The fight escalated Friday, when both stores lowered the prices to $9. Low-price rival Target Corp. threw itself in the ring on Monday, announcing it was matching Walmart.com and Amazon.com prices for seven highly anticipated titles when customers pre-order the books on its Web site.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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