Wal-Mart to expand discounts as US holiday season price war heats up

In this 2012 file photo, shoppers are seen in front of a Wal-Mart store in Paramount, California. -- PHOTO: AFP
In this 2012 file photo, shoppers are seen in front of a Wal-Mart store in Paramount, California. -- PHOTO: AFP

NEW YORK (Reuters) - Wal-Mart Stores said it will expand its offering of discounted products during the holiday season and may broaden a price-matching scheme to include online rivals, in the latest sign of an escalating price war among big U.S. retailers.

Wal-Mart said it was bracing for competition to be as tough or tougher than in 2013, when heavy discounting depressed earnings across the industry. Wal-Mart's profits dropped in the holiday quarter last year and it has posted six straight quarters of flat or declining same-store sales.

"It is starting to heat up right now, and I would expect it to be at least as competitive as last year," Steve Bratspies, executive vice president of general merchandise for Wal-Mart's U.S. operations, said on a call with media on Thursday, referring to competition during the holiday season.

Wal-Mart said it plans to have 20,000 "rollbacks", or a product discounted for at least 90 days, on offer starting on Saturday. While it did not disclose a comparable number, it said the program was bigger and included a wider line-up of products, with a focus on toys and electronics, than last year.

Other retailers have been stepping up promotions, with a focus on attracting more customers online.

Target said earlier this month that it would drop shipping fees for online purchases from Oct. 22 to Dec. 22.

Wal-Mart said it would provide free shipping for online orders of a selected list of 100 gift items. It normally waves shipping for purchases above $50.

Wal-Mart is also considering expanding a price-matching program for local bricks-and-mortar rivals to include online comparisons, Bratspies said, although he stressed a final decision on the strategy had not been made. It would mean Wal-Mart matching prices with Amazon.com in addition to local retailers and grocery stores.

The moves come ahead of what is expected to be a fiercely competitive year-end season. Research firm Customer Growth Partners (CGP) predicts spending will rise 3.4 per cent, up slightly from last year's 2.9 per cent growth, which was the slowest growth since 2009. "Demand is sluggish and consumers of all stripes are looking for value," said Craig Johnson, president of CGP.

"This is going to be a pretty promotional Christmas."