Wal-Mart cuts prices on 15,000 more items, as US retailers gird for a slow holiday shopping season

In a move to bring in holiday shoppers, the world''s largest retailer Wal-Mart said on Thursday 18 October that it has cut prices on 15,000 additional items this week, 20 per cent more than last year. It hinted that there were more price cuts to come, setting the tone for a highly competitive holiday season.

Earlier this month, Wal-Mart cut prices on popular toys, as part of its rollbacks - price cuts on in-season products. This week''s price cuts were applied to food, home appliances and apparel. The retailer said it plans to cut prices on electronics as well as other items. Wal-Mart sells more than 100,000 items.

Wal-Mart''s action comes as a trade group has forecast that retailers will have their worst holiday season in five years. This has prompted competitive price cuts, to lure shoppers who are tightening their belts in the face of record-high oil prices and a declining housing and credit market.

Competitors Target, JC Penney, Toys R Us and Best Buy may be forced to follow in Wal-Mart''s footsteps and cut prices. Analysts feel Wal-Mart needs to cut back on its prices and get back to its roots. The company failed last year to lure higher income shoppers to buy its upscale apparel and home furnishing products. These people usually only buy Wal-Mart''s consumable items such as detergent and toilet paper.

Driving traffic to stores during the holiday season is crucial for retailers because that is the time when they make their biggest sales and turn a profit for the year. Worse-than-expected September sales may prompt more discounts heading into the holidays. Retailers from Target to JC Penney have lowered their profit forecasts for the last quarter.

US shoppers are concerned about a slowing economy and may temper their holiday spending, leading to what is expected to be the slowest rate of growth in least four years. A survey by the National Retail Federation (NRF), the world''s largest retail trade group, has forecast sales for the holidays to increase at the slowest pace in five years.

Wal-Mart last week raised its third-quarter profit forecast right in the middle of a sales shortfall, after it installed a staff scheduling software program, improved customer service and reduced markdowns that were used to clear out old merchandise.

The company said it would focus on lowering prices, as its customers are still concerned about the cost of living. Wal-Mart said it saved the average family $2,500 per household last year.