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Wal-Mart to expand discounts as retail price war heats up

(Reuters) – Wal-Mart Stores Inc 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 Corp 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 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 percent, up slightly from last year’s 2.9 percent 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.”

However, Johnson said he expects Wal-Mart to return to same-store sales growth in its fiscal fourth quarter, helped by food inflation, strong demand for consumer electronics and a move to put labor back in stores to address long checkout lines and better stock shelves.

Wal-Mart said it planned to hire 60,000 additional workers for the holidays, up 10 percent from last year, and would aim to have all of its cash registers open during peak hours.

(Reporting by Nathan Layne; Editing by Ken Wills)

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