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Wal-Mart counting on price cuts to spur consumers

Amy Sancetta/Amy Sancetta/AP

Competition in the Canadian retail landscape is heating up in the crucial holiday shopping season.

Discount heavyweight Wal-Mart Canada Corp. said on Thursday that it is dropping a record number of prices in the coming weeks to spur cost-conscious consumers into its stores.

The retailer expects to lower more than 18,000 prices this month alone, representing what it says is 20 per cent more price rollbacks than in November of last year.

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"We know this has been a tough year for Canadians, so we have made every effort to drop our prices and help Canadians make their dollars go farther this holiday season," David Cheesewright, chief executive officer at Wal-Mart, said in a statement.

Retailers across North America are bracing for fierce competition this holiday season to respond to budget-conscious consumers who remain bruised from the harsh economic downturn.

On Tuesday, Loblaw signalled that it is lowering prices and ready to go even further in the weeks leading up to Christmas, even if profit margins are pinched. "I think this Christmas will be pretty fierce in terms of competition," Loblaw president Allan Leighton told analysts.

And on Wednesday, Dene Rogers, chief executive of Sears Canada Inc., said economic uncertainty continues to rein in consumer spending. "Sears will be aggressively marketing in the fourth quarter to convey to customers that we have the holiday season's most wanted products at prices that can't be beat," Mr. Rogers said.

Now Wal-Mart, the world's largest retailer, is gearing up for battle. Its latest round of cutbacks follows its price reductions in late September - dropping the price of some popular toys to $10 weekly. The price cuts of up to 67 per cent included such products as Transformers Universe (regular $29.92) and Mega Bloks' Builder Racer (regular $24.96) .

The retailer's research at the time showed that Canadians were concerned about the economy, but didn't want to compromise when it came to gift giving or entertaining over the holiday season. It found that 81 per cent of Canadians said that they planned to spend the same amount on gifts for their children as last year, while 54 per cent of them said they were more worried about the economy this year than last. It found that 74 per cent of Canadians planned to buy items on sale to help stay on budget.

It said on Thursday that prices between now and Christmas will continue to drop in every department, ranging from electronics to food.

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Still, Eric La Fleche, chief executive officer of grocer Metro Inc., said on Wednesday that he doesn't foresee the return of "irrational" pricing this holiday season. "We don't see an ugly, war-type environment," he told an analysts' conference call. "Competition has heated up a bit … but we don't see going into Christmas any irrational behaviour. It will be competitive as it always is."

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About the Author
Retailing Reporter

Marina Strauss covers retailing for The Globe and Mail's Report on Business. She follows a wide range of topics in the sector, from the fallout of foreign retailers invading Canada to how a merchant such as the Swedish Ikea gets its mojo. She has probed the rise and fall (and revival efforts) of Loblaw Cos., Hudson's Bay and others. More

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