Wal-Mart has announced that it will be pricing more aggressively this holiday season.  CEO Lee Scott said that it was criticized for cutting prices too much in 2003, and for not cutting prices enough last year, and that it would move back toward more aggressive pricing this year.  This move could portend another price war on toys this holiday season.

In 2003, Wal-Mart's brutal price competition on toys (see 'Wal-Mart Applying Toy Category Kill Shot') led to the bankruptcy of KB Toys and FAO Schwartz, and indirectly to the sale of Toys R Us.  Last year, Toys R Us cut its prices to compete more aggressively with the discount department store giant, as well as bringing in exclusives from a variety of companies that helped differentiate it from the competition.  It was also helped by less ferocious discounting from Wal-Mart.  Now it looks like conditions are ripe for another tough year in 2005 for retailers competing with the world's largest retailer.