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Wal-Mart begins a DVD price war
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Published: November 7, 2009
NEW YORK
First it was books. Now it's DVDs.
Wal-Mart Stores Inc. started another price war Thursday, trimming the online preorder prices of some upcoming DVDs following its price cut on books last month. And, once again, competitors Amazon.com and Target scrambled to match the prices.
It's the latest salvo in an ongoing online push by Wal-Mart designed to make sure everyone knows that it intends to be the low-price leader on the Web, as well as in stores.
Wal-Mart said that it would lower the online prices of such new DVDs as Harry Potter and the Half Blood Prince and Star Trek XI to $10.
But when Amazon reduced some of its DVD prices to $9.99, Wal-Mart shot back by cutting its DVDs to $9.98 as of yesterday morning. Target got into the act, too. All three companies also sweetened the pot by offering free shipping for the DVDs being sold.
The goal of such tactics is to drive higher volume, said Wayne Hood, an analyst with BMO Capital Markets. He noted that some businesses such as Wal-Mart and Target can afford to lower their prices and still be profitable because of their low-cost distribution models.
But not all retailers appear to be engaging in the tug of war, as Best Buy Co., Barnes & Noble Inc. and Borders Group Inc. all had higher prices for some of the DVDs yesterday.
That might cost them some sales, but also might not be a bad idea.
Hood said that it is important for some of Wal-Mart's rivals to remain competitive on price, but that trying to undercut Wal-Mart, with its huge scope and buying power, is a losing game. The retail giant sells enough products in enough categories to make up for any losses on individual items that it uses to pull people into stores or onto its Web site.
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