Wal-Mart Cutting Prices to Improve Their Bottom Line

What a novel idea - reducing prices to increase sales:

Wal-Mart Stores Inc. is cutting prices on thousands of products in an aggressive campaign to reinforce its reputation as a discount leader, as the company seeks to reverse months of slowing U.S. sales.

The world's largest retailer was a rare beneficiary of the economic downturn, as large numbers of bargain-hungry Americans, including many middle-class families, flocked to its supercenters from supermarkets and specialty clothing stores.

Wal-Mart's sales at U.S. stores open a year or more have edged lower recently, while other retailers have started to see an uptick in consumers' discretionary spending. That suggests to some analysts that Wal-Mart is having trouble hanging on to middle-class shoppers.

Wal-Mart says that it isn't so. Its executives attribute the chain's slowing sales to a general decline in food and electronics prices, a trend they say has begun to ease.

The company says it believes that, despite increasing consumer optimism, many Americans will continue to struggle in the months ahead. So, it is cutting prices this week on roughly 10,000 items, mostly food and other staples. The company declined to specify the sizes of the cuts.

If Wal-Mart was run by the government (and don't think for a moment it won't be based on current trends) they would have responded to lower revenue by RAISING prices thinking that would generate more money, completely ignoring the market reality that raising prices will reduce sales. However, since they've actually run a business, as opposed to most Democrats, they understand that to spur sales and increase revenue they need to lower prices on the things people need. This strategy will work for them and when the economy improves they'll be able to return to their old pricing without losing customers.