The New York Times (free registration required) posted Let the Price Wars Begin, noting that higher gas prices are cutting into the budgets of many shoppers. This has prompted retailers like Wal-Mart to price aggressively very early in the “holiday” season. Analysts expect deeper, earlier discounts than in 2004.

Despite (or because of) the pressure, retailers need to discount carefully, using the right mix of heavily promoted items and effective cross-selling to do well this season. Most companies simply have too many SKUs to do this with absolute rigor, but by focusing on the highest-velocity SKUs they may still be able to prevent some unnecessary price erosion.

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