Amazon, Wal-Mart Square Off

Wal-Mart and Amazon.com are staring each other down this holiday season as a price war between the two retailers has spread from books and DVDs to consumer electronics and Easy Bake Ovens ($17 from Wal-Mart; $18 from Amazon.com, as of last Wednesday.) But it's not just about the dough: "[T]he price-sniping by Wal-Mart is part of a greater strategic plan," says Fiona Dias of GSI Commerce. "They are just not going to cede their business to Amazon." In a tough economic climate for retailers, who are facing a predicted 1 percent decline in sales this holiday season, Wal-Mart is trying to aggressively stake out its online position—and look to the future of retailing. Amazon, though smaller than Wal-Mart overall, dominates the growing online retail market, and is expanding while others contract: its sales last quarter went up 24 percent, even as regular retail dropped 4 percent.