NEW YORK: Wal-Mart has announced phase two of its aggressive price-cutting campaign across key toy categories.

The world's biggest retailer is to slash the price of top-selling lines such as the Buzz Lightyear talking action figure and Star Wars light sabers by a further 20% to 30% in a bid to outsmart rivals and gain the long-term loyalty of customers.

It vows to continue its rolling programme of holiday price reductions just as long as stocks last.

At the end of September, Wal-Mart triggered a pricing frenzy among competitors when it trumpeted a new $10 (€7; £6) price tag on 100 of its top-selling toys.

The rival Target Corp responded with price cuts of as much as 50% on old favourites such as Barbie and G.I. Joe, but other chains have so far been unable to match the sheer scale of the discounts.

While analysts believe that the damage to retailer margins posed by such swingeing price-cuts can be mitigated by careful advance planning and good stock control, manufacturers are in a very different position.

There are growing suggestions that training shoppers to expect lower prices in this way not only damages the long-term interests of consumer goods manufacturers but may even prompt closures among the weaker retail chains.

With deep pockets at its disposal though, Wal-Mart is committed to cutting prices every week between now and Christmas.

Data sourced from Reuters; additional content by WARC staff