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Supermarket price wars heating up

Discount retailer Dollar General is cutting prices on hundreds of items across 2,000 stores. Justin Sullivan/Getty Images

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Competition is heating up between America’s biggest grocery chains, and food prices are falling as a result. Discount retailer Dollar General said Thursday that it’s cutting prices on hundreds of items across 2,000 stores.

The strategy follows a similar path set forth by other chains such as Wal-Mart, Kroger and Trader Joe’s. Cutting costs to get people in the door is a time-tested strategy, but it could mean slimmer margins for both grocery stores and suppliers.

As it turns out, that could be a risky move.

“Because you will not out-Wal-Mart Wal-Mart,” supermarket analyst David Livingston said.

In fact, Wal-Mart recently announced its own plan to slash prices even more on high-traffic items, such as fresh fruit and laundry detergent. Ten billion dollars in cash reserves can buy you that luxury. 

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