“Once every three or four years, Walmart tells you to take the money you’re spending on [marketing] initiatives and invest it in lower prices,” said Jason Goldberg, the head of the commerce practice at SapientRazorfish, a digital agency that works with large brands and retailers. “They sweep all the chips off the table and drill you down on price.”
I remember when a big name grocery store moved in to my small town and began competing with the mom-and-pop grocery store that we had long shopped at. They immediately dropped their prices lower than the local store on nearly every item in stock - for nearly half a year. People grumbled about how the little guy was getting pushed out and how awful it was for their friend and neighbor, but went ahead and bought where the lowest price was. Then the local store went out of business. Once the competition was out of the way, the big name grocery store went back to pricing their goods the way you'd expect.
Now we have two giants warring with each other price. And at first, consumer's win with low prices...
Source: Jason Del Rey, Recode