Competition is fierce among the US discount store industry which is responding to a downturn in economic activity.

Kmart says it is now having to turn its attention to pricing in a bid to make the company more profitable.

Wal-Mart, another major player in the discount store industry, says has increased its "rollback" by 15 per cent in the first three months of the year.

Another big company, Target, says it is also watching the situation carefully.

Since the mid-1990s, the US discount store industry has enjoyed relatively even pricing conditions.

A slowdown in the US economy means the honeymoon period for discount retailer is now over.