With its sales flagging and its stock sagging, retailing behemoth Wal-Mart went on the offensive Monday.

Minneapolis-based Target may be hot on its tail, but Wal-Mart claims it's still the nation's low-price leader and is willing to back up that stance with a tougher response to competitors' sales.

Oh, and all those products Wal-Mart took off store shelves in the past few years? Turns out consumers weren't so happy about that move, and the retailer is putting about 8,500 items back -- boosting a typical store's offerings by 11 percent.

Here in Minnesota, that means fishing equipment has returned to Wal-Mart stores, as have snowblowers. Those items had been taken off the shelves in an attempt to reduce inventory over the past couple of years.

"It's fair to say we went too far," Joel Anderson, Wal-Mart's senior vice president for the Northern Plains, told reporters at a Bloomington store.

That's something that investment pros and Wal-Mart stock watchers had already concluded. They'd also concluded that intense competition -- from the rise of super-discounter Aldi to the fact that dollar store chains are beefing up their grocery selection -- is eating into Wal-Mart sales.

Wal-Mart has experienced seven consecutive quarters of declining same-store sales, a key gauge that measures sales at U.S. stores open for at least a year.

The company is on the defensive, said Burt Flickinger, managing director of Strategic Resource Group, a New York City retail consultant that closely follows Wal-Mart. With its low prices, the company has always excelled during recessions and bleak economic times, Flickinger said, but not this time.

A big challenge for Wal-Mart is Target, some analysts say. Over the past year or so, Target has been revamping its traditional stores to include more grocery items -- the so-called "P-Fresh" concept.

"Target is doing a ton to assert itself in grocery," said Matt Arnold, a stock analyst at Edward Jones & Co.

At the end of 2010, 462 of Target's 1,500 traditional stores had been remodeled to P-Fresh. In addition, the company has 250 SuperTargets, which include full-scale grocery stores. The number of P-Fresh stores is expected to be 850 by the end of 2011.

And while Wal-Mart is still generally regarded as the low-price leader in groceries, Target appears to be closing in. In a January survey by a Credit Suisse stock analyst, Target's prices were only 3.2 percent and 4.1 percent higher than Wal-Mart's in the Chicago and Dallas markets, respectively.

"Our survey results indicated that [Wal-Mart's] average pricing gap relative to competitors in both Dallas and Chicago narrowed to its lowest level in nearly three years," the Credit Suisse report said.

On Monday, Wal-Mart said its store managers will be increasing competitive checks of rival supermarkets throughout the country. And it announced it is rolling out the strongest "ad match" policy in the retail market.

Wal-Mart has long matched competitors' lower prices if a shopper brought in an advertisement documenting the lower price. Now, customers no longer have to bring in ads; their claim will be matched at the register.

But there are a lot of smart, demanding customers out there. So Wal-Mart's cashiers are going to be tested mightily.

If a customer insists a competitor's price is a lot lower than Wal-Mart's, the cashier can ask for a manager to approve it. With such a "we trust you" price match policy, there may be too many prices that need "manager approval" if the customer doesn't have the competitor's sales flier to prove it.

While Wal-Mart commands more than 30 percent of some of the markets it dominates, it had only a 9.5 percent share of the Twin Cities grocery market in 2009. The most recent data from IRI InfoScan published by market researcher Trade Dimensions put it fourth behind Cub Foods, Target and Rainbow.

But the Star Tribune reported in February that Wal-Mart is eyeing a major expansion in Minnesota that could entail a $1 billion investment in 50 stores over the next five to eight years.

Star Tribune staff writer John Ewoldt contributed to this report. Mike Hughlett • 612-673-7003