Sales at the discount giant's 1,965 Wal-Mart stores rose 12 percent, to $16.2 billion, while Sam's Wholesale Club sales rose 3 percent, to $4.7 billion.

The shop owner had been planning to quit when a Wal-Mart opened nearby but, after hearing Mr. Stone, he sought and won a contract to service power equipment sold by the discount giant.

First, discount giants like Wal-Mart have leapfrogged into a powerful position by becoming big sellers of groceries as well as garden hoses.

Kmart, which used to be the discount giant, is now promising to spend $460 million in the next year to update its information systems, but it may already be perilously behind in the catch-up game.

This two-pronged competition, the two discount giants and the warehouse club, have produced the major challenge to the other discounters.

The conventional wisdom is that Wal-Mart Stores Inc., the discount giant that has plodded its way into the region in recent years, has consumed its competitors' market share.

In Seiyu's stores, few overt signs of the discount giant's presence can be found.

The Woolworth stores themselves have found it increasingly difficult to compete with the discount giants.

The discount giant estimated that sales at stores open for at least a year rose 2.2 percent.

In 1999, discount giants including Wal-Mart Stores, based in Bentonville, Ark., successfully sued to block his order for deep discounts on commonly prescribed drugs.