Walmart Makes Holiday Toy Pitch
Walmart is looking to get a head start selling toys for the upcoming holiday season. Yesterday, the company announced its top 20 toy list for the holidays with its typical emphasis on price.
"Value is a huge priority for our customers and they rely on Walmart for the right toys at great prices every day and especially during the holiday season," said Laura Phillips, senior vice president of toys and seasonal merchandising, Walmart, in a press release. "We know this economic climate is difficult for our customers and we are committed to helping them have the Christmas they want and deserve."
Walmart’s top toy list includes a number of familiar items, including Hasbro’s Easy Bake Oven and Mattel’s Barbie Camper.
Similar to rival Toys "R" Us, Walmart has worked out some exclusive deals, including some tied to the reissue of Disney’s Lion King movie. Others include Mattel’s Monster High 3-Pack and Lego’s Mace Windu Fighter.
The company is also reversing some of product cuts from last year as part of its SKU rationalization program. According to Reuters, Walmart is bringing back "Christmas village sets and outdoor decorations."
Walmart said it would kick off its layaway program on Oct. 17 to help make purchasing easier.
"One of the things we heard from customers is they wanted more pay cycles to be able to break their purchases into chunks," Ms.Phillips told Reuters.
Walmart is also rolling out its own toy line, Kid Connection, with items budget priced between $4.97 and $9.97.
Discussion Questions
Discussion Questions: How important are toys for holiday season sales for chains such as Target and Walmart? Is Walmart positioned for a stronger holiday season selling toys?
Toys are the iconic Christmas gift. Advertising them at a low price is going to generate traffic and with that traffic comes the opportunity to sell not only the toys but other items as well. The impact is not only on the parents but all adult shoppers who have relatives that of the age that want toys (no snide remarks about all men still being kids but with more expensive toys).
Walmart learned some lessons from prior years and has broadened its selection, brought back lay away, and will once again sell Christmas decorations, etc. They are certainly better positioned than they have been in the recent past to capture toys and related sales.
Clearly toys are important and clearly Walmart’s buying leverage and aggressive merchandising approach gives them an edge on Christmas items — especially in tough economic times.
That said, I personally long for the days when Christmas didn’t precede Halloween.
Toys bring in the customers and for mass merchants like Walmart and Target, getting those toy shoppers in the door is critical in selling other high-margin sections of the store. Walmart especially has always been a thorn in the side of Toys “R” Us. While their stock levels have never been comparable to TRU, I predict this year will be different. They want a piece of the action, badly, and are willing to cut into the margin to get the business. What has hurt them in the past is maintenance of the section and product knowledge. Knowing how Walmart feels about labor, I don’t see any improvement in that department and more well heeled customers may continue to shop TRU and other local boutique style toy stores.
Toys are important for the holiday season, but the emphasis on Christmas that retailers began in September is disconcerting. I’ve yet to overhear one customer comment positively about seeing holiday displays soon after Labor Day. I’ll get off my soapbox now.
Here’s another idea for Walmart and all other major retailers; carry something new and different that surprises shoppers this season. Yes, carry some products in all sections of the store that all other stores are not also carrying. Dare to be different.
Toys continue to play a significant role in holiday celebrations and gift giving. Walmart is positioning themselves well with this strategy.
Based on the September, 2011 Consumer Intentions & Actions (CIA) Survey of 9,374 Adults, plans to purchase and spend more on toys this year are seeing an uptick. Among all the doom and gloom of the economy and consumer confidence, 12.1% of respondents say that they plan to Spend More on Toys in the next 90 days, while 45.1% say they’ll Spend the Same. That compares to 9.2% and 47.7% who made those statements in September, 2010.
Fully 18.8% of these Consumers also maintain that they shop Walmart MOST often for Toys, vs. 17.5% shopping Toys “R” Us, and 9.7% choosing Target. Price is key in this category. Walmart is taking the right steps. Other categories are not showing as sharp a move upward for the holidays.
Toys are not only a core category at Christmas for chains like Walmart, they are also a key traffic builder.
Walmart knows its assortment and pricing will drive traffic of its target customer. From there, every visit gives the store the opportunity to drive add-on UPTs.
That said, Walmart has struggled over the past couple of years with overall traffic counts. That’s pretty clear from their announced results. They’ve found a lot of other formats, particularly dollar stores, nipping at their heels as their customer base continues to struggle economically. I don’t see Toys as a category doing anything to change that dynamic this Christmas season.
Holiday toys are very important to the mass retailers, because they can achieve two objectives: (1) drive incremental margin from a value-conscious customer seeking convenience (only 1 place to drive to) and (2) create a brand perception of their location as a source for holiday items (such as gift wrapping, clothes, holiday foods, etc.). Net of everything the goal is to capture additional revenue and margin from customers who make regular visits to their locations.
Walmart’s move into exclusive toys permits them to offer unique items that the manufacturer is willing to discount more than others, since those items cannot be found elsewhere.
Tough challenge for the specialty toy companies, especially in an uncertain economy.
I see this as a move by Walmart to quell the recent losses to Costco. If they can get holiday shoppers into their stores, they can keep much of the grocery, electronics, and decorating/paper goods as well, thereby taking trips away from Costco and not just toy sales from TRU.
Two exclusive toys? Are you kidding me? The biggest retailer in the world and the best they can do in leveraging negotiations with the major toy manufacturers is two exclusive toys? That won’t drive traffic. Next they undercut their toy “partners” by launching a private label line. The merchandising strategy looks like the same tired and boring approach to serving their customers. The good news, they’ve got lots of stores, big parking lots and a brand that pulls in lots of traffic. Thus, the reason why the poll is “correct” — results about the same as last year, if they are lucky.