Walmart Tones Down Holiday Toy War
By Tom Ryan
Just as Santa Claus always came to town, Walmart’s deep discounts
on toys regularly arrived to drive holiday traffic and drive out competitors.
But apparently not this year.
According to a company e-mail dated Nov. 30 obtained
by Bloomberg News,
U.S. store managers received instructions to increase an average of 1,800 types
of toys per store. The prices were hiked “to better enable your store and
the company to have a successful financial month,” said the e-mail.
surprisingly, a Walmart spokesperson assured Bloomberg that the discount
giant remains committed to the toy category. The retailer had nearly doubled
the floor space devoted to toys in most stores this year and the pages in its
toy catalog had more than quadrupled, he said. On Wednesday, Walmart also unveiled
a round of price cuts on the “Hottest Toys and Electronics,” such
as $5 off Kung Zhu Hamsters.
Regarding the price increases, the spokesperson
said they reflect temporary discounts across products, including toys, that
ended Nov. 30. “Once a
rollback ends, the item returns to its original everyday low price,” he
said in an e-mail.
Still, toy market observers said any move to limit margin
erosion would be in line with an overall shift by Walmart to deemphasize the
“Walmart felt like they weren’t making as much margin,” Jim Silver
of timetoplaymag.com, a toy review site, told The Baltimore Sun. “They
make more money in electronics and computers, so they’d rather compete there.”
Keithley, president of the Toy Industry Association, a trade group, added that
while many retailers have shrunk or exited the category due to past price competition,
many are coming back as Walmart’s less aggressive
stance and the exit of KB Toys has made the category more profitable. Also,
although the category is missing a must-have item to the level of Tickle Me
Elmo or Cabbage Patch Kids in the past, it is being helped by the success of
traditional toys that are incorporating interactive and technology components
as well as the arrival of more affordable toys (such as Squinkies and
Zhu Zhu Pets) that are working with today’s budget-conscious shopper.
The biggest beneficiaries, Craig Johnson, president of
Customer Growth Partners, told Bloomberg, are Target and Toys “R” Us.
Both have gained market share in toys against Walmart this year by expanding
their toy mix and overall distribution.
Discussion question: How important is it for Walmart to be known as
the destination for toy deals? What do you think of Walmart’s apparent downplaying
of the toy category?
Raising Toy Prices, Squeezing More Out of Holidays – Bloomberg
going after your dollars with toys – The Baltimore Sun
Announces More Big Savings This Weekend on the Hottest Toys and Electronics