By Monte M. Korn
(The material for this column was researched and written by Ann Zimmerman of for the Wall Street Journal in an article titled “Wal-Mart Fires Shot in Toy War – Retailer Cuts Prices After Learning Target’s Are Lower” appearing in the Nov. 8 edition. To view the article in its entirety, visit http://online.wsj.com/article/SB10001424052748704405704575596920008896164.html)
“The annual battle for the minds and wallets of toy-buying parents has gotten off to a particularly fierce start, with Wal-Mart Stores Inc. slashing prices in an effort to keep Target Corp. from being the low-cost leader this holiday-shopping season.
“Toys are key to many retailers’ success at Christmas, because parents will buy stuff for their kids even when the economy is awful. But in recent years shoppers have tended to snap up the biggest toy bargains and ignore stores’ other offerings.
“This year, with economic conditions somewhat improved, retailers are hopeful that if they can lure parents with a great price on electronic hamsters or Stinky the Garbage Truck, shoppers will make other purchases. But store chains continue to feel the need to stake their low-cost claims just days after Halloween.
“‘It will still be a very competitive season for toys,’ said Craig Johnson, president of Customer Growth Partners, a retail and consumer consulting firm. ‘The reason you are seeing so much early discounting is that retailers are trying to get an early share of the market.’
“When the biggest retailers came out with their initial holiday toy prices shortly after Halloween, Toys “R” Us Inc. and Amazon.com Inc.—which is touting 25% off hot toys—telegraphed aggressive price cuts.
“Amazon’s toy prices are for the most part within the range of Wal-Mart, Target and Toys “R” Us, which also offer a variety of free-shipping deals on toys to compete with Amazon. Online toy purchases are rising but still make up a small percentage of all toy sales.
“Wal-Mart was offering discounts on a broader selection than the bare-bones list of inexpensive toys it promoted last year. But in many cases its prices were higher than those advertised by archrival Target.
“Shortly after The Wall Street Journal asked Wal-Mart last week about its price disadvantage, the company issued a new price list, slashing the sticker on many hot toys.
“‘This underscores our commitment to offer the lowest prices on top toys,’ Wal-Mart said in a statement.
With its newly announced prices, Wal-Mart beat Target on many toy prices by just a few pennies. But a few big spreads persist.
“For example, Wal-Mart is now selling a Barbie doll embedded with a video camera for $39, or $6 less than Target. Meanwhile, Target has priced Stinky the Garbage Truck—a Matchbox truck that tells jokes—at $49.99, after a coupon, or $6 less than Wal-Mart.
“Both retailers say that if a shopper presents them with a print ad featuring a lower price, they will match it.
“But Target has a new, potentially potent price weapon that Wal-Mart does not: Shoppers get an extra 5% discount on all purchases, including toys, if they pay with a Target credit or debit card or the Target Visa card.
“The holiday selling strategy at Toys “R” Us goes beyond price, said Chief Executive Gerald Storch. The retailer is stocking a wider variety of toys in general and more exclusive toys, where it is not necessary to compete on price. The company, for instance, made a big bet this year on a line of miniature die-cast trains called Chuggington that aren’t sold by Wal-Mart, Target or other big chains.
“In addition, the retailer offers shoppers who enroll in a loyalty program 10% back on holiday purchases up to $500, via store credit.”
Monte M. Korn is an attorney practicing law in West Bloomfield, has been a member of the State Bar of Michigan since 1942, and is a member of the Probate and Elder Law Sections of the State Bar.
Monte Korn is the talk show host of “Open Line with Monte Korn” on radio station WNZK am690 every morning at 11 a.m. He can be reached at (248) 933-4334.
The material in the above article is the research of Monte M. Korn. The Detroit, Oakland County, and Macomb County Legal Newspapers have no responsibility therein.?
