October 19, 2006
Wal-Mart Rolls Back Toy Prices to Roll Over Competitors
In the movie Conan the Barbarian, the lead character is asked, “What is best in life?”
His answer is: “To crush your enemies, to see them driven before you.”
Perhaps Wal-Mart is not looking to crush its competitors, but with 68 days left before Christmas, the nation’s largest toy retailer is clearly ready to do battle with a price rollback on more than 100 toys and games.
“Throughout the Christmas shopping season we will offer the best prices and merchandise that provides solutions for time-starved customers,” said John Fleming, executive vice president and chief marketing officer, Wal-Mart Stores in a press release, “There’s more to come.”
Wal-Mart, as Mr. Fleming suggested, is only getting started with its rollbacks. The retailer said consumers could expect to see thousands of prices discounted on a whole host of holiday gift and related items.
“We are making toys affordable and accessible to everyone with prices that are significantly lower than elsewhere,” said Scott McCall, vice president and divisional merchandising manager Wal-Mart Stores. “Wal-Mart is helping families get a head start in the holiday shopping game by presenting a one-stop destination to get what they need and want at the best prices.”
The chain promised to be especially competitive when it came to board games. “On average, our rollbacks on board games make the prices comparable to what they were 20 years ago,” said Mr. McCall.
Discussion Questions: Will there be anything different with how consumers shop for toys and other holiday gifts this Christmas season? How should Wal-Mart’s
competitors react publicly to its announcement on price rollbacks for toys this far in advance of Christmas?
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This is not a “business as usual” approach to Toy marketing and is a foretaste of a more aggressive Wal-Mart who has found that the press can be just as “constructive” a marketing tool in forging customer perceptions as it can be “destructive.”
Setting expectations early with customers and taking the air out of the off price retailers balloons this holiday season is a strategic “first strike”. In seasons gone by Wal-Mart lost some ground in the frenetic post Thanksgiving day shopping sprees to well placed competitor advertising and cost cutting.
Customers are more willing to cherry pick the best values, so just getting them to line up at 5am on the day after Thanksgiving doesn’t ensure that they’ll stay and spend all their money. In fact it appears that many simply swoop in for the loss leading items and then move on to the next retailer to do the same, spreading versus concentrating their purchases.
Wal-Mart isn’t waiting around to react to last season’s off price advertising and is telling the public that they will have the broadest assortment at the best prices bar none.
It will very likely pay off big for Wal-Mart and the customers are going to win!
Children want lots of toys at any price. Parents want their children to have lots of toys but at the lowest price. Wal-Mart wants to accommodate those constituencies so they are rolling back prices on lots of toys. What will W-M think of next?
The competition had better create their own powerful persuasion for buying toys at their stores rather than at Wal-Mart this season. Otherwise, the Wal-Mart share of the toy market will grow to monopoly proportions.
There’s a good chance that we have moved into an entirely new situation when it comes to strategic pricing decisions by Wal-Mart. The incredibly positive impact generated by their announcement to sell generic drugs for $4 and today’s Wal-Mart announcement to roll that program out on an accelerated basis to 14 additional states shows that millions of consumers are watching Wal-Mart’s strategic pricing moves.
With that background, it’s difficult to judge the impact that Wal-Mart’s new emphasis on toys will have on the market, but it’s safe to say that it will be bigger and probably more surprising than many of us would expect.
No one is entitled to their share of the market, and it looks like Wal-Mart isn’t acting as if they think they are entitled.
“Throughout the Christmas shopping season we will offer the best prices and merchandise that provides solutions for time-starved customers…”
The question in my mind is, where are x, y and z retailers with this? It isn’t like Wal-Mart is preordained to dominate. And some of x, y and z have demonstrated competence to play successfully on the same competitive field that Wal-Mart is on.
The battle for this Christmas is already over in the minds of tens of thousands of retail executives. (Not that they are through.) But if others aren’t already ready for this, and relishing the challenge, they are effectively ceding market share to all those who are, with Wal-Mart in the van.
Courage! The smaller you are, the more nimble and creative you can be. The larger you are, the more resources you have the opportunity to effectively deploy. Like the Hash House Harriers, we call out, “On, ON!”
Wal-Mart has taken this approach for many years, and continues to be aggressive in marketing “always low prices, always” around the peak Holiday selling season. The highlight of this campaign is the day after Thanksgiving, when shoppers line up prior to sunrise to scoop up the big bargains (especially in toys) that are offered on that shopping day.
Anyone who finds this announcement unusual has not followed Wal-Mart’s marketing and PR strategies over the years. Mid October is always the kick off, and builds from that point, so you’re in phase one of the ad campaign.
The strategy will extend beyond toys, and you’ll see and hear more soon on other Always Low Price/save our cash strapped shoppers time and money message.
Regardless of Wal-Mart’s recent comments, they’ve been squeezing toy margins for many years now. And traditional toys (dolls, board games, plush, bikes) are a declining category. American children play more and more with electronic games, not traditional toys.
Well, Target hedged their bet a while ago by creating their Time To Play toy “boutique” which features European developmental toys on and off line. This differentiated move not only exploited a niche left wide open by specialty toy bankruptcies and disruptions; it has also helped them stay out of the mass price wars muck with Wal-Mart. That said, with Target now as much as 45% higher than Wal-Mart (according to our price comparisons) on key items, Wal-Mart is bound to capture early shoppers and market share. Target’s best strategy would be to lower prices on a different group of items and to promote Time To Play as an upscale developmental alternative to the Bratz/Barbie drill. The Toy category happens to be one of the few remaining areas in which Target can make credible “upscale” claims in the wake of Wal-Mart’s upgrades in multiple categories!
An earlier posted stated that toy prices are up to 45 percent higher at Target. I don’t know how she did her comparisons, but Target’s pricing system is built to change with the prices of its closest Wal-Mart. Each target store completes a weekly comp shop with its closest Wal-Mart, and then alters its prices based on the competition. The prices should never be that high at a Target store. I suggest you take another look at the prices.
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This is not a “business as usual” approach to Toy marketing and is a foretaste of a more aggressive Wal-Mart who has found that the press can be just as “constructive” a marketing tool in forging customer perceptions as it can be “destructive.”
Setting expectations early with customers and taking the air out of the off price retailers balloons this holiday season is a strategic “first strike”. In seasons gone by Wal-Mart lost some ground in the frenetic post Thanksgiving day shopping sprees to well placed competitor advertising and cost cutting.
Customers are more willing to cherry pick the best values, so just getting them to line up at 5am on the day after Thanksgiving doesn’t ensure that they’ll stay and spend all their money. In fact it appears that many simply swoop in for the loss leading items and then move on to the next retailer to do the same, spreading versus concentrating their purchases.
Wal-Mart isn’t waiting around to react to last season’s off price advertising and is telling the public that they will have the broadest assortment at the best prices bar none.
It will very likely pay off big for Wal-Mart and the customers are going to win!
Children want lots of toys at any price. Parents want their children to have lots of toys but at the lowest price. Wal-Mart wants to accommodate those constituencies so they are rolling back prices on lots of toys. What will W-M think of next?
The competition had better create their own powerful persuasion for buying toys at their stores rather than at Wal-Mart this season. Otherwise, the Wal-Mart share of the toy market will grow to monopoly proportions.
There’s a good chance that we have moved into an entirely new situation when it comes to strategic pricing decisions by Wal-Mart. The incredibly positive impact generated by their announcement to sell generic drugs for $4 and today’s Wal-Mart announcement to roll that program out on an accelerated basis to 14 additional states shows that millions of consumers are watching Wal-Mart’s strategic pricing moves.
With that background, it’s difficult to judge the impact that Wal-Mart’s new emphasis on toys will have on the market, but it’s safe to say that it will be bigger and probably more surprising than many of us would expect.
No one is entitled to their share of the market, and it looks like Wal-Mart isn’t acting as if they think they are entitled.
“Throughout the Christmas shopping season we will offer the best prices and merchandise that provides solutions for time-starved customers…”
The question in my mind is, where are x, y and z retailers with this? It isn’t like Wal-Mart is preordained to dominate. And some of x, y and z have demonstrated competence to play successfully on the same competitive field that Wal-Mart is on.
The battle for this Christmas is already over in the minds of tens of thousands of retail executives. (Not that they are through.) But if others aren’t already ready for this, and relishing the challenge, they are effectively ceding market share to all those who are, with Wal-Mart in the van.
Courage! The smaller you are, the more nimble and creative you can be. The larger you are, the more resources you have the opportunity to effectively deploy. Like the Hash House Harriers, we call out, “On, ON!”
Wal-Mart has taken this approach for many years, and continues to be aggressive in marketing “always low prices, always” around the peak Holiday selling season. The highlight of this campaign is the day after Thanksgiving, when shoppers line up prior to sunrise to scoop up the big bargains (especially in toys) that are offered on that shopping day.
Anyone who finds this announcement unusual has not followed Wal-Mart’s marketing and PR strategies over the years. Mid October is always the kick off, and builds from that point, so you’re in phase one of the ad campaign.
The strategy will extend beyond toys, and you’ll see and hear more soon on other Always Low Price/save our cash strapped shoppers time and money message.
Regardless of Wal-Mart’s recent comments, they’ve been squeezing toy margins for many years now. And traditional toys (dolls, board games, plush, bikes) are a declining category. American children play more and more with electronic games, not traditional toys.
Well, Target hedged their bet a while ago by creating their Time To Play toy “boutique” which features European developmental toys on and off line. This differentiated move not only exploited a niche left wide open by specialty toy bankruptcies and disruptions; it has also helped them stay out of the mass price wars muck with Wal-Mart. That said, with Target now as much as 45% higher than Wal-Mart (according to our price comparisons) on key items, Wal-Mart is bound to capture early shoppers and market share. Target’s best strategy would be to lower prices on a different group of items and to promote Time To Play as an upscale developmental alternative to the Bratz/Barbie drill. The Toy category happens to be one of the few remaining areas in which Target can make credible “upscale” claims in the wake of Wal-Mart’s upgrades in multiple categories!
An earlier posted stated that toy prices are up to 45 percent higher at Target. I don’t know how she did her comparisons, but Target’s pricing system is built to change with the prices of its closest Wal-Mart. Each target store completes a weekly comp shop with its closest Wal-Mart, and then alters its prices based on the competition. The prices should never be that high at a Target store. I suggest you take another look at the prices.