Just in time Three months before the holidays, Wal-Mart is challenging fellow toy retailers to try to match its prices on Christmas gifts. The retailer has a history of relentlessly undercutting its competitors, but rival retailers like Target and KB Toys aren’t taking Wal-Mart’s price cuts lying down. After announcing its price cuts last week, several other retailers countered with price cuts of their own. With any luck, the cuts will convince parents to spend big and spend soon on toys for Christmas.

The race to the bottom on toy prices shows how influential retailers can be in setting prices for the products sold in their stores. Wal-Mart might be losing money on its $10 Barbie dolls, but it’s dragging the entire toy industry down with it. One interesting quote, from an executive at Toys ‘R’ Us, highlighted how narrow-minded shoppers’ focus can be: “value is not just about cheapness,” he said, and he’s right. Wal-Mart’s toys might be cheap, but problems persist with almost every aspect of the manufacturing process. Are workers rights, American wages and children’s safety worth a $10 toy?

Wal-Mart Sparks War Among Big Toy Sellers [Wall Street Journal]

Retail price wars are starting early this year, and the latest weapon is the $10 toy—a signal that retailers are bracing for a rough-and-tumble Christmas shopping season.

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Christmas decorations usually start showing up in stores starting in early November. By the time Thanksgiving rolls around, shallow panic sets in and consumers start acting like starving hyenas hungry for merchandise. Retailers only make the savage atmosphere worse by discounting for a-limited-time-only and pitting shopper against shopper for the hottest toy or lowest price. Now, a full three months before Christmas, Wal-Mart says: Let the games begin.

Wal-Mart Cuts Prices on Toys for Holidays [Dow Jones Newswire via Wall Street Journal]

Wal-Mart Stores Inc. said it will cut prices on some of the most popular toys and speed up the opening of Christmas shops in its stores nationwide as it tries to lure budget-conscious shoppers and jump start its biggest selling season.

Ten toys, from butterfly-winged Barbie Mariposa to Fur Real Newborn Animals, are priced at $10 apiece, the Bentonville, Ark.-based company said Wednesday.

Wal-Mart said its moves to get an early start on the holiday selling season are warranted for several reasons. Shoppers are facing higher energy prices and food costs as well as a sluggish economy and the credit crunch. They are expected to start their Christmas shopping earlier and make other changes to help stretch their holiday budgets.

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