Surveys of toy prices at mass-market outlets reported in the NewYork Post indicate that Wal-Mart is acting quickly to implement an aggressive pricing strategy for the 2005 holiday season.  As ICv2 reported last month (see 'Wal-Mart Plans Aggressive Holiday Pricing'), after being criticized for cutting prices too much in 2003 (see 'Wal-Mart Applying Toy Category Kill-Shot') and not enough in 2004, the retail giant is planning to reassert price dominance in the toy category in 2005 and is wasting no time in doing so.  A mid-September survey of the prices of 100 popular toys found that Wal-Mart's prices were averaging 8% less than Toys 'R' Us's and 4% below Target's.

Wal-Mart's aggressive price in 2003 led to the bankruptcies of FAO Schwarz and KB Toys, and also resulted, at least indirectly, in the sale and restructuring of Toys 'R' US. FAO Schwarz has been reduced to stores in New York and Las Vegas, while KB is in the process of emerging from Chapter 11 (see 'KB's Bankruptcy Exit Approved'), and Toys R Us is working hard to increase the number of exclusive items in its product mix.  Currently TRU has about 30 exclusives (including some high profile toys such as a Star War Millennium Falcon from Hasbro, a Bella Dancerella Cinderella Dance Studio from Spin Master), which are immune to Wal-Mart's price-cutting.