Stores offer video-game trade-ins and preorders in battle for holiday thrift

As the battle lines form for this holiday season, the video game aisle will be on retailers' front lines. With everyone from Walmart Stores (WMT) to Toys "R" Us racing into the breach left by the late Circuit City, shoppers should have a lot of options this holiday.

Sears Holdings (SHLD) announced it will offer preordering for video games at Sears and Kmart stores. Shoppers can sign up online or at in-store kiosks to preorder games coming out between October and February, including some expected blockbusters like Band Hero and Guitar Hero: Van Halen. And prices of popular consoles such as the Nintendo (NTDOY) Wii and the Sony (SNE) PlayStation 3 by were cut by $50 to $100.
That follows a Toys "R" Us announcement in early September that it will offer trade-ins on old video games, including the ones made for vintage consoles like the Atari 2600 and Intellivision. Shoppers who clean out the garage can bring in old video games in the original box to trade for a gift card good on anything in the store.

Video games are an easy way for stores to squeeze into the Circuit City vacuum, and a good way to drive foot traffic. As the Sears announcement noted, a large part of the gamer's experience has to do with staying up late, standing in store lines to get the latest releases.

But as many have warned, shoppers are still worried about the economy, so sales this holiday season will be flat after last year's drop. Video gaming will be another area where there will be more companies fighting harder over the same pie.

Frank Badillo, senior economist at the consulting group Retail Forward, said stiff competition has driven a lot of price cutting in consumer electronics this season, and he expects that to continue aggressively into the holidays. Electronics retailers will have to do a lot of promotions to keep up with what other retailers are doing, especially the online channels, such as an expanded Walmart.com, he said.

And as experts have also warned, it won't be all about the kids this holiday -- unlike last year's era of thrift, parents will buy for themselves this time around. According to Retail Forward's research, video games and consoles dropped from seventh place among the popular gifts last year to 11th place among gifts planned for this year.

On the plus side, video games are cheaper than flat-screen TVs and computers, and experts say shoppers are starting to show they're willing to spend on smaller purchases, at the right price. So you may yet get a break on your copy of Call of Duty: Modern Warfare 2 when it hits stores.

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