Walmart (WMT) has announced that it will aggressively expand its $10 toy program for the 2009 holiday season. Last year the program applied to a total of ten toys, and this year they say it will apply to over 100 toys.
The world's largest retailer is trying to get a jump on competitors by introducing the program early in the year, while people are starting to think about what they can afford to spend in the fourth quarter as Thanksgiving and Christmas approach.
The company said in a press release, "According to Walmart customer research, by the month of August 55 percent of shoppers report having started budgeting for their holiday toy shopping, and 39 percent say they have started watching for deals."This news is not good for Walmart competitors, since it is not clear that any other retailer can match Walmart's pricing. Walmart can make the offers either because its massive bulk buying power allows it to get the toys from suppliers inexpensively, or because it can afford to lose money on each $10 toy as a play to get people into its stores early and make purchases beyond those for their children.
Most analysts believe that overall, retail sales will be down this holiday season, which could certainly mean more store closings and layoffs at the end of the year. Walmart's $10 toy program is likely to pull in traffic from other retailers, which will probably undermine competitors' sales and make the holidays even tougher than they would have been otherwise.
Douglas A. McIntyre is an editor at 24/7 Wall St.