Wal-Mart’s Looks to Loss Leader Pricing Strategy for Holidays

Wal-Mart Supersizes Holiday Toy Program (MSNBC)

I’m not sure October 1 is the official start to the holiday shopping season but it sure seems that way with this story about Wal-Mart’s plans for toy pricing.  In an effort to get a jump on everyone else it looks like Wal-Mart’s PR team did a nice job as they got loads of publicity on their announcement of $10 dollar toys.  Even with Wal-Mart’s immense buying power, most of these toys (over 100 of them) will probably serve as loss leaders.

The $10 assortment includes newly introduced toys, such as certain Transformers action figures and a Play-Doh burger builder set, as well as existing items, such as Monopoly and Connect 4, whose prices have been cut 20 percent to 50 percent.

What is the likely response from both large and small competitors?  Can they afford to match prices or will they need to compete in other ways?

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