Is this the $10 Christmas?

Articles
October 10, 2008

Is this the $10 Christmas?

Since America’s consumers got a fat lump of coal as an early holiday gift from Wall Street, they’ll be figuring ways to surround the bottom of their Christmas trees with festive wrapped packages that don’t put them further in debt. More price-sensitive and cash-poor than any Christmas in recent memory, shoppers won’t disappoint their kids even if they can’t afford much. Low-cost presents will rein. The Walmart 2008 Holiday Shopping Intentions Survey found that one-third of Americans buy gifts for their children before spouses, friends, anyone. The current twist in a dismal economy: 39% plan to buy less expensive items, 35% will start shopping earlier, and 35% will scratch people off of their gift lists. Therefore, Walmart dropped prices on 10 popular toys to $10 for the holiday season. Among them: Barbie, Play-Doh, Hot Wheels, Tonka and Clue branded items. Rival Target also promised “popular toys for $10 or less” and “the best prices on the most-wanted items.” Once consumers recover from the shock of Dow Jones gyrations, and start to focus on the holiday, advertising from these big media spenders could begin to register and imprint 2008 as the Year of the $10 Christmas.

Since America’s consumers got a fat lump of coal as an early holiday gift from Wall Street, they’ll be figuring ways to surround the bottom of their Christmas trees with festive wrapped packages that don’t put them further in debt.

More price-sensitive and cash-poor than any Christmas in recent memory, shoppers won’t disappoint their kids even if they can’t afford much. Low-cost presents will rein.
 
The Walmart 2008 Holiday Shopping Intentions Survey found that one-third of Americans buy gifts for their children before spouses, friends, anyone. The current twist in a dismal economy: 39% plan to buy less expensive items, 35% will start shopping earlier, and 35% will scratch people off of their gift lists.
 
Therefore, Walmart dropped prices on 10 popular toys to $10 for the holiday season. Among them: Barbie, Play-Doh, Hot Wheels, Tonka and Clue branded items. Rival Target also promised “popular toys for $10 or less” and “the best prices on the most-wanted items.”
 
Once consumers recover from the shock of Dow Jones gyrations, and start to focus on the holiday, advertising from these big media spenders could begin to register and imprint 2008 as the Year of the $10 Christmas. According to AdAge, Target was the third-largest retail advertiser in measured media in 2007 at $727.6 million, and Walmart was fifth at $550.3 million; Christmas breakouts or forecasts for this year were unavailable. By starting early and loudly, these two discounters could impose price leadership intended to bring traffic—and other purchases.
 
Consider how Walmart’s $4 generics have helped redefine the retail pharmacy marketplace, and caused dozens of supermarket and drug Rx operators to follow suit or lose valuable shopper traffic. If the strategy worked in pharmacy—where the relationship between pharmacist and patient is meaningful to many—it could be more impactful in toys.
 
If it works wells in toys this Christmas, competing retailers ought to start thinking about the food, beverage and household goods categories that might be ripe for Walmart price-capping.