Earlier this week, mega-retailer Wal-Mart Stores announced price cuts of 10% to 50% on its Top 12 Toys of Christmas, including Tonka Trucks and a Fisher Price digital camera for kids. The price-cut announcement predates a similar statement made in 2006 by a couple of weeks which, in turn, predated its 2005 counterpart by a couple of weeks. Some reports suggest that Wal-Mart may be announcing the cuts early due to concerns about a potential slowdown in consumer spending. The retailing Goliath has seen its profits come under pressure this year as high oil prices have taken a chunk out of its customers' discretionary income.
The company's Chief Toy Officer, Laura Phillips, said that Wal-Mart is throwing down the gauntlet early and aggressively with this year's holiday rollbacks. Further price cuts are slated to be announced each week in this aggressive move to lead the market on holiday savings. (Is it weird to anyone else that a chief toy officer keeps harping on aggression?)
But, given that Wal-Mart imports more goods from China than some countries, it seems like safety might be more of a concern for parents than low prices during this holiday shopping season. Over at Seeking Alpha, George Grutowski says that Wal-Mart is a one-trick pony, and that they're pushing the only button they know how: Cheap cheap prices.
Indeed, neither Wal-Mart nor its investors can be too pleased that the stock has recently broken to the south side of its years-old trading range between 44 and 50. The company can't be blamed for sticking with what it does best: Offering low prices on cheap imports. However, as Grutowski points out, it could prove to be a risky strategy: When your child is poisoned, a cheap price tag will only stimulate class action lawsuits as to why Wal-Mart induced me to buy something bad with a cheap price when they should have known better.