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In this make-or-break season, make-minded retailers go big

11/10/2008

NEW YORK —As economic woes continue to plague consumers, two categories of retailers seem to be emerging: those who cut their losses and bail out (a la Linens ’N Things, Mervyn’s and many others who have filed for bankruptcy in the past months), and those who use the momentum to build themselves up with merchandising and marketing initiatives that show consumers that they are the go-to place.

Many such retailers falling into the latter category have launched aggressive campaigns that tout themselves as the place to shop for this year’s must-have toys at low prices. And leading the pack is Toys“R”Us, which recently announced the arrival of its “Big Toy Book” for 2008. But where the marketing truly plays is in the eight extra pages in this year’s version, which makes it Toys“R”Us’ “Biggest Toy Book Ever,” according to the company. Items featured in the Big Toy Book range in price from $6.99 to $899.99.

Walmart launched the season with an Oct. 1 announcement that it reduced prices on some of the most popular toys. The move, the company said, signaled its determination to be America’s price leader this Christmas. Target and Meijer followed suit with their own price cuts on popular toys.

Retailers disseminating lists of hot toys and announcing reduced prices has become a staple of the holiday season, as companies engage in the practice under the auspices of performing the public service of eliminating hassles during the holidays by simplifying the gift-giving experience through the identification of popular items and key trends, which do provide a benefit to people who don’t have a clue what to buy a child.

“With global merchants in 34 countries, Toys“R”Us is able to track and study toy trends throughout the world,” stated Bob Giampietro, senior vp of trend and innovation, at the time of The Biggest Toy Book launch. “…Children continually emulate and adapt based on what they see and hear in real life, and this is reflected in the trends we’ve recognized this year.”

Come holiday season, Walmart tends to be the most aggressive retailer out there when it comes to toy prices and communicating those prices to consumers. “Consumers know we’ve been on their side all year with great brands, everyday low prices and our Rollback program. And this Christmas will be no different,” said Walmart chief merchandising officer John Fleming.

Despite their best efforts, retailers still have to contend with the fact that consumer spending is expected to be significantly lower this holiday season. According to a recent NPD survey, 26% of consumers surveyed said they plan to spend less. In the 2007 survey results, only 18% said they planned to spend less.

“For the first time, I am predicting flat to declining sales for the holiday season,” stated Marshal Cohen, chief industry analyst for The NPD Group. “With consumers already saying they plan to spend less, stores with lean inventories, those inventories on sale as soon as they hit the floor and tightening credit, both for businesses and consumers, where can growth come from?”

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