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Price leadership not so steady


Citigroup found that toy prices at both Walmart and Target fell by 4% and that the price gap between the two retailers on toys has narrowed since its first survey.

According to Ciitgroup, retail prices of a basket of “hot” toys for holiday 2011 are now 30 bps cheaper at Walmart than at Target, compared with 50 bps cheaper at Walmart in its previous survey. However, taking into account Target’s 5% rewards discount, the basket of toys became 470 bps more expensive at Walmart, compared with 450 bps more expensive in the previous survey.

While Target may be the competitor Walmart pays most attention to, Amazon continues to pose a threat, with its toy prices falling 6% during the same two-week period since Citigroup’s previous survey. Amazon’s basket of toys is now 650 bps pricier than Walmart, compared with 920 bps pricier for the prior survey.

Overall, Walmart continues to dominate on price, as shown by the fact that it had the lowest price on 45% of the items in Citigroup’s toy basket. Amazon had the lowest prices on 20% of items, and Target on 10% of items. However, Target shared the lowest price with AMZN and WMT on 15% of the items, while Amazon and Walmart shared the lowest price on 10% of the items.

When it comes to keeping the hot toys in stock, Amazon was never out of stock while Target and Walmart experienced one out-of-stock each, indicating that all three companies have invested in toy inventories to drive traffic and engage customers, Citigroup reported.

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