An EDLP indignity in toys
Walmart has been a non-player in toys this year, according to Eric Johnson, director of the Center for Digital Strategies at Dartmouth’s Tuck School of Business. He was quoted in a Bloomberg article this week about how Walmart increased toy prices after Thanksgiving weekend. Johnson is regarded as something of a toy expert, so he pops up in holiday stories and he has been critical of Walmart this year. “Most of their hot toys are out of stock and the stuff that is there is not low-priced,” Johnson was quoted as saying in the Bloomberg piece that was based on an email sent to store managers a few days after Thanksgiving advising them to mark up prices on 1,800 items.
Harsh words from an academic in New Hampshire aren’t surprising and there is some truth to the in-stock and pricing comments. However, it is absurd to suggest that Walmart, the nation’s largest toy retailer, somehow in just one year has become a non-player in the category.
Prices go up and down in the retail industry all the time, even at a retailer attempting to reassert itself as a destination for every day low prices, and Bloomberg caught Walmart in the midst of a routine process as it readjusted temporary price cuts. Gotcha! A bit of sensationalism perhaps, but this is Walmart, it is the holidays and we’re talking about the toy category. Walmart doesn’t issue press releases when it raises prices, only when it lowers them, and to be seen taking prices up, even if there is a logical explanation, just doesn’t look good. After all, Walmart is a company that often portrays itself as a champion of the consumer, an organization whose size and relentless quest for efficiency uniquely qualifies it to help people save money so they can live better.
To make matters worse, Walmart has not been the low price leader in the toy category this holiday season, according to various pricing studies and media reports. Walmart has been competitive with its toy prices, but it hasn’t been the clear cut leader in pricing studies the way it so often is on the grocery side of the business. “Save money, live better.” rings hollow during the holidays when shoppers can find better deals on toys at retailers other than Walmart without undue effort.