Erika, the latest offering from the Barbie franchise, wears a blue peasant dress and flowered headband. She carries a small plastic cat, plus a set of Barbie essentials: a comb, brush, mirror and perfume bottle. She even sings -- all for the suggested retail price of $19.99, according to its manufacturer, Mattel Inc.
Note the word "suggested." Erika is now $16.95 at Toys R Us, $16.44 at Target or $15.88 at Wal-Mart -- and analysts expect those prices to drop several more times.
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Hot Toys: Retailers are jostling to claim the lowest prices for the hottest toys this holiday season. Click the link to see a snapshot from local stores Nov. 11.
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The traditional holiday shopping season does not kick off until Nov. 26, two weeks from now, but the nation's biggest toy retailers are already aggressively jostling to offer the lowest prices.
At stake for two of the biggest toy retailers, KB Toys Inc. and Toys R Us Inc., is not just their consumer image, but their very survival. The 2003 holiday season left both hobbled after Wal-Mart Stores Inc., which has made an aggressive move into the toy business, drastically reduced prices early on, undercutting KB Toys and Toys R Us by up to 20 percent.
Since then, KB Toys has filed for bankruptcy protection, closed 427 stores and promised to shutter 160 more after Christmas. Toys R Us has undertaken a corporate reorganization and said it may sell its toy business after the holidays.
With no single must-have toy emerging so far this year, national retailers are zeroing in on about a dozen predicted holiday winners, such as Barbie's Erika and Cabbage Patch Kids, and repeatedly cutting their prices, in some cases by just pennies a day, to remain competitive, toy industry analysts said.
"What you are seeing are the early skirmishes of the toy price wars," said David S. Leibowitz, managing director at Burnham Securities Inc., who predicts the biggest price cuts will arrive after Thanksgiving.
But in what analysts say is a surprise offensive, Toys R Us is meeting and, in some cases, beating Wal-Mart in price comparisons.
In a survey released this week, brokerage house Oppenheimer and Co. found Toys R Us undercut Wal-Mart by 5 percent for a shopping cart filled with 62 toys. Harris Nesbitt Corp., in its own survey published this week, found Toys R Us undercut Wal-Mart by 0.2 percent for a shopping cart filled with 75 toys.
"It appears Toys R Us is being quite aggressive this year," said Oppenheimer analyst Linda Bolton Weiser.
