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.

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.

Greg Ahearn, vice president of store marketing at Toys R Us, said the chain "took it on the chin last year," when it came to consumers' perceptions of its toy prices. "We want to be price-competitive and do it throughout the holiday season this year."

As of Thursday, Wal-Mart still claimed the lowest price on several toys -- including Erika Barbie, Cabbage Patch Kids and E-L-M-O, a survey of Washington area stores showed. But analysts note the 3,000-store chain has abstained from the kind of dramatic price cutting that marked the 2003 holiday shopping season.

"I am surprised by it," Weiser said.

Wal-Mart says it tries to beat the competition wherever it operates a store. If the analysts' reports are correct, spokeswoman Karen Burk said, "we need to go out and look at the competition and make sure we focus on being the low price leader."

So far, KB Toys does not appear to be keeping pace with Wal-Mart, Target and Toys R Us, analysts said -- and a survey of Washington-area stores shows KB's competitors are undercutting the chain on some popular holiday toys.

As of Thursday night, KB Toys charged $34.99 for Fischer Price's new E-L-M-O doll, which sings and sways to the tune of Village People's "YMCA" -- about $15 more than Wal-Mart and Target, which sold it for $19.72. And the new V.Smile TV Learning System, an educational video game system, had a price tag of $64.99 at KB Toys, $15 more than what Toys R Us charged.

KB Toys spokesman John Reilly declined to comment on the chain's pricing policy, citing that the company is in bankruptcy, except to note that KB Toys yesterday dropped the price of E-L-M-O to $24.99.

In its most recent survey, Harris Nesbitt found that prices at Target Corp. were 3.5 percent higher than those at Wal-Mart. Target spokeswoman Paula Thornton-Greear said the chain offers competitive prices on the "most-needed and wanted items."

Sean P. McGowan, a toy industry analyst at Harris Nesbitt, said toy chains cannot afford to fall behind their competitors, even on unpopular toys, because "the American consumer is so price sensitive right now."

One of them is Carolyn Tyler, who lives in Gaithersburg. Standing in the toy aisle of Wal-Mart last week, she eyed an E-L-M-O doll for $19.72, the cheapest she's seen this year.

"I never buy the first one I see," she said as she tossed the toy into her shopping cart.

Dina Antonoff of Olney scanned the Sunday circulars and the Internet for the best deal on the V.Smile before deciding to buy it at Toys R Us. "I may save a dollar or two," she said, "but it's always worth the trip."