When it comes to toy prices, Walmart is losing its edge.
The giant discount chain — which became the world’s largest toy retailer in the late 1990s by slashing prices on everything from Barbie dolls to Tonka trucks — has lately allowed rival chains to undercut its prices on key toys as the holiday season ramps up.
Late last week, while Walmart was advertising online a Lego City Space Center for $56, Amazon.com was offering it for $52.49, according to a survey by Deutsche Bank Securities. Overall, the firm found that a basket of a dozen popular toys was 2 percent cheaper at Amazon than Walmart.
“The really surprising thing was that Walmart had actually raised its prices from where they were a week earlier,” said Deutsche Bank analyst Charles Grom. “That’s despite all of their low-price rhetoric.”
Amazon’s price advantage is especially wide in most cases because, unlike Walmart, it isn’t required to charge sales tax, the bank noted.
Meanwhile, Amazon and Target have been cutting toy prices — moves that could help them steal away customers during the most crucial holiday weeks, Grom said.
Likewise, Toys R Us — which Walmart dethroned in 1998 as the price leader for toys — has been matching and even undercutting Walmart’s toy prices on occasion, according to other recent studies.
This week, Toys R Us was offering a Leapfrog Peek-a-Shoe Talking Octopus for $24.99 versus $34.99 at Walmart, according to data compiled by BMO Capital Markets.
Nevertheless, analysts note that Walmart has already racked up plenty of early-season toy sales by bringing back its popular layaway program this year. Indeed, Target this month cited layaway at Walmart for its own slow start to the toy sales season.
“Walmart is taking a lot of share with layaway,” said Sean McGowan, a toy analyst at Needham & Co. “Target and Toys R Us are pricing pretty close, but layaway is attracting consumers to Walmart.”
But if Walmart has won the early part of the holiday toy battle, analysts say Toys R Us is poised to win the second half.
“Walmart has very little inventory in December, so Toys R Us can charge whatever it wants,” said one industry watcher.