Talk Back – WalMart Toy Department Changes

Talk Back – Editorial

Wal-Mart Toy Department Changes

A few weeks back, Wal-Mart made an announcement stating after a number of years stocking the toy department and utilizing it as a loss leader (meaning selling at less than profitable margins to draw in customers), they would be shrinking their toy stock to only a few aisles in each store.

Over the past few weeks, I have visited a number of Wal-Mart’s – living in Minneapolis they are hard to find as Target is the alpha retailer. BUT we do have a few superstores and standard venues. My experience has been that the Superstores, while appearing to reduce the inventory are still stocking fairly close to normal levels. In other words, there has been little change in my area Super stores. The standard Wal-Mart’s are another story. All three of the smaller venues visited have reduced their departments to no more than three aisles. While they were all identical and were all long aisles with product on both sides, store stock has been dramatically reduced. In particular, die cast.

Hot Wheels and Matchbox accounted for the largest showing but even allotted space – which I might add were winter releases on both counts – was scaled back to less than ten pegs of each. Other offerings included three pegs of Jada on clearance, the house brand accounting for only four additional pegs and then stacks of larger scale items below. Collector items like Hot Wheels Classics were only occupying one peg with only a few pieces available – those also outdated. No other items were prominent.

While I will say that I get the economics of an adjust such as this, the business side of the equation. That is what it was, a business decision. However, operating a retail business myself and understanding the whole-margin equation, I find it extremely hard to believe that Wal-Mart was not making a relatively decent margin on these products. Their prices, at least in my area, were not that low. In many cases, other venues beat them. However, with outdated product, it would not surprise me that they would need to clearance the products to sell. generally moves like that tend to wash out with the total sales.

So, as a collector and really not being a fan of Wal-Mart, it appears I really have no reason to go to Wal-Mart anymore. My understanding is that Target is not following suit. While not handling some of the additional brands Wal-Mart does, they do stock the most recent mass releases and are always rotating new company offerings. While not everything a collector could want, they do have a large selection. I would be curious as to the impact of this change to the Wal-Mart bottom line. Sure they don’t have the losses on toys, but are they not also losing a lot of the additional money folks/collectors like me spend?? I don’t think, despite my distaste for the company itself, I left there with less than fifty dollars worth of merchandise per visit. Sometimes that included only one car, other times including more. While my focus was just a die cast observation, what about the other parents who brought kids in for other toys and will go elsewhere now??

On the positive side, maybe this will be a distinguishing factor between Wal-Mart and Target. Maybe this will drive the later to stock more brands and pressure manufacturers to be more price friendly (ala Greenlight and the like). Maybe this will drive more support and sustainability for Toys-R-Us and help to rebound that companies endless financial battle. While it probably won’t solely change the company position, it could contribute. Lastly, maybe it will help drive more value for the online dealers and companies who support the hobby.

What are your thoughts? Please Talk Back.