Reuters reports that Toys R Us has decided to attack Wal-Mart where it lives – on low prices. The national toy store chain is aggressively pricing its selection to be as cheap as Wal-Mart wherever possible, in what is called “a major statement” by analysts.
However, analysts also note that lower prices generally mean lower margins and lower profits, and that the toy store price war was what led to the bankruptcy and dissolution of FAO Schwarz, not to mention the decision by Toys R Us’s parent company to consider selling its toy store division.
However, analysts also note that lower prices generally mean lower margins and lower profits, and that the toy store price war was what led to the bankruptcy and dissolution of FAO Schwarz, not to mention the decision by Toys R Us’s parent company to consider selling its toy store division.
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The question is whether the toy chain is positioning itself for eventual success or for a higher sale price.
But there’s something else to remember. Wal-Mart is unlikely to let such a challenge go unanswered. Which means that this story isn’t over yet.
