Beneath Walmart’s Top Toy List, a Retail Price, Inventory and Payment War Is Brewing

Christmas might come early this year as retailers hedge an uncertain outlook with earlier sales events and an attempt to start gift buying sooner and drive more sales in final months of 2022.

This was evident Tuesday (Aug. 30) as Walmart unveiled its 2022 Top Toy List “to help families plan ahead and save on their wish lists this holiday season, featuring more toys than ever for kids of all ages and a wide range of prices,” according to a press release.

Walmart is keenly aware that money will be tight throughout the rest of the year, so getting consumers thinking about the gifting season earlier than ever is a clear effort to get more of those dollars sooner.

“We know our customers are shopping early, and finding the lowest prices on toy gifts is a priority for many families this year,” Walmart U.S Senior Vice President of Electronics, Toys and Seasonal Laura Rush said in the release, while noting plans to help customers get started on their holiday shopping.

In the entertainment category to which toys belongs, Walmart’s battle royale with Amazon takes on serious proportions. The PYMNTS report “The Battle for Consumer Retail Spend: Amazon Versus Walmart Q1 2022” noted that Amazon dominates “with nearly five times Walmart’s share of books, sporting goods, hobby and music categories. Amazon’s ability to maintain its edge over Walmart in books, sporting goods, hobby and music categories reflects not only the company’s long-term advantage in these areas but also its fine-tuned user experience.”

“Amazon can suggest books and related items to consumers shopping for sporting goods, for example. While Walmart can theoretically do the same, Amazon’s subscriber base has provided extensive data that aids in delivering insightful suggestions,” the study added.

With physical shopping recovering substantially this year, Walmart and other physical retailers can count on more foot traffic, although it remains to be seen where the mix will settle this year. Macy’s is betting big on toys also in 2022, on schedule to have a Toys R Us in-store shops in every Macy’s location by the end of October.

In a July press release Macy’s said: “Since last August, Macy’s customers have shopped the expansive assortment of Toys R Us products online exclusively at macys.com/toysrus and ToysRUs.com, powered by Macy’s digital and fulfillment ecosystem. In Macy’s reported earnings for the first quarter of 2022, toy sales were 15x higher than the comparable period prior to the Toys R Us partnership.”

These add to action by LEGO, Mattel and others that have made moves to sustain a toy industry that’s been bucking downward pressures this year. In a May announcement LEGO said it “will step up its digital investment across all areas of its business from play to shopping and technology infrastructure,” with plans to triple its digital workforce in the next three years.

Read more: Lego Joins Toy Industry’s Online Transformation, Bets Digital Bricks Will Click With Kids

BNPL for the Holidays

It’s unclear if consumers will want to break Walmart toy purchases into installments. Buy now, pay later (BNPL) is used more online than in-store, which may give Amazon and other eCommerce players some advantage in BNPL use in Q4.

With Walmart pricing more than half the hottest toys of 2022 at $50 or less, the chain is sticking to its everyday low-price mantra, but with inflation squeezing budgets, more consumers may opt for methods like BNPL this gifting season for extra breathing room.

According to “BNPL and the in-Store Opportunity: Why Merchants Must Offer Payments Flexibility at the POS,” a PYMNTS and Zip collaboration from a survey of over 2,000 U.S. consumers, “BNPL was offered for roughly half of consumers’ most recent online purchases across retail segments but available for less than one-fifth of in-store purchases. The gap between online and in-store availability of BNPL was most dramatic for consumers making purchases from local businesses. Online, 55% of these entities offered BNPL, while just 4.8% offered the method in-store.”

It may also be a big year for BNPL when gift buying really kicks in during Black Friday (Nov. 25) and Cyber Monday (Nov. 28) events, as well as a rumored second Amazon Prime Day in October. In anything, merchants need to do a better job communicating that BNPL is available at checkout for consumers who want to spread out gift 2022 payments.

According to “The 2022 Global Digital Shopping Playbook: U.S. Edition,” a PYMNTS and Cybersource collaboration, “Many U.S. merchants are also held back because their customers do not realize that they accept their preferred payment methods, especially BNPL. Even though 55% of local merchants offer BNPL options, just 40% of local shoppers realize that BNPL options are available. U.S. merchants will need to close this awareness gap to gain a competitive advantage.”

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