business news in context, analysis with attitude

The Chicago Sun-Times reports that, in an unusual move to put a cap on the influence wielded by Wal-Mart in the toy business, manufacturers in that arena have decided to reduce shipments to the Arkansas-based retail giant. In addition, a number of manufacturers are looking to introduce products exclusively at Wal-Mart's competitors, including Toys R Us.

The manufacturers believe that such a move is critical to reduce the rampant discounting done by Wal-Mart, which owns 21 percent of toy sales in the US, and that affects the overall profitability of the toy manufacturing biz. At the same time, the manufacturers seem to feel that it is in their own interests to shore up the operations of toy retailers that compete with Wal-Mart.

Two such companies - FAO Schwarz and KB Toys - have filed for bankruptcy protection in recent months.

However, manufacturers do have to be careful. They can't risk alienating Wal-Mart, and are prevented by antitrust laws from setting prices with retailers.
KC's View:
We think that more companies ought to take stands like this. It is on their own self-interest to do so, to not let too much power rest with the Nation of Wal-Mart.