• The Wall Street Journal , Thursday, October 9, 2008 11:15 AM

We picked up a story last week about Wal-Mart launching Christmas before Halloween by announcing that it was selling 10 popular toys for $10. Predictably, its competitors have parried back. KB Toys, for example, cut prices to $10 or less on more than 200 toys. Amazon and toy sellers it promotes on its sites have also matched prices (not including shipping).

Wal-Mart is engaging in a classic loss-leader strategy, the Journal reports. M. Eric Johnson, a Dartmouth College professor who follows the toy business, says it is using cheaper toys to "get people into the stores, but not necessarily giving away the store." Supplies of the $10 toys are ample but scattered across store aisles, he says.

"It's not the good, old Wal-Mart that cuts prices everywhere," Johnson says. But that doesn't mean it's not inflicting pain on its competitors. Any rival that follows Wal-Mart's cuts on those toys "will definitely be losing money," he claims.

Read the whole story at The Wall Street Journal »