I've heard that many a time, but can you explain to me how exactly this would work?
How big a percentage of SW toy sales can be ascribed to Wal-Mart anyway? I have difficulty imagining that removing their sales would financially cripple the SW toy line directly, so is it more a matter of Herd Mentality with other retailers following WM's lead in dropping it?
Okay, the first thing that I'll point out is that Wal-Mart is the number one retailer in North America (for better or worse) in every department. Shoes, clothing, DVDs, tackle boxes, toys, etc. You name it, WM is number one in the retail world. Over the last few years, WM has pulled way ahead of TRU in terms of toy retailers, and WM was one of the key reasons why TRU and KB started to have so much financial trouble two years or so ago. WM was pricing their stuff so low that people would see the same product selling for a buck or so more at TRU or KB and question why they should even shop at TRU or KB. WM gets this person/family's business, and TRU and KB have more pegwarmers.
A lot is made of Wal-Mart's control of what gets made and what doesn't in this day and age, and for the most part, it's completely true, backed up by factual and empirical observations by people far more knowledgeable about economic theory than I. What I'll try to do is boil this down to what I understand, although I would seriously suggest that anyone who wants to know more do a little reading on the web (I know that walmartwatch.com has some good stuff) to get the full story.
Wal-Mart has singlehandedly caused several companies to file for bankruptcy due to their "roll back" mentality. The most famous example is (I think) the Vlasic pickle company. A few years ago, WM made a contract with Vlasic for these huge pickle jars that would be sold on their aisle-obstructing islands for a really low price (for the sake of comparison, let's say 3 dollars). Vlasic ramped up production and WM brought in a lot of sales. The problem with this was that Vlasic was putting so much time and money into these big jars that their smaller jars were not performing all that well. WM decided that they needed more of the big jars at an even lower price, and when Vlasic told them they couldn't, WM threatened them with not carrying Vlasic products AT ALL anymore. Vlasic, realizing what a stranglehold WM had on retail, reluctantly agreed, and had to end up raising the prices on their regular non-WM pickles at other retailers.
The problem with that was that people realized they could get the Uber-Pickles at WM for a buck less than a small jar, and Vlasic didn't make any money on anything except the WM Uber-Pickle Jar, which they were already losing money on to begin with due to WM's demand for more at a lower cost. It got to the point where Vlasic could not keep up the cost and they ended up losing a lot of money, mostly due to the fact that WM quit carrying the Uber-Pickles when Vlasic could not keep up production to the WM levels.
There is a documentary/expose/whatever that airs on CNBC occasionally that is very good to see the "behind the scenes" side of WM called "The Age of Wal-Mart." Of particular interest to toy collectors is the interview portion with the company that makes those atrocious "Bratz" dolls. The guy who runs the company says that they decide what to make based on what WM is selling. If the Slutty Sally Bratz doll is flying off the shelves at WM, they make more Slutty Sally dolls; likewise, if the Herpes Harriet doll is not selling very well, Herpes Harriet doll gets a great big shot of penicillin. All silliness aside, the point is that directly or indirectly, WM is dictating how the Bratz doll makers decide what to make and what not to make based on a narrow view of success.
Now, as for how this affects Star Wars stuff, I'm going to expand a bit on my earlier anecdotal statements and do a bit of (pessimistic) prognostication. For the gist of what I was talking about just reread the portion on the 120 Clones and Neimoidians being the same thing to WM as 120 different figures that aren't selling and how they are no different to the WM buyers and HAL system.
We all know the fiasco surrounding the Early Bird exclusive on April 2nd. Hasbro (who actually have an office a few miles away from WM HQ in Bentonville) tells WM that this exclusive will fly off the shelves and will get them a lot of business and publicity. This does not happen, and WMs either send the EB kits to other stores or back to Hasbro, while Target, TRU, and K-Mart's exclusives get a lot of attention. WM is most likely not happy with this lack of sales on the EB kit and tells Hasbro so.
Hasbro, already having a strained non-film-year relationship with WM on the SW line (see the earlier comments about them not wanting to carry the CW line AT ALL and Hasbro placated them with the Wave 1 with Bonus Clone two packs that fall), has yet another strike in their column with WM where it concerns SW. Combined with the "slow sales" of ROTS figures (those Clone Pilots and Neimoidians), WM cuts back on their SW section dramatically and begins to stock sparingly, especially in rural areas that don't have the foot traffic of larger areas like in Southern CA. All WM sees are SW figures continuing to sit and they begin to wonder why they are even devoting that much space to SW when there's money to be made on Teen Titans (this is sarcasm, as we all know how much Teen Titans sucks and how they don't sell ****).
So, November 1st comes, and Hasbro's claims of the DVD bringing in potential sales of toys falls flat. This isn't due to WM, as in their minds, the pegs are full of figures (Clone Pilots and Neimoidians) and they can't understand why Hasbro thought the DVD would bring increased sales. Meanwhile, Hasbro is getting really nervous because at this point, WM is really upset with the lack of SW sales. WM tells Hasbro that due to the lack of a media tie-in (movies or TV shows), SW will have its section cut dramatically. ROTS stuff is clearanced out at rock-bottom prices, and both WM and Hasbro end up losing a lot of money on those "full pegs" of CPs and Neimoidians which, wrong as it may be, give the illusion that SW isn't selling well.
WM cutting back on the SW section has very little short-term effects, as people end up going to Target and TRU for the 2006 Saga Collection, as both those retailers seem to be supporting the line. WM, however, due to their standoffish attitude toward the 2006 line, doesn't end up getting their first case of TSC until about a month after Target, and after the initial rush, the figures (specifically the repacks) begin to sit and collect dust. The glut that ended 2005 begins to repeat itself and it becomes an ocean of Baradas. WM tells Hasbro that this is it. They have been stuck with too many products that won't sell and SW will no longer have a permanent place in the action figure aisle after the spring reset.
Hasbro panics and asks Target and TRU to increase orders. Both of these retailers, who don't have anywhere near the retail ordering clout of WM, order a little more, but can't match the number of orders needed to fill the WM niche. Hasbro has to cut back on production due to the money lost for a lack of WM orders, and TSC 2006 begins to ship more and more sporadically to Target and TRU. Hasbro can't keep up with demand at these two retailers and due to the prolonged financial loss incurred by WM's refusal to carry the line and the cost of production going up due to the oil price increases, Target and TRU's inability to match earlier orders, and a waning in casual fan interest, they decide that the 2006 TSC collection will be the final year for SW toys until a media tie-in occurs.
Is this highly fatalistic? Sure it is, and I hope that it doesn't happen. The above couple of paragraphs are just a way of trying to explain how much control WM has, directly or indirectly, on what companies make, market, or support.