Analysts say whoever wins toy shoppers this season, wins the year.
"It's the old days of the price war, Wal-Mart versus Target. Everyone else gets caught in the crossfire," says Burt Flickinger, a retail analyst. "The last time this happened in the 1990's, five of the top ten toy retailers either went into bankruptcy or liquidation. It's great for the consumers, bad for the competitors."
The holiday season typically accounts for nearly half of retailers' annual revenue: $457 billion are up for grabs. So at Wal-Mart, battle plans for the season were made months ago.
"We actually started preparing for this holiday season in the spring time," a Wal-Mart manager says.
And at Target, they're firing back.
"We do watch Wal-Mart," says Todd Hamilton, a Target manager. "We make sure that our pricing is in line with theirs."
Early demand has surprised some retailers. So discounts are easy to find, but other things are a bit tougher.
For example, Extreme Elmo is extremely hard to find. Target sells him for $40, but was sold out. Wal-Mart had it for a bit less, but no luck there either. Toys R Us said there were about $40 and in stock, so, CBS News producer Jack Renaud went in for the elusive capture.
"This was the last one and he only speaks Spanish," Renaud says.
How do you say "make my kid stop crying" in Spanish?