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'Tis the Season for $10 Gifts

Thursday, 10 Dec 2009 | 8:06 AM ET

There's no room for coal in your stocking this year.

Zhu Zhu Hampsters
Source: Toys R Us
Zhu Zhu Hampsters

Consumers are more hungry for bargains than ever, causing the 2009 holiday season to rapidly migrate from the $20-and-under prices seen last year to become the year of the $10 gift.

By cutting costs and adjusting their inventory to include a diverse selection of items at low price points, retailers have been able to pass savings along to customers, without taking as much of a beating on their revenues, said Ellen Davis, vice president of the National Retail Federation.

"[Retailers] really had a year to plan for this holiday season, and they knew that price was going to be a factor," Davis said.

Discounters like Target and Wal-Mart have been competing in price wars over $10 toys, DVDs and books, but the deals transcend bargain stores and include items in traditionally costlier categories, such as apparel, technology, home goods and beauty.

Consumer Nation Holiday Central Edition
Consumer Nation Holiday Central Edition

JCPenney is offering items at lower opening price points, such as three-piece crystal jewelry sets for $9.99 — marked down from $24 — and Arizona kids' hoodies for as low as $5.99 — a 37 percent discount.

The store has adjusted its marketing approach to advertise products at particular price levels, like $20 and under, rather than for a certain percentage off, said Kate Coultas, a spokesperson for company. Customers can also search for gifts on the retailer's Web site by price brackets.

"We continue to see a barbell in effect in consumer spending — customers responding to practical and basic items, but then also responding to innovation, style and newness," Coultas said. "Customers expect to get great pricing from us, and they will get it."

Target has taken a similar approach, pulling together gift ideas under certain dollar amounts for its circulars, said spokesperson Joshua Thomas. In addition to toys and beauty items, the discounter offers dozens of movies for $10 or less, though most aren't big-name releases.

Ten-dollar toys — which range from board games to Barbies and beyond — will likely be the season's biggest sellers in this price range as most families like to put multiple gifts under the tree for their children, Davis said. Zhu Zhu Pets Hamsters have perhaps received the biggest buzz in this category, as stores can't seem to keep their shelves stocked with the robotic pets.

"What's surprising is that $10 toys aren't really limited to one type of toy or game," she said. "What I think companies are trying to do by showcasing this diversity is communicate to customers that there are many definitions of the word 'toy', and there's really something for everyone at this price point."

For the most part, though, these value items won't be strong contributors to retailers' profits, said Brian Sozzi, equity research analyst at Wall Street Strategies independent research company.

"The trick is to get consumers into the stores, and then up-sell them," Sozzi said.

While $10 and under makes sense for toys, books and media, the $20 to $30 range is the sweet spot for apparel this season, while items between $50 and $100 will perform strongest in electronics, Davis said.

But that doesn't mean there aren't deals in these categories: Check out this slideshow to see cool holiday gifts for under $10 in toys, technology and beauty.

More Gift Ideas from CNBC.com:

Questions? Comments? Email us at consumernation@cnbc.com

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