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I don't think it would necessarily kill the LHS - as others have said, Wal-Mart are unlikely to want to stock most of the Walthers range apart from the cheap trainsets (in the event of the contract being renewed). If they're cheap enough, some of the items in those sets make excellent kitbash fodder - can anyone see Wal-Mart selling the other equipment you need to convert a trainset into a complete layout? I think that if anything a good supply of cheap start sets will help the LHS, as the buyers will probably go there in search of additional parts. The tricky part then will be whether the LHS can stock enough budget models to keep their interest - if they only see $20+ boxcars and $100+ locos they're unlikely to conclude that this is a hobby they can afford to get involved in.
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