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Wal-Mart and Toys R Us Prepare for Dismal Holiday Season


Toy retailers need another Elmo to save them.

With Nielsen analysts foreseeing unimpressive sales this December -- in addition to legitimately scary Halloween spending -- retailers are scrambling to generate some creative efforts to pique customer interest. Both Toys "R" Us and Wal-Mart (WMT) recently unveiled strategies to increase foot traffic during the shopping season.

This week, Toys "R" Us announced plans to hire 35,000 workers to pitch in during the Christmas season. Despite the dismal sales forecast for December, the number of new employees is the same as the company hired during the last two years. But with the defunct KB Toys brand now in its pocket as well as FAO Schwartz, Toys "R" Us should be well positioned to command a bigger share of toy sales for the fourth quarter.

Finding locations for 35,000 extra workers won't be a problem for the company. Toys "R" Us will be opening almost 350 "pop-up" stores in malls, shopping centers and within some of its Babies "R" Us locations. According to BusinessWeek, the temporary shops will sprout in 80 shopping malls and give the 847-store chain a leg up in competing against Target (TGT), Wal-Mart, and Sears (SHLD) -- which recently added permanent toy displays in 20 of its locations.

As for Wal-Mart, it's prepping for the holidays but still sees a long road ahead. The Big Box Behemoth announced on Wednesday that it will be offering 100 different toys for $10 through the holiday season -- a hefty increase from the ten toys from last year.

In a company statement, Wal-Mart's vice president of toys Laura Phillips related the $10 program was expanded to accommodate the bargain shoppers. Displaying a brilliant grasp of the market, Phillips said, "What we learned from last holiday was that price mattered more than ever."

(HAS) Transformer line and Play-Doh sets will be included in the deal, including board games like Monopoly and Connect 4, which will see price reductions of 20-50%.

The $10 program is just the first of many deals that Wal-Mart plans on introducing in the coming weeks.

But Wal-Mart chairman Robson Walton told a business conference in Asia on Wednesday that the consumer is far from back. "I think this recovery is going to be a slow one," he said, according to the AP.

Despite all the sales being introduced for the holidays, not many analysts expect to see a sizable sales jump from last year -- which was described as the worst holiday season in roughly 40 years. And unless a "must-have" item emerges from Toys "R" Us' list of 15 hot holiday toys, retailers will be biting their nails to the nub in anticipation of the holidays.

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