I had just settled down for a long winter's nap when the clatter hit. I jumped to my feet to see what was the matter. You would think by now I would have learned. "Nice to see you, I was getting worried," I said, with a sideways glance at the old calendar.

"Reindeer were a bit rusty. Get your notepad," he said, settling back at my desk, "and I will tell you what is hot this year in the land of make-believe."

Toys "R" Us, the $11 billion toy chain, is looking at rolling out a new line of stores it will likely call Geoffrey, which loyal patrons to the chain know is the name of the company's mascot giraffe. The new format is a multihued, airy warehouse that's part playpen, part kids' mall and part toy store.

To the tunes of piped in music, children can play on the store's indoor jungle gym, do arts and crafts in a supervised area, and play free video and arcade games. The stores also will host parties, offers haircuts, take kids' photos and run summer activities such as water-pistol fights.

Why the sudden departure from its traditional format? Toys "R" Us is having its lunch eaten by the likes of Wal-Mart and Target. Toys "R" Us announced recently that it had lost $38 million in the third quarter and was closing all of its 146 Kids "R" Us stores plus 36 Imaginarium smart-toy stores, both of which were hemorrhaging red ink.

Meanwhile, the warehouse behemoths have an arsenal of high-margin items that can make up for losses on low-margin toys. Wal-Mart uses the tried and true marketing strategy that says toys, even if sold at a loss, will lure customers in who will then proceed to buy a variety of higher margin items.

This year Wal-Mart has another trick up its sleeve. Santa Claus is coming to 2,966 Wal-Mart stores, following a successful trial run last year. And true to Wal-Mart's discount heart, the photo with Santa is free, vs. charges that can run over $30 at mall and department store locations.

But the toy battle is not just among the retailers. It is also crunch time for the toy manufacturers. The two largest among Santa's helpers are Mattel and Hasbro. Both companies saw about 35 percent of their total 2002 revenue come in the fourth quarter.

This year, the two industry giants are pinning their hopes on brands that have been staples of the holiday season for decades. For Hasbro it is the always popular Trivial Pursuit and My Little Pony lines, while Mattel's answer is its classic Hot Wheels and Barbie offerings.

Yet there are plenty of new high-tech oriented toys available as well. They include Hasbro's personal video player, Video NOW, and Mattel's Power Touch, a line of early-learning electronic books.

However, no story about the world of enchantment would be complete without mentioning American Girl. American Girl is part of Pleasant Company, itself a division of Mattel since 1998.

Although American Girl does most of its sales via mail order, it has a very successful store in Chicago that attracts more than a million visitors annually and generates approximately $40 million in sales per year. On Nov. 8, an American Girl store opened in Manhattan.

One key to American Girl's success is that the dolls appear to become individual characters in girls' minds. The company even has a "choose your doll" line that allows girls to order any combination of hair, eye and skin colors. It seems girls get a kick out of owning a doll that looks like them.

Each year American Girl introduces one new doll with her own story and accessories. This year's new character is Kailey, an environmentalist surfer girl who fights to save her favorite stretch of beach from being turned into a mall. (Living in Florida, even I can relate to that theme.)

In addition to offering a high quality product backed by a sophisticated marketing program, American Girl has the luxury of controlling its own distribution channels. That means it does not have to bargain with the likes of Wal-Mart for shelf space.

"Fascinating," I said, scribbling as fast as I could. Then just as I was about to ask a few questions, he just smiled and with a quick nod of his head he was gone. However, I am sure I heard him say as he drove out of sight, "Seasons greetings to all, and to all a good night."