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Internet retailers, too, are counting on bargains to build their 3% share. From (AMZN ) to Yahoo! (YHOO ) to eBay (EBAY ), online sellers are pushing discounts and offering free shipping. Along with free delivery on orders over $25, Amazon has marked special deals on toys, some more than 60% off list price. Yahoo! Shopping, which hosts 13,000 merchants, has launched a department that highlights such bargains as a $49 DVD player and $29.50 Polo Jeans Co. T-shirts. "Value shopping is a huge trend," says Rob Solomon, Yahoo's senior vice-president of commerce. eBay has seen a boom in toy listings, which it credits to early promotions and a big brand-marketing campaign.

Back at the mall, conventional retailers have been rushing to pack shoppers in early in part because the shopping season is six days shorter than usual. That leaves less time to move such hoped-for hits as Chicken Dance Elmo, Mattel's (MAT ) $20 retread of the popular Sesame Street character. The shorter season is partly why toy sales overall are expected to be flat, at just around $25 billion this year, according to market research firm NPD Group.

No sector faces a bigger challenge than consumer electronics. After a year of steadily declining prices for DVD players, chains such as Circuit City Stores Inc. (CC ) and Best Buy Co. (BBY ) hope to persuade video fans to pony up for such higher-margin gear as digital plasma TVs and home-theater sound systems. But that's a risky strategy. The market has become increasingly competitive as Wal-Mart and Target and even Gateway Inc. (GTW ) dive in. One of the few hot spots for electronics retailers: video games. Sales are projected to climb 10% this year, to $10.4 billion. Doing particularly well are highly theatrical games aimed at adult players such as Rockstar Games' Grand Theft Auto: Vice City, which has voiceovers from movie stars such as Ray Liotta and Dennis Hopper.

No such similar fallback exists for the beaten-down apparel industry. More than other sectors, apparel has cut inventories to the bone--down 6.5% from year-ago levels, says NPD Fashion World co-president Marshal Cohen. Still, in an attempt to create some fashion buzz, both discount and upscale chains are offering clothes and accessories gussied up with sequins, faux fur, and coin-like metal trim adorning belts and purses. Will they pay off? Probably not. Analysts at U.S. Bancorp Piper Jaffray figures apparel sales may rise as little as 0.9%. The problem: "There's no apparel equivalent to the Cabbage Patch doll," says Emanuel Weintraub, a Fort Lee (N.J.) management consultant.

Of course, not all retailers are slashing inventories on the bet that the season will be a flop. Outfits such as Toys `R' Us (TOY ) and clothing-store chain Kohl's Corp. are laboring mightily to carve out a bigger share of their respective pies. Toys `R' Us is carrying a lot more likely hits and fewer losers. Execs say they are in good shape so far. Hot toys are in stock 97% of the time this year, up from 65% in the 1999 holiday season. And Kohl's has added clothing racks packed with name-brand casual clothing on the bet that shoppers won't be able to find what they want in department stores.

It's a long shot. But weary of political and economic gloom, shoppers could outright splurge. If that happens, retailers who have skimped on stocking up will be crying in their punch.

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