The mall-based pop-up stores will be significantly smaller than free-standing Toys R Us stores, about 4,000 square feet, and will carry an edited assortment of toys. In addition, more than 260 of the pop-up stores will open within Babies R Us locations around the country. Those pop-ups will occupy about 2,500 square feet and will offer three times the toy selection usually carried in Babies R Us.

Pop-up stores, which began as an edgy marketing move, have now become mainstream, used by brands from The Gap to Gucci. They've become vehicles to launch new brands, perk up holiday sales, or just advertise in large urban markets.

Ironically, the recession has given the trend a boost. With retail real estate sitting empty in many markets, landlords are willing to sign short-term leases rather than let space go vacant.

For Toys R Us, putting stores in malls could help fight off a challenge from Sears Holdings (SHLD), which announced in August it would bring back toy departments in Sears Roebuck stores. Sears has been putting a full-court press on holiday sales this year, bringing back its Christmas Club and promoting layaway as an option for cash-strapped customers.

Meanwhile, Toys R Us, which is privately held, has been expanding and revamping stores; it bought specialty toy store FAO Schwarz in May, and in February bought the online toy store eToys.com; last month, it announced a program to accept used baby items in exchange for gift cards to buy new merchandise.

But both are facing the challenge of competing with Wal-Mart Stores (WMT), which is the largest toy retailer in the country and has been showing strength in this recession, as shoppers trade down to save money.

And all retailers will face skeptical consumers. According to a poll from the trade group Marketing to Moms Coalition, 96 percent of mothers with children under 18 plan to spend the same or less on holiday gifts for the kids this year than they did last year.

So, let the holiday games begin.