The same parents who bought toys at Wal-Mart would take the kids to Macy's to sit on Santa's lap and have their picture taken.
Santa also plans to put in appearances at two other big holiday retailers. For the second year in a row, he'll be at Kmart Holding Corp.'s 1,500 stores on two days during the holiday season. And after a test at four stores last year, Santa will be in 84 Toys "R" Us Inc. stores every day for the first two weeks of December.
Retail experts say the only surprising thing about Santa's emergence in the discount aisles is that it didn't happen sooner.
"Santa is going where the shoppers are going," said Butch Price, merchandising specialist at Kurt Salmon Associates, a retail consulting firm based in New York.
This season, 84 percent of consumers have said they plan to shop at such discounters as Wal-Mart Stores Inc., compared with 28 percent who say they plan to shop at department stores, according to a survey conducted in November by Kurt Salmon.
The numbers track with a decline in malls' share of retail sales, which dropped to 19 percent this year, compared with 39 percent in 1995, according to Customer Growth Partners LLC, a consulting firm based in New Canaan, Conn.
Photos with St. Nick
Retailers' Santa Claus tradition dates back to the mid-19th century, when department stores first used St. Nick to lure shoppers. Today, photography studios dominate the business of Santa photos, not only taking the pictures but also hiring and training the Santas.
Malls usually furnish the festive backdrop, sometimes spending tens of thousands of dollars, and split the profits with the photography studios. Photo prices can range from $12 to $45.
Santa is a big draw. Macerich Co. -- which owns and operates 57 malls nationwide, including the Centre at Salisbury in Maryland -- estimated that Santa has boosted traffic on average about 11 percent on days when he has appeared in its malls this year (at many malls, Santa started making appearances as early as mid-November.)
The International Council of Shopping Centers, a New York-based trade group, says Santa drew an average of 8,758 children per mall last year.
No wonder big-box retailers are suiting up cashiers for a Santa gig. Indeed, even supermarkets and dollar stores are buying Santa suits. (Most big-box retailers rely on regular employees stuffed into Santa costumes -- which doesn't help employment prospects for the countless men who moonlight as Kris Kringle during the holidays.)
Lure of live reindeer
Department stores and malls boast that their Santas are more professional. He is more than a guy in a red suit, said Judy Noerr, president of Noerr Programs Corp., a promotions company based in Golden, Colo., that supplies nearly 200 malls with Santas.
Her company's Santas undergo hours of training, she said, and most sport natural beards. Our Santas "truly believe they can make an impact on a child or an adult," she said.
One retailer offers an unusual Santa visit. Cabela's Inc., a nine-store hunting-and-fishing-gear chain based in Sidney, Neb., situates Santa outdoors at some of its stores (none of which are in Maryland). Children may be photographed with the big guy, and also with a team of live reindeer or Alaskan sled dogs.
The snapshot Dusty and Misty Olberding took of their 3-month-old daughter on Santa's lap outside the store last week in Kansas City, Kan., represents the start of a new family tradition -- in part because of the frosty-breathed animals sharing Santa's tent.
"Where else would you find live reindeer?" asked Misty Olberding, of nearby Lansing, Kan. "We'll come here for Santa photos every year."
Ducking mall crowds
But for many time-pressed families, any Santa will do. On a recent Saturday, Sheri and Mark Lukacek took their 2-year-old son to see Santa at the local Kmart, in Tinley Park, Ill.
Kmart, based in Troy, Mich., offers no photos, but the couple brought their own camera and snapped away as their son greeted the jolly old man, who sat on a plain chair in an aisle stocked with Christmas lights and tree trimmings.
"Are you a good little boy?" asked the 19-year-old stockroom employee in a red suit. Afterward, Santa's helper, a Kmart employee in a red stocking cap, gave the child a toy figurine, a Sesame Street sticker -- and a Kmart coupon for a Hasbro toy.
This is the second year Lukacek has come to Kmart to see Santa. She said the visit has become a tradition because she doesn't like the crowds at the mall. "It's easier to get in and out," she said.
Wal-Mart, the world's largest retailer, said it decided to bring Santa back this year after realizing how much customers crave one-stop shopping, and never more so than during the hectic holiday season.
"Convenience was absolutely an overriding factor," said spokeswoman Danette Thompson. People "were already in Wal-Mart shopping."
At first, Toys "R" Us resisted putting Santa in its stores, said Amy Parker, senior vice president of marketing for the company's domestic stores. Even after the company's own research showed mothers wanted him in the stores, she said, "we were a little tentative."
Given how busy the stores get in December, executives wondered: "How do we handle this operationally? ... What is this going to do to the stores?"
Toys "R" Us, based in Paramus, N.J., charges $4.99 for a photo, and customers may bring their own cameras. Some stores are handing out $5 coupons for toys.
'Santa pagers' debut
But some malls are taking the new competition seriously. To cut down on the long lines -- in some places a tradition unto themselves -- mall-owner General Growth Properties Inc. is distributing "Santa pagers" at 30 of its 166 malls, which are located primarily in the West and South. Customers can knock some gifts off the list while waiting their turn.
"We really wanted to differentiate ourselves from the Kmarts and Toys 'R' Us," said Al Shifflett, marketing coordinator at General Growth's Crossroads Mall in Kalamazoo, Mich. "We focused a lot of attention this year on the Santa experience."
Macy's, the retail chain owned by Federated Department Stores Inc., has played host to Santa since 1863, most notably at its Herald Square store in New York made famous in the movie "Miracle on 34th Street." Macy's executives say they aren't worried about the low-rent newcomers.
Said Elina Kazan, a spokeswoman for Macy's East, which includes its three stores in the Baltimore region, "We have the one and only Santa."