(FORTUNE Magazine) – Retailers are betting on a jolly Yuletide. Avers Arthur C. Martinez, head of Sears Roebuck's $32 billion merchandise group: ''I don't think we have a scared consumer out there anymore.'' Folks on the unemployment line -- including, perhaps, some of those Sears laid off this year -- might quibble with Martinez's conclusion. Even so, the stronger economy bodes well for the Christmas season. Peter Schaeffer, a partner in Johnson Redbook Service, a New York City firm that tracks retailers, predicts an 8% increase in seasonal sales. Because good value and prices still figure high with shoppers, chains like Wal-Mart Stores, the Gap, Home Depot, and Toys ''R'' Us should fare well, while department stores may be hurt. TV still seems to govern what kids want from Santa. Among the stars: Biker Mice from Mars. Sales of these action figures, based on the eponymous syndicated cartoon show, are expected to be so hot that investors quadrupled the share price of manufacturer Lewis Galoob Toys, to $10. The craze for interactivity, meanwhile, has reached cuddly toys. Among them: T.V. Teddy, made by Yes! Entertainment and priced at $70. He comes with a videotape and is programmed to talk and sing along as the story unfolds on the screen.