* Toys "R" Us puts value sections in front of U.S. stores
* Comes after 3 pct drop in 2008 U.S. retail toy sales
NEW YORK, April 2 (Reuters) - Toys "R" Us has rolled out shops in the front section of its U.S. stores, highlighting toys for $3 and under as it responds to the recession that has made even indulgent parents cut back on toys for their kids.
The privately-held specialty toy retailer, which operates almost 850 Toys "R" Us and Babies "R" Us stores in the United States, said its "$1-$2-$3 Fun" shops will carry about 100 items at those prices.
The effort to woo shoppers comes after U.S. toy retail sales fell 3 percent to $21.64 billion in 2008 from a year earlier, according to market research firm NPD Group.
Besides grappling with consumer thrift, Toys "R" Us also faces stiff competition from discounters such as Wal-Mart Stores (WMT.N) that tout bargain prices for their merchandise, attracting more shoppers in recent months.
The toys in its value stores range from dinosaur eggs and puzzles to coloring books and paint brushes, and will be available at all of its U.S. stores by Thursday, Toys "R" Us said.
Heading into 2009, toy makers have already geared up to cater to consumers' frugality. For instance, Mattel MAT.N is selling $30 Elmo gloves and Hasbro HAS.N has the $28 Lil' Patter Pup. Last year, Mattel promoted its $60 Elmo Live doll, while Hasbro focused on its $180 toy dog called Biscuit.
Toys "R" Us already sells toys at a variety of prices, such as a 4-pack of Play-Doh modeling compound for $2.50 and the Power Wheels Barbie Pink toy car for $380.
Putting cheaper toys in the front of its stores was a "natural extension" of its assortment, the retailer said. (Reporting by Aarthi Sivaraman; editing by Carol Bishopric)