• by Sarah Mahoney  @mahoney_sarah, November 3, 2008

In the midst of celebrating its sesquicentennial, Macy's is invoking none other than the famous Virginia in its holiday marketing blitz. And thanks to the sputtering economy, the campaign's nostalgic "Believe" theme has rarely seemed more fitting.

TV spots are scheduled to break Sunday, and continue to feature Macy's eclectic team of celebrity designers, including Jessica Simpson, Martha Stewart, Carlos Santana, and Donald Trump. But the holiday spots are based on the 1897 New York Sun's famous "Yes, Virginia, there is a Santa Claus" editorial, and also include in-store "Believe" stations and a Santa letter drive with a potential million-dollar donation to the Make-A-Wish Foundation.

Believe stations will include a "Believe Meter," a letter-writing station and an official R.H. Macy Santa Mail letterbox, where kids can drop letters (stamped and addressed to Santa At The North Pole). The store says it will donate $1 to the Make-A-Wish Foundation for every letter received, up to $1 million. (Make-A-Wish works with children with life-threatening medical conditions.) "The letters will be counted for the Make-A-Wish Foundation donation and then delivered to the post office for mailing to Santa," says a spokesperson.

"'Believe' is the articulation of everything we treasure about the holiday season and is an authentic celebration of the Christmas spirit," the company says in its release. "We felt strongly that this year it was important to remember and embrace the real sentiment of the season. We'd like to inspire all of America to believe."

The campaign, from JWT New York, will also include print, with full-page reprints of the "Yes, Virginia" editorial, as well as TV spots aimed at Hispanic shoppers. The retailer has also reportedly eliminated all magazine ads for the first half of 2009. All ads will invite children around the country to deposit their letters to Santa at their local Macy's.

A microsite (www.macys.com/believe) will tell the story of Virginia O'Hanlon, include an electronic Believe Meter, and offer a downloadable letter kit with Santa letterhead. It will also feature a "Be Claus" widget that allows customers to upload a photo and design themselves as Santa.

Analysts are predicting a tough season for all retailers, with department stores expected to be among the hardest-hit. As a result, many stores are ramping up sales and promotions much earlier than usual. Macy's Web site, for example, is already offering free shipping and 50% off deals on its men's and women's cashmere.

Dillard's, another mid-tier department store, just announced large cuts in capital spending. And discounter Kmart, owned by Sears, is reminding shoppers that there are "only 4 weeks left until December!," and offering free shipping on everything on its Web site, and 20% off holiday décor.