Last fall, business got peculiar for PlayFair Toys.

The Boulder toy shop could not fulfill some Web orders and had to dole out refunds as a result. Some items went missing from the shelves.

It wasn't until the end of the year when owner Marilyn Walker was checking inventory that she discovered a "massive" theft had taken place over a four-month period at PlayFair, 2550 Arapahoe Ave.

Last month, Walker filed a three-dozen-page report with her insurance company and the Boulder Police Department. The police continue to investigate the reported theft of $4,000 worth of merchandise, said Sarah Huntley, Boulder police spokeswoman. It appears to be an employee-involved theft, Huntley said, adding that a company computer reportedly was accessed by at least one unauthorized party.

Walker estimated the cost of the theft to her business to around $50,000 -- throwing in refunds, potential lost sales, the costs related to reporting the thefts and prevention efforts. Walker took her plea to the Internet, putting a six-minute video on YouTube of her sharing her plight, offering a "Save Our Store," or "SOS" sale, and telling viewers that the 28-year-old store's future was jeopardized by the theft.

Since the video was posted Feb. 10, it has been viewed more than 3,000 times.

The loss of thousands of dollars worth of products and the hit to the store's reputation, she said, couldn't have come at a worse time.

"On top of a bad year, this was really discouraging," Walker said.

The weak economy has hit retailers hard and toy stores have not been an exception. U.S. retail sales of toys were $21.47 billion in 2009, a 1 percent drop from 2008, according to the NPD Group, a New York-based market research firm.

Owners of local toy stores say the past two years have been difficult. Geppetto's Toy Shoppe closed its Longmont store two weeks ago because of lost sales to Wal-Mart, said John Korhel, whose parents started Geppetto's and continue to operate the Estes Park location.

"We didn't have any sales," the younger Korhel said.

Jerome Crawford, owner of Crawdaddy's Toys off 95th Street and Arapahoe Road in Lafayette, said he was saddened to hear of Geppetto's closure.

"It's hard to see them go. That store has served Longmont for a long time," he said, noting Geppetto's predecessor, Mrs. Toads Toys.

Crawford said that business for his toy shop has been a mixed bag during a "brutal" 18 months. He's optimistic because of the store's location, the neighboring YMCA's plans for an outdoor pool and his keeping a tight handle on the expenses.

"People, they're definitely holding onto their pocketbooks and being very careful," he said. "We're fortunate we've got a loyal customer base helping us get through the hard times."

Lynne Milot, owner of the 33-year-old Grandrabbit's Toy Shoppe, said business has been flat, which is "fairly good," she said, considering the recession and its aftershocks.

The economy has changed how Milot has conducted business, she said. No longer is she taking as many chances on toys, games and books as she did in the past.

She's trying to be cautious about her other stores. Out of uncertainty involving the lease of Grandrabbit's Superior store, she quickly opened a location in the Flatiron Marketplace in Broomfield in late November.

As a result of some negotiations, Grandrabbit's currently has three stores and Milot, saying she feels that "we haven't seen the end" of the troubled economic times, is considering all options -- including going back to operating only the Boulder store, at 2525 Arapahoe Ave.

"We're in a different paradigm, so we can't rely on our history or our experience or how we got here," she said. "We have to do something different than in the past. I mean that at every level...

"It does give you some sleepless nights and some worries, but we are all in the same boat."