Reuters has reported that the retailer hopes the offering will fill a gap left by the demise of independent and speciality stores such as KB Toys.
Julia Fitzgerald, chief marketing officer for Sears' toy business explained: "That's what we're hearing more and more from our core consumer, that they would like to buy (toys) in the mall."
Sears plans to dedicate about 1,500 square feet of floor space in each of the 20 stores and offer around 600 different items.
The venture returns the retailer to the toy market after it experimented with store-within-a-store partnerships with KB Toys.
Since KB Toys went out of business earlier this year, closing its 460 stand-alone stores, a niche has opened for Sears, Fitzgerald said.
Fitzgerald said Sears will carry toys made by Hasbro and Mattel as well as Leapfrog and Schylling.
Sears’ apparel business has been damaged by discounters such as Wal-Mart and Target and a slumping economy. As a result, the firm has been experimenting with different pathways to growth.