There's no way they can be sure the customer will buy another item from their own product line instead. Surely they're more likely to buy a competitor's product?
They don't have to, as long as more buyers do than choose to not buy the "hot" item after Christmas. In general it's a good thing to increase the size of your industry, as long as you capture some (not all) of that increase.
Also, I wouldn't bet on them being more likely to buy a competitor's product. Brand recognition counts for a lot, particularly with toys & other discretionary purchases. Some will, of course, but most people once "primed" will buy something close to what they initially had in mind.
This was a strategy practiced long before the invention of e-commerce. It works perfectly for brick-and-mortar shops because physical distance to the toy shop (in winter!) guarantees more return customers.
Also, I wouldn't bet on them being more likely to buy a competitor's product. Brand recognition counts for a lot, particularly with toys & other discretionary purchases. Some will, of course, but most people once "primed" will buy something close to what they initially had in mind.