Executive Summary

This report considers the UK market for traditional toys and games, which was valued at £1.64bn at retail selling prices (rsp) in 2000. The sectors covered in this report include action toys, activity toys, dolls, infant/preschool, games/puzzles, plush, ride-ons, vehicles and other miscellaneous toys and games. For detailed information on the electronic market, Key Note publishes a report on Electronic Games. Sales in the total toys and games market (including electronic) increased year-on-year until 1999, when there was a slight decline. However, these improvements were due to the relatively strong performance of electronic games, while sales of traditional products have stagnated.

The traditional toys and games market has been strongly affected by a number of factors. The number of children in the population is declining, as the impacts of falling birth rates over the past decade are being felt. Tastes are maturing and becoming more sophisticated at younger ages, reducing the available time slot for many products and leading to companies targeting younger groups in order to maximise sales. However, the market has also benefited from increasing levels of spend per child, as disposable income levels have risen, family sizes fallen and the age of parents has increased.

The toys and games market has many international businesses with global brands. Most of the major companies source and distribute internationally to benefit from economies of scale, not only in costs, but also in marketing. The two biggest UK toy companies are Hasbro UK Ltd and Mattel UK Ltd, both of which are owned by US corporations. These companies operate across most sectors of the traditional toys and games market and own major brands such as Barbie, Action Man, Furbies, and Pokémon Trading Cards. UK-owned companies tend to be smaller in scale.

Character merchandising continues to be a strong feature of the traditional toys and games market, with over a quarter of goods in the sector carrying this element. The other growing influence on the sector is that of increasing electronic content. Companies are endeavouring to make toys more exciting by increasing functionality and interactivity. This electronic trend will continue to increase, as technology improves and costs are brought down.

Sales of toys and games are likely to increase in current prices over the 5-year period to 2005. However, electronic games will take a greater share of the total market. Traditional toys and games will experience falling volumes as the child population decreases. However, the development of more sophisticated technological products will contribute to maximising sales.

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