The UK market for toys and games was worth £1.63 billion in 1996, having grown in 1994 and 1995 following the recession in 1992. In real terms, the growth has been in the region of 6 percent since 1990. Toys and games compete for consumers expenditure with a wide range of leisure products, but especially computer games, videos and CDs - items which are excluded from this report. The increasing competition in the market has held back value growth. Sales are highly seasonal, with over two thirds of annual sales in the weeks leading up to Christmas.

There are eight main categories in the market, of which the largest is activity toys which includes building and construction toys such as Lego, and arts and crafts sets, and has a 17.3 percent market share. Other major categories are infant and pre-school toys (16.1 percent), dolls (11.5 percent) and gamespuzzles (11.5 percent). Sectors which have exhibited above average growth in 1995 and 1996 have been electronic learning aids, fuelled by parental interest in equipping their children with computer skills, and traditional toys and games including board games such as Monopoly, and top sellers Barbie and Action Man.

Exclusive research commissioned by MAPS from the National Opinion Poll (NOP), prior to Christmas 1996, found that over half of all adults would be buying toys and games during this time, with the most popular purchases being board gamespuzzles (57 percent purchasing), arts and crafts (43 percent), soft toys (42 percent), and building and construction sets (39 percent). The typical toy purchaser is female, aged 25-44 years old, married with children. However, there is a substantial market with consumers in other age groups, including friends, aunts and uncles, and grandparents. Men are especially likely to buy toys for children which they enjoy, such as toys vehicles, and to have a major influence on the purchase of other toys especially interactive electronic learning toys, and bicyclestricycles.

The UK market is dominated by overseas companies, with Mattel and Hasbro from the US, Tomy from Japan, and Lego from Denmark. Mattel and Hasbro have grown by acquisition in recent years, having taken over JW Spear and Tyco Matchbox (Mattel) and Waddingtons Games (Hasbro). The top two account for approximately 33 percent of the market, but there are also a number of smaller but highly active manufacturers, with strong brands. Bluebird is the leading UK supplier with an estimated 5 percent market share.

New product development is the key to manufacturers maintaining market share, and considerable investment is made in this area, as well as in the marketing and promotion of toys and games. Line extensions of successful concepts are one of the most effective ways of gaining incremental sales.

The vast majority of toys and games are imported into the UK, with product design and development carried out in the manufacturers own country, and manufacturing sub contracted to manufacturers in the Far East and Asia, where labour costs are lower. Quotas imposed on the import of toys and games from China have forced some manufacturers to alter their manufacturing arrangements, and there has been a tendency to bring certain manufacturing facilities closer to the end market, with opportunities in Eastern and Southern Europe. New market entrant K'nex is establishing a manufacturing plant in Kent.

Toy retailing in the UK has seen considerable change since the advent of Toys 'R' Us, a very active company based on US style mass marketing techniques. The main retailers in the UK are now Argos, Toys 'R' Us and Woolworths. Argos, through its chain of catalogue shops offer low prices, while Toys 'R' Us has a combination of low price, due to its exceptional buying power, and extensive range in its superstore-style outlets. Woolworths has a major presence on every high street, with a carefully chosen range of toys including market leaders, competitive pricing and regular special offers.

As a result of the dominance of the major chains, independents are under increasing pressure, finding it difficult to match the major in terms of price, range or convenience. Buying groups have been established - the largest being Toymaster - to help independents regain a competitive edge. Some independents have found a move from the traditional high street location to a shopping centre with car park gives them the advantage of convenience.

Future performance of the toys and games market will be mixed, with most sectors showing some growth, but few growing substantially. The UK market for toys and games is therefore forecast to reach £1.81 billion by 2001, at constant prices. This is in line with the expected increase in consumer expenditure and personal disposable income (PDI) over the same period.