Despite the problems caused by the economic downturn, Key Note reported recently that the market remains vibrant, due to an ever-increasing child population in the UK thanks to a rising birth rate. Family sizes are getting smaller and people are becoming parents later on – two factors which mean more disposable income to lavish on their children.

Against this background, traditional toy suppliers have a great opportunity to carve out a niche; offering high-quality products for parents who want to move away from the plethora of high-tech electronic gadgets and licensed tie-ins with cartoons and children’s films.

The British Retail Consortium reported last month that July 2009 saw sales of arts and crafts increase by 4 per cent across the UK toy market, in a signal that many parents are looking to more traditional pursuits during the school holidays. Of these sales, crayons, pens and paints manufacturer Crayola was the undoubted leader, taking almost £1 in every £10 spent. However, Spin Masters’ Moonsand and Flair’s Plasticine also saw healthy sales.

The BRC also said that building sets experienced a sales boost, as parents sought to stimulate their children’s creativity. Lego remained comfortably on top, owning nine of the top ten toys in this category, and only Mega Brands’ Mega Bloks Maxi prevented it from scooping all ten places, coming in at number nine.

With over 600 different companies involved in the market, however, competition remains fierce. International giants such as Bandai, Hasbro, Lego, Mattel and Tomy dominate in the stores, although the demise of Woolworths has caused a vacuum, which canny suppliers are rushing to fill.