Toys sold for less than £15 accounted for nearly half of the UK market last year, as pressure from the rising cost of living continued to bear down on consumers.
Sales of toys and games were down 3.7% by value on the previous year, industry analysts Circana said, as parents tightened their belts and sought out lower-priced presents for children.
Despite the trend of adults increasingly buying toys and games for themselves, traders said overall sales had felt the impact of an “unsettled economic landscape”.
Retailers are increasingly pinning their hopes on collectables, appealing to adults and children, which are low in price but can prompt multiple purchases.
The Squishmallows Plush 8″ Assortment, which typically sells for about £8.50, retained its position as the top-selling item for the second-year-running.
Squishmallows became popular during the pandemic when people shared their collections on social media, and said that hugging the toys helped them to feel calmer and less anxious.
Toys costing less than £10 accounted for 28% of the market.
The British Toy and Hobby Association’s 71st annual Toy Fair takes place in London over the next three days, with hopes for a rebound in fortunes through innovation.
That will see further releases of mini or micro collectable items.
However, the sector may again be relying on adults buying for themselves as much as their children – with nostalgia and building sets such as Lego expected to sell well again next Christmas.
Sales of toys and games saw a big lift during Covid as more families spent time at home during lockdowns, but sales have fallen since 2021.
A falling birth rate, the cost of living and fewer big hit film franchises have been blamed for hitting the market last year.
Kerri Atherton, from the association, said: “These latest figures have undoubtedly been shaped by the current unsettled economic landscape which is impacting people’s spending across a wide range of consumer goods, including toys.
“However, it is promising to see there are pockets of increased spend across the UK toy sector.”