TRA Chairman also says that categories must 'rise to the challenge' presented by tablets.
Toy price cuts made too early by certain retailers are having a "damaging" effect on the industry.
Alan Simpson, Chairman of the TRA, made the comments following last night's 2012 Toy Industry Awards.
He said: “In a year which has continued tough for the industry, exceptional marketing by retailers and suppliers alike has generated a better than expected outcome.
"Undoubtedly this has been assisted by the development and further launch of tablets joining must-have adult products in 2012 which open up exciting platforms for play in the future.
"Other traditional areas need to rise to the challenge too and as we continue to tour Toy Fair this week retailers will be looking for evidence that will write an even better story for traditional and new toys in 2013.
"The uncertainties of retailing in our threatened economy led many to cut prices too soon again, fearing for their survival. This damages the industry and confuses consumers about the real value of our goods. Businesses not only need cash flow but profits in order to survive, and children need toys for play, for life and for learning."
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