Figures from January to October show growth of 11 per cent in value. Almost all toy categories are improving, with five of them experiencing double-digit growth, with building sets up 49per cent and plush, up by 51%, growing the fastest.
Dolls have experienced an impressive 14 per cent increase in value since the beginning of the year, while outdoor/sports looks strong, boosted by this year's World Cup.
Only three categories of toys saw a decline in sales - vehicles and action figures have both been affected by the success of building sets and the games and puzzles category has also gone into decline.
Frederique Tutt, European Analyst for NPD EuroToys commented: "NPD is confident that after such a strong start, 2010 is on track to be the strongest year for the UK toy market since 2002 and we expect the last two months of the year to confirm the current trend.
"In particular, we expect the toy market to continue to gain strong growth online. According to our Consumer Panel, in 2009 almost 20 per cent of all traditional toy sales were made online. This could easily reach 23 per cent in 2010, led by multi channel operations such as Argos, Tesco or toy chains, but also with the UK arm of the online retail giant Amazon. We expect this channel to be hugely significant for retailers in the run up to Christmas."
Commenting on the main trends so far in 2010, toy expert Jez Fraser-Hook provided his analysis of the key trends in the sector: "Every year the toy market works its magic with innovations, and this year is no exception. Manufacturers have recognised that children are often drawn towards their parents’ electronic gadgets and so this year our little ones will be creating family memorabilia like never before.
"Vtech launches its new Videocam that, like its predecessor the digital camera, is expected to be a great success in Europe. Market leader Mattel is also jumping on the bandwagon, with Barbie video girl, the first ever fashion doll with built-in camera. As for Spinmaster, they are taking the popular flying helicopters one step further: their Air Hogs Hawk Eye also has a built-in camera.
"In a slightly different vein, the Paper Jamz range from WowWee, a range of brand new musical instruments based on a new super-thin technology is a perfect illustration of innovation and fun.
"The big screen always has an impact on the UK toy market and this year, Toy Story 3 is the main film title on the market. According to our figures, the licence already topped the toy ranks in October and sales are expected to continue flying until the end of December, thanks to the DVD to be released on 22nd November.
"Crazes continue to create a buzz in school playgrounds. Following on from the success of football cards this summer (Panini and Match Attax) and Gogos (MartoMagic) for the last few years, primary school children are now eagerly collecting Lego Mini Figures and Silly Bandz.
"In spite of so many new products being available in the market, classic toy categories continue to perform well. Building Sets are doing extremely well with leading manufacturers including Lego and Mega Brand being popular with all age groups. Lego also launched new themes this year such as Atlantis and Toy Story together with Mini Figures. These have added incremental sales to successful existing ranges.
"Playsets based on themes and characters continue to remain a key part of the toy market for all ages. For pre-schoolers, Peppa Pig (Character Group mainly) and Thomas and Friends (Mattel mainly) continue to dominate character sales, but there is also strong interest in newcomer Chuggington and Fireman Sam amongst others. Older kids are still turning towards enduring favourites Playmobil or the likes of Sylvanian Families later on.
Meanwhile Fashion Dolls are also doing well (up 16 per cent), led by Barbie and Disney Princess both from Mattel and MGA’s Moxie Girlz.
"Board Games are also expected to be successful again this winter, thanks to a new twist on classic play values: Monopoly Revolution, Trivial Pursuit Bet you know it (Hasbro) and Scrabble Trickster (Mattel) are amongst the new top-tipped games. NPD also expects strong sales for the eagerly anticipated range extension of Lego games and the new children’s game from Drumond Park - Pumpaloons.
"In several categories (Plush and Playsets) pets have an ongoing attraction. We were already familiar with the success of Sylvanian Families (Flair) but they now share toy shelves with the Zhu Zhu pets from Character Group (special feature plush), the Furreal Friends from Hasbro and the Animagic range from Vivid Imaginations.
"Like all other consumer goods industries, the toy market is opening up to green and environmental issues. While few toys can pride themselves on being environmentally friendly, a few new brands are entering the market. In line with this trend, NPD sees a clear resurgence of popularity for Scientific Games (+11% this year), led by ranges licensed under National Geographic, Science Museum or the Natural History Museum. Outdoor Goods also performed well during the summer with a 13 per cent growth overall to date."