The next five years will prove difficult for retailers in this sector, with sales growing by just 0.4 per cent per annum and increasing competition coming from supermarkets and online stores.
These findings from industry research specialist IBISWorld also suggest that non-specialist retailers will continue to use price and promotional deals to attract consumers, with toy stores having to work harder to differentiate themselves from the competition.
"Increasing levels of competition, both within and external to the industry, have created a challenging marketplace for retailers," said IBISWorld analyst Claudia Burgio-Facca. "As a result, industry sales have posted modest growth of 1.1 per cent per annum over the five years through 2011-2012."
According to the report, industry sales are forecast to rise from £1.31 billion in 2012-2013, to £1.34 billion in 2016-2017. it also points out that annual fluctuations in sales will be driven by trends in real household disposable income, consumer confidence and the relative share of the UK population aged between 0 to 14 years-old.
To find out more about the report, click here.