Toy Retail Market: Analysis and Growth Trends

This article was written by our expert who is surveying the industry and constantly updating the business plan for a toy store.

Who wrote this content?

The Dojo Business Team

A team of financial experts, consultants, and writers

We're a team of finance experts, consultants, market analysts, and specialized writers dedicated to helping new entrepreneurs launch their businesses. We help you avoid costly mistakes by providing detailed business plans, accurate market studies, and reliable financial forecasts to maximize your chances of success from day one—especially in the toy retail market.

What is the current global market size of the toy retail industry, and how has it evolved over the past five years?

The global toy retail market is valued at approximately $121.3 billion in 2025, reflecting steady growth from around $95–100 billion in 2019.

This represents a compound annual growth rate (CAGR) of 4–6% over the past five years. In 2024, the market was estimated at $108–$114 billion, showing consistent year-over-year expansion driven by rising consumer demand, innovation in product categories, and the expansion of e-commerce channels.

The toy retail industry has proven resilient through economic fluctuations, adapting to changing consumer preferences and technological advancements. Growth has been fueled by the emergence of new buyer segments, particularly adult collectors known as "kidults," as well as increased spending on educational and tech-integrated toys.

Looking ahead, the toy retail market is forecast to reach $217.2 billion by 2035, indicating strong long-term growth potential. For entrepreneurs entering the toy retail business, this trajectory suggests a stable and expanding market with opportunities across multiple product segments and distribution channels.

You'll find detailed market insights in our toy store business plan, updated every quarter.

Which product categories within toys are experiencing the strongest growth, and which are in decline?

The strongest growth in toy retail is concentrated in tech-integrated toys, STEM/coding kits, educational products, licensed character-based items, and eco-friendly toys.

Tech-integrated toys—including those with augmented reality (AR), artificial intelligence (AI), app connectivity, and voice recognition—are reshaping both the learning and entertainment segments. These smart toys command premium pricing and appeal to parents seeking developmental value and to older buyers interested in interactive experiences. STEM and coding kits continue to surge as parents prioritize educational outcomes and skill-building in their toy purchases.

Licensed character-based toys tied to movies, TV shows, and gaming franchises remain highly popular, driving significant sales during content releases. Eco-friendly toys are experiencing exponential growth, with the sustainable toy market expected to expand from $1.4 billion to $4.4 billion by 2035, as consumers increasingly demand biodegradable materials, recyclable packaging, and ethical sourcing.

In contrast, traditional battery-operated toys, generic mass-produced items, and non-customizable toys are declining. Parents are moving away from these categories because they offer lower engagement and limited developmental benefits compared to modern alternatives that combine play with learning and interactivity.

For toy store owners, stocking the right mix of growth categories while minimizing exposure to declining segments is essential for maintaining healthy margins and customer satisfaction.

What consumer demographics are driving toy purchases today, and how do their preferences differ across regions?

How is e-commerce influencing toy retail sales compared to traditional brick-and-mortar stores?

E-commerce has become essential in toy retail, accounting for a significant and growing share of total sales, fundamentally transforming how consumers shop for toys.

Online platforms like Amazon and region-specific e-commerce leaders offer advantages that have shifted consumer behavior: broader product selection, 24/7 shopping convenience, price transparency and comparison tools, customer reviews and ratings, and efficient data-driven targeting that personalizes recommendations. These factors have made online shopping particularly appealing for price-conscious consumers and those seeking specific or niche products.

However, brick-and-mortar toy stores maintain important advantages: experiential shopping where customers can see, touch, and test products; immediate gratification with instant product availability; knowledgeable staff who can provide personalized recommendations; community engagement through events and demonstrations; and the opportunity to create memorable in-store experiences that build brand loyalty.

The most successful toy retailers in 2025 are adopting omnichannel models that integrate both online and physical retail. Strategies like "buy online, pick up in-store" (BOPIS), in-store returns for online purchases, and using physical locations as showrooms while maintaining robust e-commerce platforms are increasingly prevalent. For new toy store owners, this means that a purely brick-and-mortar approach is risky—you need an online presence, even if it starts small, to remain competitive and meet customer expectations.

This is one of the strategies explained in our toy store business plan.

What seasonal trends and peak sales periods are most significant in shaping annual toy retail revenues?

The most significant sales peak in toy retail occurs in Q4, specifically November and December, which accounts for over 30% of annual revenues due to holiday gifting.

This holiday season is the most critical period for toy stores, often determining whether the business achieves its annual profit targets. Retailers must plan inventory, staffing, and marketing campaigns months in advance to capitalize on this peak. Black Friday, Cyber Monday, and the weeks leading up to Christmas drive the highest sales volumes of the year.

Beyond the holiday season, several other seasonal surges shape toy retail revenues throughout the year. Easter and spring break (March–April) generate increased sales, particularly for outdoor toys, craft kits, and seasonal-themed items. Summer (June–August) sees strong demand for outdoor play equipment, water toys, sports equipment, and travel-friendly toys as families vacation and children are out of school. Back-to-school (August–September) drives sales of educational toys, STEM kits, fidget toys, and gadgets. Halloween (October) creates demand for themed toys, costumes, and collectibles tied to spooky characters.

For toy store owners, understanding these seasonal patterns is essential for inventory management and cash flow planning. You should stock up ahead of peak periods, adjust marketing efforts to seasonal themes, and plan promotions strategically to maximize revenue during high-traffic periods while maintaining steady sales during slower months.

Which companies or brands hold the largest market share, and how are they positioning themselves competitively?

The largest market shares in global toy retail are held by LEGO, Bandai Namco, Hasbro, and Mattel, which dominate through scale, innovation, and strategic positioning.

LEGO maintains its position as a market leader through continuous product innovation, strong brand loyalty, expansion into digital gaming and entertainment, and a commitment to sustainability with plans to use 100% recyclable materials within the next decade. Bandai Namco leverages its strength in licensed products tied to popular anime, manga, and gaming franchises, particularly strong in Asian markets. Hasbro focuses on entertainment-driven toy lines linked to major film and TV properties, including Marvel, Star Wars, and its own franchises like Transformers and My Little Pony. Mattel, owner of iconic brands like Barbie and Hot Wheels, has successfully revitalized classic lines while expanding into new categories and strengthening its digital presence.

These major players position themselves competitively through several strategies: securing high-profile licensing agreements with entertainment studios and gaming companies; investing in global supply chains that ensure product availability across markets; driving innovation in product design, including sustainability initiatives and tech integration; maintaining broad omnichannel distribution through both major retailers and their own direct-to-consumer channels; and building strong brand equity through marketing, partnerships, and community engagement.

For independent toy store owners, competing directly with these giants on scale or price is not viable. Instead, differentiation through curated selection, personalized customer service, local community engagement, exclusive or niche products that major chains don't carry, and creating unique in-store experiences can help smaller retailers carve out profitable market positions.

What role does licensing and media tie-ins play in shaping toy demand?

Licensing and media tie-ins drive more than 25% of toy industry sales worldwide, making them a critical factor in shaping consumer demand.

Toys linked to movies, TV shows, video games, and celebrity brands generate significant sales by leveraging existing fan bases and brand recognition. Major content releases—such as new Marvel films, Disney animated features, popular Netflix series, or blockbuster video game launches—create immediate demand spikes for related toys, including action figures, collectibles, playsets, and special editions.

This strategy enhances product differentiation in a crowded market, making licensed toys more desirable than generic alternatives. It also boosts both in-person and online retail traffic, as fans seek merchandise connected to their favorite characters and stories. Licensed toys typically command higher price points because of the perceived value and emotional connection consumers have with the source material.

For toy store owners, maintaining relationships with suppliers of licensed merchandise and timing inventory to align with major entertainment releases is essential. Stocking toys tied to upcoming movie releases, popular streaming series, and trending gaming franchises can drive significant foot traffic and sales. However, it's also important to monitor licensing trends carefully, as demand can be unpredictable and products tied to unsuccessful content releases may become difficult to sell.

We cover this exact topic in the toy store business plan.

How are sustainability, eco-friendly materials, and ethical production influencing consumer choices in toys?

Sustainability and ethical production have become major purchasing factors, with the eco-friendly toy market expected to grow from $1.4 billion to $4.4 billion by 2035.

Consumers increasingly expect biodegradable materials, recyclable packaging, and ethical sourcing when purchasing toys. Parents are particularly concerned about the environmental impact of plastic toys and are actively seeking alternatives made from wood, organic cotton, recycled materials, and other sustainable options. This shift reflects broader environmental consciousness and a desire to instill eco-friendly values in children from a young age.

Major brands like LEGO and Mattel have responded by pledging to transition to 100% recyclable materials within the next decade, and many are already introducing product lines featuring sustainable materials. Product transparency—clearly communicating sourcing practices, manufacturing processes, and environmental credentials—has become a competitive advantage, allowing brands to justify premium pricing.

For toy store owners, offering a curated selection of eco-conscious toys appeals to environmentally aware parents who are willing to pay higher prices for sustainable products. Displaying sustainability credentials prominently, educating staff on eco-friendly options, and marketing your store's commitment to responsible retailing can differentiate your business and attract a growing segment of conscious consumers.

What pricing strategies are most effective for capturing both premium and value-conscious segments of the toy market?

• Tiered Pricing for Differentiated Ranges: Offer products at multiple price points within the same category. For example, stock basic board games at budget-friendly prices, mid-range options with additional features, and premium collector's editions or deluxe versions. This allows customers to choose based on their budget while maximizing your market reach.
• Limited Edition and Collectible Lines at Premium Prices: Special releases, exclusive items, and limited-run products justify higher price points and attract collectors and enthusiasts willing to pay more. These items often generate excitement and urgency, driving both sales and store traffic.
• Value Packs and Bundle Deals: Create bundled offers that combine complementary products at a slight discount compared to purchasing items individually. This strategy appeals to price-sensitive shoppers while increasing average transaction values. Examples include gift sets, themed bundles, or "buy two, get one at discount" promotions.
• Subscription-Based Models: Monthly subscription boxes featuring curated toy selections provide recurring revenue and build customer loyalty. This model works well for educational toys, craft kits, or age-specific product assortments, offering convenience and discovery for customers.
• Direct-to-Consumer (DTC) Initiatives: Selling directly through your own website or store reduces intermediary costs, allowing for competitive pricing or higher margins. DTC channels also enable personalization and customization options that justify premium pricing.
• Dynamic Pricing Based on Demand and Seasonality: Adjust prices strategically during peak seasons (higher pricing during holiday periods when demand is strong) and offer clearance discounts during slower months to move inventory and maintain cash flow.
• Loyalty Programs and Rewards: Implement a rewards program that offers discounts, early access to new products, or exclusive deals to repeat customers. This builds long-term relationships and encourages consistent spending across both value and premium segments.

How are technological innovations changing product development and sales in toy retail?

Technological innovations are fundamentally reshaping both product development and sales strategies in the toy retail industry.

Tech-driven toys—especially those integrating augmented reality (AR), app connectivity, coding functionality, and voice recognition—are transforming how children learn and play. These "smart" toys offer interactive experiences that combine physical play with digital elements, creating immersive entertainment that appeals to both children and parents. Examples include coding robots, AR-enhanced puzzles, app-connected action figures, and educational tablets designed specifically for young learners.

These innovations attract premium pricing because they promise skill-building, educational outcomes, and long-term engagement. Parents perceive tech-integrated toys as investments in their children's development, making them willing to pay higher prices compared to traditional toys. Additionally, these products appeal to older buyers, including teens and adult collectors, expanding the addressable market beyond young children.

On the sales side, technology enables data-driven personalization, targeted marketing, and enhanced customer experiences. Retailers use customer data to recommend products based on past purchases and browsing behavior. Augmented reality apps allow customers to visualize toys in their homes before purchasing. Online reviews, video demonstrations, and social media influencer partnerships shape purchasing decisions more than ever before.

For toy store owners, staying informed about technological trends and stocking the latest smart toys and educational tech products is essential for remaining competitive and meeting evolving consumer expectations.

It's a key part of what we outline in the toy store business plan.

What distribution channels beyond retail stores and e-commerce are gaining traction for toy sales?

Several emerging distribution channels are gaining traction in the toy retail industry, offering new opportunities for reaching customers beyond traditional retail stores and mainstream e-commerce platforms.

Subscription toy boxes have grown significantly, delivering curated selections of age-appropriate toys directly to consumers' homes on a recurring basis. These services appeal to busy parents seeking convenience and discovery, and they provide toy brands with predictable recurring revenue. Direct-to-consumer (DTC) specialty websites operated by individual brands or niche retailers allow manufacturers to build direct relationships with customers, gather valuable data, and offer exclusive products or customization options not available through traditional channels.

Educational institutions and after-school programs represent another growing channel, as schools increasingly purchase educational toys, STEM kits, and learning tools for classroom use. Hobby clubs, maker spaces, and community centers focused on specific interests (such as robotics, art, or board gaming) also serve as distribution points, often hosting events and demonstrations that drive sales.

Collaborations with entertainment venues—such as cinemas, theme parks, museums, and family entertainment centers—create opportunities for pop-up shops, exclusive merchandise tie-ins, and impulse purchases in high-traffic locations where families are already engaged in leisure activities.

For toy store owners, exploring partnerships with local schools, community organizations, and entertainment venues can open new revenue streams and increase brand visibility beyond your primary retail location.

What are the key risks, challenges, and regulatory factors that could impact growth in the toy retail market over the next five years?

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.

Sources

1. Future Market Insights - Toy Market
2. IMARC Group - Toys Market
3. The Toy Association - Global Sales Data
4. Circana - US Toy Market Growing in 2025
5. Future Market Insights - Eco-Friendly Toys Market
6. Spherical Insights - Top 15 Companies in Toys and Games Market
7. GlobeNewswire - Toys and Games Industry Research 2025
8. SGS - How Do We Make Toys More Sustainable
9. Statista - Toys and Games Worldwide Outlook
10. Grand View Research - Toys and Games Market