Toymakers Hope Parents Are Ready to Splurge

By Christina Cheddar Berk, News Editor

NEW YORK (CNBC) -- Are parents more willing to splurge on toys for their kids? Toymakers think so.

That was one of the most notable takeaways from this week's 109th American International Toy Fair in New York.

Toy companies are playing to the extremes. As you walked around the booths of the Jacob K. Javitz Center or visited company showrooms throughout the city, you were sure to find lots of little, low-priced collectible toys as well as bigger, more elaborate items priced above $100 mark. That's a big step up when you consider the average price of a toy these days is $8.

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It's also interesting because it follows a year of declining toy sales in the U.S. According to market research NPD Group, U.S. retail sales of toys generated $21.18 billion in 2011, a 2 percent decline from the $21.68 billion in toy sales rung up in 2010.

Despite declining U.S. sales, global sales of toys rose about 2 percent, and there are signs that American consumers may be willing to loosen their purse strings and spend more.

NPD research showed Americans are making trade-offs. Parents may buy one pricier toy instead of buying several mid-to-lower priced items, or they will spend more on toys for their own children but buy fewer toys for children outside their immediate family.

The Toy Industry Association is calling the trend "Save and Splurge." The idea is to find toys that children will keep coming back to again and again or that have a certain "wow" factor.

"I think it's a matter of needing to have creative toys," said Carter Keithley, president of the Toy Industry Association, in an interview with CNBC. "That has always been what has driven the toy industry."