U.S. retail toy sales dropped 3 percent from $22.32 billion in 2007 to $21.64 billion in 2008, according to a report issued by leading market research firm NPD Group on Thursday. A 5 percent drop was reported for the fourth quarter of 2008, roughly coinciding with the difficult economic climate during that time.

The hardest hit categories were vehicles, youth electronics, and dolls, which saw declines of 16, 14, and 10 percent, respectively, though other categories, such as building sets and plush toys, saw increases of over 20 percent. All channels reported lower sales for the year, with sales through mass merchant/discount and Internet channels dropping 2 and 4 percent, respectively.

On the positive, the report stated that toys captured the largest market share of dollars spent on children age 14 or younger during the five weeks preceding Christmas, followed by apparel, video game hardware, and video game software. Traditional board and card games were not mentioned in the report, likely indicating relatively little difference in sales for 2008. Licensed properties took 27 percent of the overall dollar sales for the year (identical to 2007), with Star Wars, Disney Princess, Barbie, Transformers, Crayola, and Webkinz listed among the top sellers.