There’s no way to soften the blow: the plush category has taken one of the greatest hits in overall toy sales this year.

According to the Port Washington, N.Y.-based NPD Group, soft toys experienced a 17 percent decline in sales in the last year. In the period from August 2008 to August 2009, annual retail sales dropped from $995 million to $822 million, marking a severe loss for plush toy manufacturers.

While the category struggles to make up for lost dollars as the holiday season begins, manufacturers reflect on the trends currently shaping the market and discuss the different methods they are implementing to attract new buyers.

Eco-friendly is undeniably one of the most prominent buzzwords embracing the toy industry as of late, and the plush category is no exception. From eco-conscious packaging to green materials for production, everything from bears to bunnies are embodying consumers’ increasing desire to take care of the environment, even during playtime.

“Families are showing a growing interest in greener products and healthier choices,” says Beth Saunders, marketing manager, Dandelion by Re-Think It, Winter Park, Fla. “They are looking for organic and natural materials, as well as eco-friendly dyes.” The company has responded to this trend by using low-impact dyes and corn fiber stuffing in all of its plush creations.

BamBoo Bears maker Planet Fred also lauds the benefits of using its signature material and notes its ubiquitous presence in consumer products. “In the last few years, bamboo has gained tremendous popularity as an eco-friendly material in everything from hardwood floors, to serving bowls and sheets and towels,” says Sandra Litsinger Lippard, founder of the Washington, D.C.-based company. “Bamboo trees absorb four times the carbon dioxide as hardwood trees, while putting out 35 percent more oxygen. Most importantly, bamboo is grown without the use of pesticides.”

The company’s line of organic plush bears, which will debut at Toy Fair 2010, is made of fur that blends bamboo fleece with organic cotton, while the bears’ corduroy ears, tails and paw pads are constructed with hemp and organic cotton—all grown without the use of chemical pesticides. In addition, BamBoo Bears are colored using low eco-impact dyes and their stuffing is made from a hypoallergenic corn fiber which, Saunders notes, can be replenished annually unlike petroleum-based polyfil. “With the recession and tightening of belts, we believe that 'reduce, reuse and recycle’ takes on even more meaning,” she says.

While plush had more recently adopted a soft color palette, some manufacturers are noticing a movement toward bolder colors.

“We’re seeing fashion colors interspersed with more neutral color palettes,” Gund’s marketing director, Jennifer Monson, tells Playthings. Aurora’s marketing manager, Tina Waldmier, says the company’s 2010 line will also be awash in “bright, vibrant colors,” while Weston Parker of Douglas Co. says that “unusual combinations of fabrics, including quilted and patchwork, are making clear inroads onto retailer shelves.” He points to Douglas’ Quilties line, Sassy Pet Saks and Sillo Purses as evidence of this movement toward colorful fabrics and more off-beat designs.

When it comes to color, licensed plush offers a rainbow of bold-hued brands designed to suit a wide range of consumers. From comic book-inspired pigs, to diehard road hogs, this subcategory of plush makes a statement at retailers across the board—and not just at the stereotypical big boxes, manufacturers say.

“Buyers are embracing the classics,” says Laura Perks, vice president of marketing for Kids Preferred, a company with a roster full of toys based on children’s book favorites like Madeline, The World of Eric Carle, Peter Rabbit, Guess How Much I Love You and Spot. “This is tied into high brand recognition, nostalgia and parents and grandparents who grew up with these characters and stories.”

But if the classic storybook characters don’t suit consumers’ interests, Kids Preferred’s latest license, Harley-Davidson, just might. Among the toymaker’s motorcycle-influenced line of plush (and non-plush) items that appear to have some muscle are soft animals outfitted in Harley gear from head to paw, a motorcycle that can be colored with washable markers and the signature Road Hog in a complete Harley ensemble.

Speaking of pigs, Aurora’s Pearls Before Swine plush line is making an impression at retail all its own. “It’s really on the upswing, and fans of the comic strip are huge buyers of the plush online,” Waldmier tells Playthings. To aid its retail customers, the company is working on assorted POP materials for the brand, including signage and custom rack displays. “This helps to brand the space where the plush is in, and it can be paired with other licensed merchandise, such as comic books, to really make a statement,” she says.

Fiesta is focusing on licensed properties that offer a boutique, anime or European look, according to marketing director Suzanne Hammond. The Vernon, Calif.-based company recently partnered with Paul Frank Industries to translate a line of knitted monkeys and other characters into plush. To help merchandise the brand, the company recently designed POP counter and floor displays, along with signage and posters.

While some manufacturers look to new licenses to supplement their current portfolio, others find success in sticking with core brands. “Gund has rarely pursued 'hot’ properties and has focused on evergreen properties such as Sesame Street,” Monson tells Playthings. The company recently introduced a free-standing interactive Sesame Bus, which houses a variety of plush and has interactive features like sound and motion to entertain children at point of purchase.

If lights and sounds are enough to engage a child at the cash register, imagine the effects of enhanced plush that can be brought to life out of the box and onto the Web. While electronics-enhanced plush lines like Hasbro’s Fur Real Friends and WowWee’s recent Alive line of movable soft animals continue to drive the traditional interactive plush market, line that are integrated with a Web component are bringing plush playtime into the virtual world.

“Partnering plush with a Web element allows a staple item to stay in step with current technology,” says David Socha, CEO of the Beverly Hills Teddybear Co., of the movement towards greater online interactivity for plush toys following the success of Ganz’s Webkinz virtual world-enhanced line.

Chris Ryan, owner and vice president of sales for Santa Barbara, Calif.-based Noodle Head, also recognizes a growing interest in online plush. “eMarketer estimates that by 2012, 50 percent of kids online will use virtual worlds,” he tells Playthings. In response to this demand, his company is in the process of developing Planet Pawparazzi, a site where children will be able to travel virtually, play and learn at the fictitious Pawparazzi University and be entertained by their favorite celebrity pets.

“Connecting kids further to the Pawparazzi personalities and engaging them with fun character-driven games and educational entertainment will add an exciting new dimension of play to our line,” adds Ryan. Planet Pawparazzi will absorb the current online fan club on which the 550 members receive monthly e-newsletters, enter contests and giveaways, and submit photos of themselves and their pets for possible inclusion in a “Caught on Camera” gallery.

Aurora’s YooHoo & Friends line of endangered animals from around the globe also has a solid online following, according to the company. “Our site provides a fun and interactive environment for children to play and learn,” says Waldmier, adding that it’s free of charge.

Also in the endangered species realm is Fiesta’s Tales4Tomorrow brand, which has its own online virtual world. “As computer skills in the youth market continue to grow, the online/Web plush concept will also grow,” says Hammond.

Other manufacturers beg to differ, believing that the online plush trend has already peaked.

Says Elaine Kollias, marketing director of Folkmanis Puppets in Emeryville, Calif., “We have found that if the line isn’t constantly groomed and maintained that the interest [online] wanes,” she tells Playthings.

Douglas’ Parker calls plush with a Web component “pretty much old news for retailers and consumers. It is certainly a sub-category within plush that is here to stay, but as the last 12 to 18 months have shown, it is unlikely to continue to be a dominant factor.”

Even though the industry may be divided about Web-based plush, many are on-board with the idea of social networking as an alternative means to reaching their core customers and broadening their consumer base.

Several companies say they are attracting new business via social networking sites and blog outreach. Emily Ross, president of the Chapel Hill, N.C.-based Buckley Boo credits these communication vehicles for playing “a big part in building a loyal following of moms who are actively engaged in helping us succeed.”

Some companies are also finding success by moving beyond traditional toy and gift shops and into more niche retailers. Truck stops and Harley-Davidson dealerships have been favorable retailers for Fiesta and Kids Preferred, respectively, while eco-friendly shops (including day spas and organic clothiers) and health food stores are carrying BamBoo Bears and Dandelion’s products. BuckleyBoo, having penetrated the special needs and autistic communities, is actively targeting occupational therapists, hospitals and other special needs environments. For Folkmanis, zoos, aquariums, museums and national parks have been strong non-toy retail partners as of late. “They seem to have funding unlike the mom and pop stores and don’t really go out of business,” Kollias tells Playthings. “And with families staying closer to home for vacation time, we’ve seen our sales in these niches grow.”

As manufacturers test the waters of new retail possibilities, they also face challenges that pervade the toy industry. Safety issues are of paramount concern, say several manufacturers. And materials costs continue to be a millstone for makers of higher-end products.

“Most of our material costs have skyrocketed, so the challenge is to keep designing and producing plush that is desirable and well-priced,” says Kollias. “Often the two don’t mix well and it’s the dance we do to find a compromise so we can offer the best value both in terms of play value and dollar value.”