James Colclough has been running Melton Toys for a dozen years, first in King Street and then in Nottingham Street in the city.
He hinted that the difficult economic climate was the reason for the shutdown in an emotional post on Facebook.
James thanked his “loyal customers and staff”, writing: “From humble beginnings on King Street in 2009 to the heights of the Toy Retailer of the Year award in 2018, Melton Toys has seen it all.
“I’ve employed 18 amazing people over the years, all of whom remain friends.
“14 young people can call Melton Toys their first job and I’m proud of what they have achieved since then.
“I think studio work is great for building confidence.
“What I will miss most is seeing young faces at the counter and sharing their joy when pocket money is exchanged for an exciting new toy. I believe that toy stores teach children the value of the money.
For many years generations of Melton families bought their toys from the Arbon and Watts shop and James said he saw a gap in the market when it closed.
James added in his post: ‘Melton Mowbray is a fantastic town with loyal shoppers, some of mine have been coming weekly for 12 years.
“City center stores are often an underrated haven for the elderly, vulnerable or lonely among us.
“If you’ve ever shopped at Melton Toys, you did a good thing. Thank you.”