Child World

Child World, Inc.

Former type	Corporation
Industry	Retail
Fate	Liquidation
Founded	1970
Defunct	1992
Headquarters	Avon, Massachusetts
Products	Toys, electronics, board games, dolls, and video games
Website	None

Child World was an American chain of toy stores that was founded in Avon, Massachusetts in 1970.^[1] Child World once boasted 182 stores and revenues of approximately $830 million annually. From 1977 until its closure Child World also operated the Children's Palace chain of stores after acquiring it from Kobacker Stores, and later incorporated most of the aesthetic design features from the latter chain into Child World stores.

Beginnings and early expansion

After the acquisition of Children's Palace, Child World became the second largest toy retailer in the United States after Toys "R" Us, its chief competitor. In many areas Child World stores were operated close to Toys "R" Us locations, as in Framingham, Massachusetts (see below), Milford, Connecticut, East Haven, Connecticut, Pleasant Hills, Pennsylvania, Henrietta, New York, Cincinnati, Ohio, Indianapolis, Indiana, and Totowa, New Jersey.

Child World also began incorporating elements of the Children's Palace store design into its stores that opened post-merger, with many of the new stores taking on a castle-like design (see below).

In 1981 the chain was acquired by Cole National Corporation, a retail ownership group that is now a division of Kohlberg Kravis Roberts.^[2]

Into the early 1990s, Child World was led by then-President Peter Hayes. The chain was known for, largely, a 'warehouse' style of merchandising, with long aisles and so-called "over-stock" storage above selling-floor-level shelves.

Although sales had begun to decline by the late 1980s, in 1989 the chain announced a new 29,000 sq ft (2,700 m²) store prototype designed to appeal to customers and real estate developers alike. The first store remodeled into the new prototype was in Framingham, Massachusetts, near the Shoppers World mall and key competitor Toys "R" Us, just one block away. Initially, the prototype was well-received, with strong first-day openings, and good performance in the critical Christmas selling season. Owing partly to that success, Child World management announced that the new prototype would be used to renovate 11 existing sites, and new market expansion would be targeted in 1990, 1991 and 1992 using the new design. However, Child World would not have the chance to implement the design, as problems began to arise.

Downfall

While the focus of Child World's management was primarily on growing the brand, a recession that began in 1990 and continued into 1991, combined with the lack of a 'must-have' toy (e.g., Cabbage Patch Kids), helped to send Child World into a steady decline.

Peter Hayes and a large portion of Child World's executive board were fired in 1990 and Cole National began to restrict capital to the stores. As a result, Child World was unable to procure their needed merchandise for the upcoming holiday season and sales dropped. The combination of cash restriction and lack of sales caused Child World to default on payments to creditors and suppliers. These companies, such as LEGO, responded by refusing to accept orders for merchandise and Child World was not only unable to spend money, but store shelves were also becoming empty due to the suppliers' unwillingness to do business with the chain. Child World suffered a yearly loss of $192 million (US) on $830 million in sales for fiscal year 1990. Its profile was not helped by Toys "R" Us's continued growth, as well as the chain's being named a co-defendant in a lawsuit filed by the Consumer Products Safety Commission.^[2]

Cole National decided to seek a buyer for their ailing toy store but a $157 million (US) dollar deal fell through when the buyer failed to come up with enough capital. Meanwhile, Child World was continuing to lose money at a rapid pace and without any monetary interest from potential buyers Cole National was forced to find another way. This resulted in a debt trade with another venture capital firm, Avon Investment Limited Partnership, in 1991. In the deal Cole National gave Avon $30 million in short-term debt in exchange for a larger amount of long-term debt and the remainder of the short term debt. Avon installed a group of former Toys "R" Us executives who sought to bring the company back to prominence.^[2]

The already precarious situation, however, did not improve entering 1992 and store closures began. Child World closed 26 stores and exited certain markets altogether in January, then was forced into bankruptcy in April after its line of credit was not renewed. On May 7, 1992, in addition to making the bankruptcy filing public,^[3] Child World announced that 54 more stores would be closing.^[1] This left Child World with less than half of the stores they had at the end of 1991, and the financial situation was further compromised after company executives failed to secure a line of credit that would have ensured the stores would remain open until at least January 1994.^[1]

Child World's management then approached Lionel Kiddie City, another bankrupt toy store chain, about a merger that Child World declared would be its only chance for survival. The chain set a deadline of July 12, 1992, to complete the merger. Eleven days before the deadline Child World announced a chain-wide inventory clearance sale in order to raise cash.^[3] July 12 came and passed with no merger announcement, and Child World announced the inventory clearance sale was now a full-fledged going out of business sale. Despite this, merger talks continued in the hopes that Child World and Lionel Kiddie City might be able to pull off a last-minute deal. Unfortunately for Child World, the deal ultimately failed and on August 3, 1992, the chain announced that the remaining 71 stores would accelerate their liquidation sales and close as soon as possible; this occurred over a period of two to six weeks.^[3] (Lionel Kiddie City would meet the same fate as Child World, going out of business in 1993.)

Store design

Entrance to former Children's Palace in Englewood, Colorado (now a Big Lots, as seen above the door, with turret apparently still in place top left).

Child World was known largely for making its stores resemble castles, complete with turrets, battlements, and three arches (two small, one large) in the front door [1]. The corporate logo was written in a "refrigerator-magnet" like typeface. The design starting showing up in newer Child World stores after the 1977 acquisition of Children's Palace. After the company went out of business some of the retailers that took over the Child World spaces retained the design but most did not.

Mascot

The mascot for Child World was originally a cartoon rabbit named Happy Rabbit who sported the words "I'm Happy" on his T-shirt, but by 1979 was replaced by a cartoon panda bear named Peter Panda, often depicted wearing overalls with his name printed on them.

Video catalog

In 1990 Child World produced a video catalog in time for Christmas that year called "Video Toy Chest: A Toy Catalog on Videotape". This catalogue advertised the toys sold, with child actors talking about the toys, including Sega and Nintendo video game consoles and software. One of the child actors featured in the video was Lacey Chabert.

References

1. ^ ^{a b c} Adam Bryant (May 8, 1992). "Child World Files for Bankruptcy". The New York Times. http://query.nytimes.com/gst/fullpage.html?res=9E0CE1DF153EF93BA35756C0A964958260. Retrieved 2007-11-30. 
2. ^ ^{a b c} Funding Universe.com - Company History: Cole National Corporation
3. ^ ^{a b c} Laura Liebeck (August 3, 1992). "Child World is grounded: rescue by Lionel falters - Lionel Kiddie City". Discount Store News. http://findarticles.com/p/articles/mi_m3092/is_/ai_12540143. Retrieved 2009-06-22.