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
Slogan	"Everything a toy store should be!"
Website	None

Child World was an American chain of toy stores that was founded in Avon, Massachusetts, in 1970. Child World once boasted 182 stores and revenues of approximately $830 million annually. From 1975 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

File:Child World 1993.jpg

The former Saugus, Massachusetts Child World store, taken in 1993. This was a typical store using the new design right before Child World was liquidated.

After the acquisition of Children's Palace in 1975, 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.

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.

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 slump that quickly spiraled out of control and led to the eventual demise of the company.

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.

Cole National decided to seek a buyer for their ailing toy store but a US$157 million 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 to get Child World out of its control. 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.

However, nothing changed and the precarious position of the chain became more dire as 1992 began. In January, Child World began a wave of store closures by shuttering 26 locations and exiting some markets altogether. Then, in April, the company dealt with two major blows to its financial standing. First, Child World lost its line of credit and was forced to file for bankruptcy protection as a result. In the discovery phase of the case, findings by the presiding jusge led a group of former Child World managers and Cole National executives to file a class-action lawsuit against Avon. They accused Avon of deliberately sabotaging the company so they could liquidate it and thus not pay them money that they were owed.

On May 7, 1992, Child World went public with its bankruptcy filing. Fifty-four more closures were announced, leaving Child World with fewer than half of the stores that they had started the year with. To further complicate matters, Child World tried to secure a new line of credit which would have allowed the stores to stay in business until January 1994 at the least. This, however, did not succeed and left Child World with what they considered to be their only remaining options: either merge with another toy store chain and continue to conduct business, or liquidate. Management did not want to give up and approached fellow retailer Lionel Kiddie City, who at the time was the fourth-largest toy retailer in the country and much like Child World was in dire financial straits. Child World announced that if they were unable to complete a deal for a merger, there would be no hope for the store to survive.

On July 1, 1992, Child World began selling off most of its inventory in order to raise cash. This was originally to be a massive chainwide clearance sale at its remaining seventy-one locations and was started eleven days ahead of what Child World had set as a deadline for a decision regarding the merger with Lionel Kiddie City. When the deadline date of July 12 came, Child World announced that the merger talks were continuing and that they still intended to remain in business, but the clearance sale was being converted into an inventory liquidation. On August 2, Child World announced the merger talks had failed and the remaining Child World and Children's Palace stores would begin winding down business immediately. Within two to six weeks, the liquidation sales were completed and Child World's stores were shuttered forever.

Child World's potential merger partner eventually would fall victim to liquidation as well, as Lionel Kiddie City went out of business one year later.

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. The corporate logo was written in a "refrigerator magnet"-like typeface. The design started showing up in newer Child World stores after the 1975 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 catalog advertised the toys sold, with child actors talking about the toys, including Sega and Nintendo video game consoles and software. Two of the child actors/actresses featured in the video were J.D. Daniels and Lacey Chabert.