SHELBURNE -— Facing slowing growth in the teddy bear market, one of Vermont’s most iconic businesses is looking to become the Noah’s Ark of stuffed animals.
The iconic Vermont Teddy Bear has started making bunnies, foxes, koalas, elephants and various other animals. Next year, it’s making a sloth.
Vermont Teddy Bear has traditionally targeted adult customers for its pricey hand-made bears, said President and CEO Bill Shouldice. For years, Valentine’s Day yielded the busiest sales of the year. But over the last decade, the company has started to market more consciously to children, said Shouldice, who has been leading Vermont Teddy Bear since 2013.
“The bear business historically was an adult product given by an adult to an adult,” he said. “We think there’s an opportunity to be more, maybe to younger kids.”
Vermont Teddy Bear is already much more than a stuffed animal company. Bears and the other animals only make up 30% of the company’s revenues, according to Shouldice. The rest of the money comes from other related companies that keep a lower profile: Pajamagrams, a gift company that started in 2002; Pajamajeans, which sells men’s and women’s blue jeans; and Addison Meadow, a women’s loungewear company that Vermont Teddy Bear launched last year.
The clothing companies are run as separate businesses from the Shelburne headquarters; the clothes are made all over the world, mostly in China.
But Vermont Teddy Bear puts the bears out front.
Vermont Teddy Bear got its start in 1981 when creator John Sortino started selling his hand-made bears from a cart on Church Street in Burlington.
After some fits and starts, Sortino discovered radio marketing, and sold thousands of bears through radio personalities who pitched the bears and listed the company’s 800 number. By 1993, Vermont Teddy Bear had annual sales of $17 million and was 58th on Inc. Magazine’s list that year of the nation’s fastest-growing companies, according to Funding Universe.
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The company went public in 1993 and moved into its $6 million Shelburne factory and visitor center in 1995. It created a distribution center in England, and opened stores in Waterbury, on Newbury Street in Boston, in North Conway, N.H., and on New York’s Madison Avenue. Along the way, Vermont Teddy Bear built another manufacturing plant in Newport.
But in 1995 the company’s board asked Sortino to step down as CEO, and financial problems led it to close all of its retail outlets in 1998 except Waterbury, which stayed open until 2000. The Newport plant closed in 2009.
The stores weren’t as effective as direct-to-consumer outlets like radio, television, and now social media, said Shouldice.
“If you put a radio spot on commute time in a metro area, the phone rings right away,” he said. “We have people in headsets waiting.”
Thirteen years ago, a group of investors took the company private, and Shouldice said the company’s majority owners are now Mustang Group, a private equity firm in Massachusetts, and Fresh Tracks VC in Shelburne.
Shouldice declined to release annual revenues — which other media outlets have reported at $60 million — but estimates the company sold 300,000 bears last year, all in the U.S. or Canada. The company has 125 year-round employees, and gets up to about 1,000 workers in its busiest season, which starts just after Black Friday and runs through Valentine’s Day. About 150,000 people a year pay for a tour in the summer, the company says.
Vermont Teddy Bear sets itself apart from the mainstream plush toy giants by making pricey clothes and accessories for custom bears to go along with interest groups, popular personalities, or trending themes. Right now, a $79.99 Donald Trump-themed bear in a suit with a combover, a fistful of money, and a red “Make America Great Again” pin is out of stock on the company’s website. A Bernie Sanders bear with wire-rimmed glasses, available for the same price, is available; Shouldice declined to say which one was more popular. In 2015, the company came out with a 50 Shades of Grey bear, and more recently, said Shouldice, an astronaut bear has been popular.
“Because we are vertically integrated and can be nimble, we can follow trends and look for affinity groups online,” said Shouldice. He used as an example a group of I Love Lucy fans who have a Facebook group.
“We’ll partner with whoever owns the license for I Love Lucy, get a license-holder to approve a sample, go into production, and present this product on the same Facebook page next to the affinity group so you have relevancy and interest,” he said.
The company created a rainbow-colored bear to go along with singer Cindy Lauper’s True Colors Fund, which supports gay, lesbian, bisexual and transgender equality. Part of the proceeds from those bears go to the fund, Shouldice said.
And in the last two years, Vermont Teddy Bear has made about a dozen different plush animals, many that sell for $39.99, including the sloth. (Sloths are the No. 1 selling soft animal on Amazon right now, said Cassie Clayton, a product designer at the company.) Also out soon: a flamingo, a pony, a unicorn and more wild animals.
The bears themselves start at $49.99 for a basic teddy with hinged arms and legs, and go up into the hundreds for limited-edition bears with a large range of accessories. The company also makes 3-foot, 4-foot and 6-foot bears, the latter for about $220 depending on its accessories.
While business analysts list companies like Build-a-Bear and American Girl dolls as Vermont Teddy Bear’s closest competitors, Shouldice said the company is really more in the home décor business.
“You become a doctor and you get a bear that has a white lab coat: What do you do with the bear? You put it on the shelf and display it as something that marks a major milestone,” he said.
The bears and stuffed animals are filled with recycled plastic and are mostly cut, sewn and stuffed by hand or small machine on sections of factory floor that feature as part of the company’s popular tour. They are guaranteed for life, and the company has a popular “hospital” where bears are repaired or replaced after an encounter with a dog, sibling or lawnmower turns out badly.
When it comes to the stuffed animals, the company is steering clear of voice activation, connectivity, or anything else wifi-enabled.
“It’s our sweet spot,” said Shouldice of unwired bears. “We are promoting a handmade, guaranteed-for-life bear that has a unique sentiment to who they are and what they do. We’re not going to try and be something we’re not, which is a technological-based company.”
One of Shouldice’s biggest concerns is finding his seasonal workforce. The company tries to attract people back year after year with lottery drawings and flexible hours. Many, he said, work several seasonal jobs, moving from a summer stint at the nearby Shelburne Museum to fall and winter at Vermont Teddy Bear before taking a few months off in the spring.
Pay starts at $13.50 per hour for packing boxes. Flexible hours are key to attracting seasonal workers in an area with a 2% unemployment rate, he said.
“That used to be, ‘Do you want a morning or evening shift?’ Shouldice said. “Now, we say, ‘What hours can you give us?’”
Shouldice is also learning how to work with Amazon, which he described as a “frenemy.” The online shopping giant broadens the market but controls the rules on storage and shipping, and takes about 17% of the profits.
“Amazon is not an easy partner to do business with,” said Shouldice. “I don’t want to get dependent on the Amazon revenue and then have something change.”
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