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Bullish on bears

Under new CEO, Vermont Teddy Bear shifts its focus to kids, betting quality will be selling point for safety-conscious parents

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By Jenn Abelson
Globe Staff / July 19, 2009
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SHELBURNE, Vt. - To say that Howard Stern and teddy bears are an unlikely pairing is no stretch. But for much of the history of Vermont Teddy Bear, the company spent its efforts targeting the listeners of the radio shock jock. More specifically, its mainstays were the lazy men who forgot to buy their girlfriends presents for Valentine’s Day and so ordered handmade teddy bears shipped in from the Green Mountain State.

In recent years, the strategy failed miserably and Vermont Teddy Bear teetered on the brink of extinction: The volume of sales plunged 50 percent and one of its two factories took the entire summer off because of the falloff in orders.

Now, with a new leader at the helm - a former executive at Dunkin’ Donuts and T.J. Maxx - Vermont Teddy Bear is taking aim at a more identifiable market for cuddly stuffed toys with a new line of bears tailored for children instead of absent-minded boyfriends. In many ways, it’s a no-brainer approach.

“The world changed around us, and we were set in our ways,’’ said John Gilbert, the new chief executive of Vermont Teddy Bear.

In an effort to stage a furry comeback, the company is setting its sights on a younger crowd and looking to capitalize on the growing interest, following the spate of recalls from China, in domestic toys - and especially in local products. Vermont Teddy Bear is planning to draw on its crunchy heritage with the launch of an ecofriendly bear made entirely of natural fibers. The cataloger is also partnering with local authors and artists to create books about its bears in an attempt to emulate the wild success of American Girl, which created storylines around its dolls. And to rapidly increase its sales opportunities, Vermont Teddy Bear will for the first time enter chains like Sam’s Club and roll out Vermont Teddy Bear boutiques inside other shops.

“Vermont Teddy Bear’s heritage and handmade quality are their strengths. They have that personalized touch,’’ said Monica Tang, a retail strategist at Kurt Salmon Associates. “Playing that up makes sense for them and sets them apart from Gund and others. There’s room for Vermont Teddy Bear to grow in the market. Teddy bears are classic gifts.’’

On the factory floor in Shelburne, workers are hand-stitching different prototypes: the flat fuzzy bear expected to be sold for $20; the soft, floppy bear aimed at infants for $40; and the $50 furry play bear for youngsters who like to dress up their animals. The company has already started selling the “Wear It Bear It’’ that lets consumers turn their old T-shirts into handmade teddy bears for $39. All of the bears come with a lifetime guarantee: The company will repair the bears at no charge at its own “bear hospital’’ in Shelburne, where dog bites are the most frequent injury.

A broader selection of the new bears will start making their way into stores by Halloween - with appropriate costumes, of course - and then the winter holiday season. The expanded assortment and shift in marketing is an effort to boost revenues overall and spread sales more evenly throughout the year instead of the Valentine’s Day craze, which typically makes up 50 percent of annual bear sales. And the company plans to move much of its advertising dollars away from Howard Stern and similar shows and toward radio and television programs targeting parents and grandparents.

The cuddly bears may not go out of style, say retail analysts, but they aren’t recession-proof either. Vermont Teddy Bear faces a tough retail environment with sales of plush toys down 17 percent this year compared with 2008, according to NPD Group, a market research firm in Port Washington, N.Y. In its most recent earnings report, the Build-a-Bear chain saw sales at stores open at least a year drop 20.5 percent in North America. Vermont Teddy Bears, meanwhile, saw the number of bears sold last year plummet to about 200,000 from its peak four years ago of 400,000.

Nonetheless, Vermont Teddy Bear is optimistic following a recent test at several Sam’s Club stores in New Hampshire, where shoppers snapped up about 10 bears daily at each of the four pilot locations. Vermont Teddy Bear is hoping to break through the market with its new bear models sold across a broad price range. It’s a huge shake-up for a company where, previously, innovation consisted of creating new outfits for its bears.

As the company broadens its ursine offerings, it is refocusing the efforts of its staff. The aggressive push for a future has meant retraining employees who take phone orders to also make sales calls to small toy shops across New England and pitch the new products.

The company flirted briefly with retail in the 1990s with a selection at FAO Schwarz, but those efforts stumbled. Vermont Teddy Bear is hoping to get it right this time by penetrating select retailers with innovative products and offering merchants 20 percent off all sales in exchange for prime shelf space.

“You need to get retailers engaged. Presence is everything,’’ Gilbert said.

And Vermont Teddy Bear is also hoping to keep an ongoing relationship with shoppers once they buy the bears. For example, customers can update their bears by purchasing outfits online and the company will offer promotions on items to mark children’s birthdays and other celebrations.

“It’s a challenge in this economy,’’ Gilbert said. “But we offer a simple escape from the turbulence of the markets and everyday pressures - a soft, comforting teddy bear.’’

Jenn Abelson can be reached at abelson@globe.com.

Soft, floppy bear for infants, $40

Wear It Bear It, made out of the buyer’s old jeans, $39

Flat, fuzzy bear for infants, $20