Smart Business

Suzanne Knutson speaks fluent bunny, sprinkling her conversations with aphorisms like, “You don’t want to put all your carrots in one basket.”

Then again, as one of the founders of Bunnies by the Bay and the company’s appointed “director of whit and whim,” she’s been immersed in the language for almost 30 years. In charge of creating the brand’s copy, naming the products and helping flesh out the fictional world for the brand’s beloved characters, it’s safe to say she’s now an expert on all things rabbit-related. However, Knutson admits she never imagined fate would carry her down this particular bunny trail, helping produce a wide-ranging line of heirloom-quality gifts, toys, books and apparel for infants and toddlers.

In fact, Bunnies by the Bay got its start a far cry from the baby arena: The company’s famed bunnies were first marketed as collectible items, selling for as much as $1,000 a piece in the 1980s, during the heyday of the collectibles craze. Knutson and her sister and company co-founder Krystal Kirkpatrick stumbled into the market entirely by accident, after customers kept confessing they were “collecting” the hand-sewn bunnies the pair sold at local craft fairs.

Gaining a toehold in the competitive collectibles market, however, was just another milestone in their remarkable journey—one that’s been defined by both tragedy and triumph. Born and raised in Anacortes, WA, a small village on Fidalgo Island, Knutson and Kirkpatrick were first introduced to sewing by their grandmother, Elsa, a self-taught seamstress. “We would sit with our grandma and make Barbie clothes when we were kids,” Knutson recalls. However, it was her sister who “wanted to make and sew everything.” Knutson confesses, “I have to set the record straight: I hate to sew.”

As the two grew older and married, the women of their family opened a boutique filled with children’s apparel and bedding—“and whatever else we liked,” Knutson jokes—named Elsa & Co. in honor of the family matriarch. It was a way to express their creative impulses during the long months when their husbands, all fishermen, were away at sea. But on Valentine’s Day in 1983, the sisters lost their father, uncle and cousin, as well as 11 other men from their hometown, in one of the worst commercial fishing accidents in U.S. history. “We kept the store open for a couple more years after that, but our hearts really weren’t in it,” Knutson says. A few years later, their brother also disappeared at sea in a boating accident.

That’s when Knutson’s stance on sewing began to shift, as the sisters relied on the healing hobby to help recover from their grief.  “We realized we needed to do something to mend, and my grandmother always said sewing is something you can mend—something that can help you heal.” So in 1986 they began stitching and selling bunnies. Within a year they hired a local production team to help keep up with the rapidly growing demand.

When the collectibles market began to crash in the mid-90s and the sisters struggled to sell their American-made bunnies to buyers who deemed them “too expensive,” fate stepped in again in the form of the company’s current CEO, Jeanne-ming Hayes. She grew up in Taiwan, and had worked there and in Hong Kong for 15 years as a senior manager at plush toy company Applause before retiring to Whidbey Island, located just a bridge away from the Bunnies by the Bay headquarters. Hayes came on board in 1999 and utilized her overseas contacts to help the company switch to a more affordable manufacturer in China.

But the tale of how Hayes and the sisters became lifelong friends and business partners is actually far more prophetic. A year before they all met, Knutson and Kirkpatrick were walking back from dinner in New York City when Kirkpatrick had a sudden urge to visit a psychic. The two were debating whether or not to go when they were stopped on the sidewalk by a man, who gave Kirkpatrick a Chinese charm on a red string, one he said helped him overcome difficulties in his own life. “He said, ‘I received this as a gift, and I would like to give it to you.’ Then he just turned around and walked away. To Krys and me, it was so profound,” Knutson recalls.

The moment’s true meaning became clear a year later, again in New York City, when Hayes joined the sisters at Toy Fair. At dinner, Kirkpatrick pulled out the charm to show it to their new business partner, and Hayes immediately burst into tears. “She told us that the charm is actually from her village in Taiwan, from the orphanage across the street from where she grew up. Having that charm from that orphanage in Taiwan is like having a needle from a haystack. Jeanne said, ‘This is my mission. This is why I was sent here.’ So we’ve never been apart since,” says Knutson, who calls Hayes her soul sister.

Partnering with Hayes was fortunate in another way, too: When the sisters showed buyers from Hallmark that they could create the same quality products at a much lower cost in China, the company quickly offered them a lucrative five-year deal, beginning in 2000, that helped catapult Bunnies by the Bay into the national spotlight. The partnership also inspired the sisters to branch into the baby market, where they’ve been focused ever since.

Today, Bunnies by the Bay is owned by children’s toy manufacturer Kids Preferred, which acquired the company in 2013. But the brand continues to call Anacortes home, and the sisters still retain their roles, with Kirkpatrick serving as the head designer, or “director of design and drama,” as Knutson dubs her. Hayes, the company CEO, or “director of serious stuff,” oversees production and helps create the whimsical cast of animal characters that live on Cricket Island—a fictional retreat based on Fidalgo Island. And the brand remains a go-to baby shower gift, revered by shoppers for its soft texture and timeless style.

Yet even after almost 30 years of success, Knutson admits the three women still look at every day as a new challenge and a new opportunity. “We just feel like everything we do has got a little bit of fate to it,” she says. “As successful as we think we are, or others think we are, we’ve still got a lot to learn. Even though we’ve been doing this for 29 years, it just feels like we’re still new, with the ways things change every day. You have to be able to embrace it.”

Bunnies by the Bay started out in the gift market, correct?

Somehow we were sucked into the collectible world, and we still don’t know how. We didn’t really know what it was at the time, but people kept telling us, “I’ve been collecting your bunnies!” So Krys and I started going to the collectible shows and asking doll makers: ‘What makes you collectible?’ And they said, “Well it’s because we say we are.” So we decided to go into that world, because that’s where our customers were. We were selling to gift shops, primarily, because back then they were all selling collectible teddy bears or plates. But we weren’t ever really comfortable with it, and the market really tanked after Beanie Babies came out. We were selling bunnies for $300, but you could buy a Beanie Baby for $10 and sell it for $200. Our sales came to a screeching halt, and we realized we needed to reinvent ourselves.

Adjusting your pricing strategy was a big priority, I bet.

Exactly. We knew we needed to go offshore, because we had to lower our prices. Everybody loved our product, but they kept telling us it was just too expensive. But we couldn’t continue to make it here in Anacortes and sell it for less than $300. It just wasn’t possible. And that’s when Jeanne ended up on our doorstep. Jeanne and her friends in China are the ones that believed in us and supported us, and that’s how we ended up going over to China.

What a fortuitous turn of fate. How did you meet Jeanne?

She actually sent us a letter. As it turned out, we were only a bridge apart.  She lived on Whidby Island; we live on Hidalgo Island. She contacted us because she had a friend in China, a factory owner she had known since she was 5 years old, and he saw our ad in Teddy Bear & Friends. He kept saying, “Look at how beautiful this product is. I want to make this product. Find out where they are, because if they’re still made in the U.S., they’re probably not surviving.” He said, “Look, this is in ‘WA,’ isn’t that where you are?” So that’s how she ended up pursuing us, because she found out that we were on the next island over. And we’ve been together ever since.

What’s the biggest way the gift industry has changed over the years?

Mainly the way you sell the product. Back then, shoppers used to rely on their local gift store. Now they sit at home and shop on Amazon or other websites—which isn’t necessarily a bad thing. Sometimes I think it’s a good thing, especially considering all the bad weather this winter in places like Boston. After all, it means people are still spending money, whether they can get out of their house or not. And even though there aren’t as many stores as there used to be, the ones that are still around are a lot more resilient and know what they’re doing. Everyone laments that for every store that opens, two close. But you don’t have to have 10 stores in a town. One or two great stores are all you really need. You’re always going to have local stores. People need that retail therapy. And our line is so tactile and detail oriented, you really have to touch and feel it. You have to see all the embroidery, extra buttons and appliques, and feel how soft our velour is.

Another big break for Bunnies happened in 2000, when the company landed a licensing deal with Hallmark. How did that help catapult the brand?

It really put us on the map. At the time, we were really well known in pockets of the country—primarily, in the South and California, and a little bit in the Midwest, because that’s where the collectible world was centered, but we didn’t really have a sales base in the Northeast. Hallmark had 4,500 Gold Crown stores at that time, and some part of our product line was present in most of those stores. We did a whole line of plush bunnies, cards and a few hard goods like music boxes and tea sets, as well as products for Christmas and Valentine’s Day. (Hallmark is all about the seasons.) And then we just sat back and collected royalties, which was great. But everything runs its course, and that ran its course too. Out of it, however, we gained a whole baby line.

So that’s where the baby line began! Do tell. 

The most successful thing we did for Hallmark was a line of greeting cards, but the baby cards were by far the bestsellers. Out of the 112 cards we made, the top five were baby cards. So they said, ‘We think you should do a baby line.’ We had been thinking about it, and we actually already had some designs ready to roll out. We did a test run with some of Hallmark’s buyers, and they thought it looked great. But none of the retailers had any baby products in their stores. All Hallmark had at the time was Snoopy Baby, so they backed off a bit. And we said, ‘Great, we’re going to do it ourselves.’

How did you switch gears and begin promoting the Bunnies by the Bay as a baby brand instead of a collectible company?

We designed an entire baby line, and we took it to the Atlanta gift show in 2001. We told ourselves we either make it or we don’t. Thankfully, we sold $100,000 out of a 10’x10’ booth, writing non-stop orders the whole time. We were a little oasis of soft and cuddly, sitting next to everything from ceramic lamps to rugs. And we never looked back. In some ways, I feel like we’re still doing what we’ve always done. Our collectible bunnies were embellished wearing outfits, and people always said, “This is adorable. You guys should create children’s clothing.” We’re still making plush bunnies, but they’re not dressed. And we’re still making apparel, but not for dolls. We didn’t really go that far away from what we’ve always done. We’re still in soft goods. We’re still in cut and sew. You never know where the next inspiration is going to come from.

Did you continue to utilize trade shows to build the brand?

We did. The Atlanta show was only our first. We also had sales reps with permanent showrooms in California, Dallas and Atlanta. They were gift reps, though—one was even more of a toy rep—so there was a learning curve for them, too. However, our Atlanta rep, Leigh Anne Bassinger, was a visionary. She’s retired now, but what I loved about her is she always saw the next big thing. She was our best rep. She had total faith in us from the beginning of the launch of the baby line, so we knew we were going to be fine.

How do you determine what’s going to be a bestseller today?

We’ve never really followed what’s hot and what’s not. My sister has always been a little bit in front of the curve. Often, if a product doesn’t do well right off the bat, it will pick up in another six months. She just designs and picks colors based on what she loves. She’s pretty consistent—she likes anything vintage, anything that’s got an old-fashioned feel to it. Nothing is bright white. Everything is antiqued, umbered and warm. And it’s got to be soft, because she’s only into soft clothing. If she wouldn’t put it on herself, she would never make it for a baby. She hates anything with tags and zippers. She shops at Goodwill all the time, looking for prints and fabrics for inspiration. We’re doing some knit toys for next season based on some cool angora sweaters she found at Goodwill. She sees things that most of us bypass.

Often the secret to success is simply sticking to what works.

We try to. Jeanne is our brand ambassador and brand police. Sometimes we start to stray and Jeanne asks, “How does that fit on Cricket Island? How does that tell the story of Bunnies by the Bay?” One of our challenges is we dabble in a little of everything, but we’re not really known for any one specific product other than our security blankets. We have our own line of books, blankets, booties, apparel and plush. We’re trying to expand our apparel line, but we feel like we’re sandwiched in between the gift world and the apparel world. Fifty percent of our line is now apparel, and designing apparel is what actually gives my sister the most pleasure.

How do you make the case that you’re an apparel brand, too?

I think for one thing it’s just getting in front of the customer. If you don’t sell to a department store, and you’re only depending on small gift shops, you’re never going to reach a sustainable level of volume. Right now, Lord & Taylor and Neiman Marcus carry a bit of our plush and gift items, and Nordstrom sells our Buddy Blankets. We’ve got a toe in a lot of places, but I want the full foot. So a big part of our strategy is convincing buyers that we’re an apparel company, and we want to be a brand in their store.

Has your partnership with Kids Preferred helped you in that regard?

We’re two years into this marriage with Kids Preferred, and what’s nice is it has given us the ability to go into new formats and design some things that normally we couldn’t feasibly afford to do, like baby teethers, melamine dish sets and swaddle blankets. We’ve always wanted to partner with a company that could help us grow financially but would allow the main functions of our company to remain the same. We still have all of our designers and we are still based in Washington, but now we can get into all these new formats. Truthfully, if they didn’t step in when they did, we just wouldn’t have been able to grow any more. We were pretty much stuck, so this is a great opportunity.

Where do you see the biggest growth opportunities for Bunnies by the Bay?

I would love to see our apparel collection grow. Right now, we have gift sets for newborns, a line called Storywear, because we feel like the baby story begins in the outfit. We have a boys’ collection called Stinkin’ Cute in sizes 3 to 24 months. And we have a girls’ collection in sizes 3-6 to 24 months called Pretty Girl, which is all about learning to be pretty on the inside, and how that will make you pretty on the outside. We feel like our things have to have a message. We don’t want to just put out a little T-shirt or a pair of pants; we want it to encourage kids to be polite, to be a good listener, to share. That’s why many  of our items have a little storybook that can go with them. There are too many cute things out there. You have to have your own niche. I would love to do socks and shoes, too—the whole gamut.

The sky is the limit?

We jokingly said it in the beginning, but we would love to be the Beatrix Potter of the United States. What other brand is there in the U.S. that’s not Winnie the Pooh or another Disney license? We would love to see Bunnies have a movie. Hey, I think we can compete with SpongeBob—everybody likes bunnies, right? We just feel like everybody has a story to tell. Our story is about how you can go through something terrible and come out stronger in the end. We want to tell people you can do that. For us, the question is, how do you make someone feel better? And the answer is, the bunnies are here to help, and when you ask for help, they will come. It worked for us. •