Annie Hurlbut has been a retailer long enough to know that now is not the time to be selling merchandise that competitors can easily replicate.
“If a product is commoditizable, here comes Amazon,” says Hurlbut, co-founder and CEO of Peruvian Connection Ltd., No. 901 in the 2019 Digital Commerce 360 Top 1000 rankings of North America’s leading online retailers.
Fortunately for Hurlbut, all the ponchos, dresses and jewelry she sells are handmade, not produced by the millions in factories. Most are imported from Peru, a country she fell in love with when she visited for the first time in 1971 while a 19-year-old anthropology student at Yale.
Five years later, she and her mother Biddy Hurlbut founded Peruvian Connection, bringing the products she saw in markets in Cuzco and other Peruvian towns to U.S. consumers, initially selling by catalogs. She now also sells online at PeruvianConnection.com and operates eight bricks-and-mortar stores, seven scattered around the U.S. and one in London.
The handmade products would be impossible for any rival to duplicate in large quantities, she says. And that includes Amazon.com Inc., No. 1 in the Top 1000.
“We produce originally designed, natural fiber goods, all artisan-based. So, by definition, small batch,” Hurlbut says. “Nobody will be able to imitate our product in a big way.”
Peruvian Connection moves into bedding
Hurlbut plans to press her advantage this summer by adding a new line of bedding merchandise: sheets, pillowcases, duvet covers and the decorative pillow covers known as shams. All will feature the kind of Peruvian designs that adorn the apparel the retailer sells.
Hurlbut says she’s wanted to expand into bedding since the colorfully patterned sheets she used to buy from Ralph Lauren disappeared about 20 years ago. The move into bedding came after a friend introduced her to a designer who used to work for Ralph Lauren. “He knew where everything was sourced,” Hurlbut says. “Suddenly, it all fell together.”
Peruvian Connection announced plans to launch the new collection this week and will make the merchandise available to shoppers in July. It will only be available initially in the United States, Hurlbut says, and not in Germany and the United Kingdom where Peruvian Connection distributes its printed catalog. She says the retailer sends out about 5 million catalogs a year.
Selling the products in the U.K. and Germany would require resizing the merchandise to meet the standards of those countries, Hurlbut says. “We decided to test home first in the U.S. market before expanding to other markets,” she says.
The richly illustrated catalogs drive sales on PeruvianConnection.com, which accounts for about 65% of the retailer’s revenue, and to its call center, which produces about a quarter of sales. The remaining 10% of revenue comes from its stores, she says. The company’s annual revenue is about $75 million, she says, which would put online sales roughly at $50 million.
Besides moving beyond apparel and accessories for the first time, Hurlbut also plans to sell the bedding products wholesale, something she’s not done before. It likely will be through an exclusive relationship with a high-end bedding retailer, but she did not provide any details.
She hopes offering Peruvian Connection products through a well-known retailer will help generate awareness of her brand, just as selling through department stores like Neiman Marcus and Bloomingdales helped publicize the upscale fashions of designer Eileen Fisher.
“We’re doing it not so much for the margin, but the exposure,” she says.
Coronavirus dampens sales
Meanwhile, the current coronavirus outbreak has cut into sales. Peruvian Connection closed all eight of its physical stores, and online sales are down. Hulburt says that’s not surprising, given that the retailer hasn’t sent out a catalog recently, which would boost sales, and that her merchandise is relatively pricey.
“It is investment clothing, and that will come back,” she says. But, she says, if her customers “are worried about their kids or their neighbors, it puts a damper on sales.”
“It’s exactly like 2008,” she adds, referring to the financial crisis that erupted in 2008.
There has been one silver lining for Peruvian Connection from the pandemic, Hurlbut says: The media has shown a lot of interest in her announcement of the new bedding collection. She thinks that’s because they’re anxious to write about something uplifting at a time when the COVID-19 epidemic is producing so much gloom.
“With all this bad news, we’re getting quite a bit of press about this,” she says. “It’s a little bit of good news and people are saying, ‘We’ll take it.’”