The whole point of North American economics is to encourage COMPETITION. Competition is what drives and improves our economy. But enough with macroeconomics.
I do NOT think you have done anything wrong. I'm not sure if you should bother apologizing. Why should you apologize for trying to market your product? Unless there is a patent on this blanket, I would go ahead and continue doing what you enjoy: making your beautiful blankets. I think it's a little ridiculous that someone would get upset with you because of this. Do these same people get upset with large corporations that also manufacture and sell these products?
So, keep on doing whatever makes YOU happy, because I'm sure the blankets you make bring a lot of happiness to your clients and their fur babies!