Just Say Om

With tough, new rivals like Nike and Reebok, Sara Chambers's yoga business is suddenly getting stressful.

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Case Study

Sara Chambers knew yoga before it was chic. Seventeen years ago, while other women shaped up with Jane Fonda, Chambers was standing on her head, twisting her torso, bending her back -- and starting her own company, Hugger Mugger Yoga Products. Working out of her Salt Lake City home, Chambers made formfitting shorts, synthetic mats, wooden blocks, and other equipment for enlightenment seekers. It was a classic niche business, small but profitable, which suited Chambers, a laid-back mother of two who still finds time to do yoga every day, just fine.

These days, however, life as a yoga entrepreneur is no longer quite so mellow. Thanks to high-profile partisans like Madonna and Sting, yoga has graced the covers of Time and Newsweek, and is now offered by most gyms and health clubs. Nationwide, some 15 million people have attended yoga classes, and serious practitioners spend about $1,500 a year on instruction, apparel, and equipment, according to Yoga Journal, an industry magazine. In the old days, Chambers says, "if you said 'yoga,' people had this picture of somebody sitting in the lotus position staring at a candle." Now, she says, "you say yoga and everyone knows what it is."

Where Hugger Mugger once had the yoga market virtually to itself, it now competes with dozens of start-ups, with names like Gaiam, Spri, and Barefoot Yoga, peddling their own mats, clothes, and props. Even mega-brands Nike and Reebok have rolled out their own yoga products. "With the crash of the Internet, there's a real back-to-basics for people and yoga is a natural fit with that," says Pete Gilmore, merchandise director at the New Hampshire-based retail chain Eastern Mountain Sports, which carries a full line of yoga products, all of them by Hugger Mugger. "The growth curve is very steep right now."

For Chambers, that means confronting a problem that would puzzle even the wisest Zen sage, not to mention some of the savviest minds in business: How does Hugger Mugger, with 40 employees and revenue of about $7.5 million, compete in the new, feverish environment? Does it stick with business as usual or does it go after the growth?

It's not a question Chambers ever imagined having to face. She stumbled into the yoga business in the mid-1980s, when a doctor suggested that her husband try the ancient Indian practice to treat a back injury. Yoga, as it happened, was a revelation for both of them. There was just one problem: Traditional fitness clothing never quite fit right. So Chambers, a skilled seamstress and designer, took to her sewing machine and made a pair of shorts, equipped with elastic to hug the leg during inside-out and upside-down poses. Soon enough, word spread and in January 1986, Hugger Mugger -- named for the elastic in the shorts -- was born.

With two sewing machines and a roll of synthetic mats imported from Germany, Chambers, then 33, began making custom-sized shorts and yoga mats, selling them via mail order to the then-small community of teachers and studios. Noticing that traditional mats lost their stickiness after heavy use, she began formulating her own, higher-quality mats. "They innovate and design more specifically for yoga users," says Charlotte Bell, a yoga teacher and Hugger Mugger customer for the past 17 years. "They have their eye on what's going to work for people."

Other yogis apparently agreed, and sales at Hugger Mugger had begun to grow 50% annually. The company moved three times to bigger, more industrial spaces and grew to 30 employees. Unexpected things began to happen. Orders for shorts and mats came in from celebrities like Jerry Seinfeld, John McEnroe, and Oprah Winfrey, and Hugger Mugger products appeared on episodes of ER and Party of Five.

Chambers was caught unprepared. She lacked branding skills and a marketing budget. Nor did she have the experience or contacts to pitch for shelf space in national chain stores. Suddenly, Hugger Mugger was scrambling to keep up, as larger companies and energetic start-ups pounced on mass-market consumers, many of whom had discovered yoga for the first time.

Sensing that her company was getting too complex for her to run herself, Chambers enlisted David Chamberlain, a marketing pro, a veteran of Quaker Oats and Shaklee and current CEO of Stride Rite (as well as a Hugger Mugger customer), to join her company as managing partner in exchange for a chunk of equity. Chamberlain knew Hugger Mugger faced a potentially lucrative opportunity. But it first had to deal with a host of tricky questions. Should the company push its mats on the shelves of large retail chains, such as Target and Wal-Mart? Could it extend the brand to other parts of the fitness industry? And would going mainstream sacrifice the company's hard-earned reputation with its core customers, yoga's old school?

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