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The Decision

Hugger Mugger entered the mass retail market with a new, lower-cost brand called YogaBasics, which sells at chain stores like Linens 'n' Things and Big 5 Sporting Goods. Sales of the line have more than doubled over the past two years. Hugger Mugger-labeled products, by contrast, can only be purchased via catalog, online, in studios, and in specialty stores. "At a time when there is a lot of change, we need to maintain our technical leadership and maintain our quality," Chamberlain says. YogaBasics now accounts for 20% of the company's annual sales of about $7.5 million.

Still, after soaring for years, the company's annual growth rate has begun to level off at about 30%. So Chambers and Chamberlain hired 50 independent sales reps and increased the company's marketing budget by 30%. They've also increased the frequency of catalog mailings to four times a year and changed their look -- often dedicating whole pages to artful, serene photographs of yogis in mid-pose. "What we've done is continued to really move forward with the platform Sara's built, working with the teachers to figure out how they've used the products and what they find works for them," says Chamberlain.

But striking the balance between serving the new mass-market crowd and Hugger Mugger's traditional, hard-core yogi constituency hasn't been easy, says Rodger Lee, the company's vice president of sales. "We are trying to respond to the larger market, but we don't want to be part of that rip-off mentality," he says. Eric Johnson, who joined Hugger Mugger as CEO in 2002, adds that the company is focusing on longevity rather than taking advantage of the yoga craze. "It could be a temporary boom," he says. "We are interested in the long-term health of Hugger Mugger. We intend to still be here."

The Experts Weigh In

David Abrutyn

IMG, a New York-based sports marketing firm
Vice President

Fair or not, sometimes David does not win out against Goliath. At the end of the day, an exit strategy may present itself. And at the end of the day, it makes sense to sell out. They have to look at who might be interested in buying them, someone in a related field who has the distribution built in, the retail relationships built in, and the financial wherewithal to put the funding in to grow the company from where they are. They certainly don't want to be perceived as somebody whom the market's passed by. But creating a buyer is not the easiest thing in the world. It's important to have a board of advisers who are schooled in selling in the industry.

Gary Erickson

Clif Bar Inc.
Owner and CEO

For a small company trying to remain competitive, it's sometimes difficult to resist the pull of "what the other guys are doing." The challenge will be to stay in touch with the changing needs of its customers and maintain that innovative edge to support them. Now more then ever, consumers want to support companies they trust and that are honest with them. I think the past year has shown us that the size of the company and its quarterly earnings don't necessarily guarantee winning in the end. In the case of Hugger Mugger, I think they made the right decision not to jump on the bandwagon and risk losing their authenticity.

Stephen Hoch

The Wharton School, University of Pennsylvania
Professor of marketing

Sports is one of those things where there are lots of fads. I think Hugger Mugger can benefit from the big boys investing and growing in the market. The thing I'd be worrying about is if the bottom falls out, and she's built all this infrastructure and inventory. I would say they are just getting themselves, potentially, into a situation in which they are operating without the capability of really delivering. They don't know how much of a fad this is. It seems to me that the popularity of different sports is reasonably volatile. Something can become really popular; then it's just a fad and it's replaced by something else. There are lots of substitutes for yoga. I'd say that taking it slow and easy would be the best way to go.

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