Chip Wilson knew he was on to something big with his Lululemon Athletica stores, and now it’s about to become something even bigger.

The Vancouver-based entrepreneur will be opening 10 Lululemon yoga wear stores in the U.S. and five in Canada – adding to the five Canadian stores already in operation – in the next few years. The stores offer an array of men’s and women’s athletic wear, yoga mats and informational books and videos about yoga and natural healing – everything the yoga practitioner needs to get on the path to enlightenment.

It’s not the first time Wilson has latched on to a niche lifestyle trend: he was also responsible for starting up the Vancouver-based Westbeach line of surfboard/skateboard/now-snowboard apparel in 1979, which, according to retail analyst Ian Thomas of Vancouver-based Thomas Consultants, ‘remains very successful.’

Wilson sold Westbeach in 1997 and found himself out of a job. He started doing yoga in his spare time and realized that it could become ‘really big.’ Wilson and wife Shannon began designing reasonably priced, high-quality active wear with their trademark horseshoe logo and ultimately opened their first Lululemon store in Vancouver in 1998.

‘[Wilson] is good with crystal ball-gazing,’ says Michael Penalosa, project manager with Thomas Consultants. ‘He’s made sweatpants and recreational apparel trendy.’

The Lululemon brand has been created with very little advertising. The brand is advertised in the Yoga Journal, a magazine for the yoga community, and full-page ads are placed in local newspapers when new Lululemon stores open. Says Wilson, ‘When we open a store, we try to do enough advertising so we have a critical mass of people coming into the store to justify the overheads.’

However, Wilson prefers to get people talking about the brand in other ways. Although he’s guarded about his trade secrets, perhaps one of Wilson’s most memorable marketing stunts was for the opening of the Robson St. store in Vancouver in late October. The first 30 people who showed up in the buff were awarded a free top and bottom. More than 40 Vancouverites arrived in robes and were told to get naked and stand outside of the store for 30 seconds, to ensure contest legitimacy.

The story made headlines around the globe and also landed on CNN. ‘It was phenomenally successful and I gauge it by how much feedback I get from people on the street,’ says Wilson. ‘I might do it in the U.S. if people haven’t heard too much about it. I like to be inventive every time I do something.’

The Toronto-based Lululemon store, a franchise operation that opened February 2002, took a somewhat different approach to marketing the brand. Toronto-based operating partner Syd Beder says they worked on creating a buzz for the store six months in advance of the opening, sending out press releases to media as early as August.

Beder invited members of the fitness community to his loft and sold the clothing prior to opening the store, adding, ‘We had a lot of people wearing the product prior to opening.’ A teaser advertising campaign ran in magazines like Now in Toronto during the 2001 Christmas season and paper with cryptic Lululemon logos appeared in the windows of the store prior to opening.

While the Vancouver-based stores have put the emphasis on Lululemon clothing rather than the store concept since there is a plethora of athletic wear stores in the Vancouver area, the Toronto location has created an environment that is a destination unto itself. Beder and his team created a one-stop holistic environment, complete with in-store fountain with seating area, soothing colours and one of the largest selections of yoga-related books in Canada.

Creating a community-oriented resource centre is key, says Beder, since they want to encourage dialogue about the product, rather than foster the ‘just looking’ type of shopper. The formula seems to be working: the Toronto store has been nominated for an Achievement in Retail Concepts (ARC) award and it has doubled its expectations in terms of sales. Says Beder: ‘We’re probably the retail phenomenon in Ontario.’

The key to niche market retail success, according to Wilson, is to get into the market first, as he did with Westbeach. Although it began as a surf and skateboard apparel store, Wilson primarily focused on the snowboard aspect in the late 1980s. There are likely no stores in Canada quite like Lululemon.

Secondly, he notes, it’s important to position the products as superior quality. Lululemon’s active wear is constructed using sewing machines that cost around $25,000 and is made with anti-microbial wicking fabrics with flat seams, ensuring it is non-abrasive to the wearer.

Thirdly, Wilson says his stores and apparel convey the idea that they care about the health of the customer. Store reps are sometimes schooled in kinesiology and/or Chinese herbs and are also ready to answer questions about where people can find yoga classes.

Overall, Penalosa says Lululemon has been successful in getting its message across, and he attributes that success to several factors. Penalosa says Lululemon was started just at the right time – before yoga became huge in the culture at large. And with yoga and holistic approaches to health and beauty being all the rage in the last few years, it has only helped the brand become more successful.

‘Health is a major issue [now]. People are eating better and eating organic foods. Even higher-end specialty grocers like Dean & Deluca have increased market share because people are more aware of well-being,’ says Penalosa.

He says understanding the demographic in the area you are trying to penetrate is also a key factor in Lulu’s approach. He cites the opening of a Lululemon store in the Kitsilano area of Vancouver – a place rampant with health-conscious, leisure-loving thirtysomethings – as a prime example of strategic targeting by locale. ‘He’s not going into malls – it’s not healthy and doesn’t reflect his vision for the store. His clothes represent good health and good living. People want that.’

Wilson stresses that while the clothing is primarily made for athletes, it can really be used by anyone, for any activity – from running to mountain climbing. Further, according to Penalosa, diversification of the brand will be the key to Lululemon’s longevity. ‘Every trend has a shelf life,’ says Penalosa. ‘[But] even if yoga will decline, if they keep changing their designs, there’s a good chance of being successful in the long-term.’

The trend for yoga, though huge at the moment, has to wane at some time and Wilson is prepared for that fact.

‘I think it will peak in about three years and will stop being trendy,’ he says, adding that people in their 20s and 30s may latch onto the trend because it’s hot right now and then eventually let it fall by the wayside.

He predicts the brand’s longevity lies in the baby boomer market. Though he doesn’t plan to change his grassroots approach to marketing, he says boomers will realize they need yoga to maintain a healthy, well-balanced life.

The stores currently attract everyone from the ages of 13 to 60, and Wilson believes that boomers with children who are now getting into yoga will hear about the activity via word-of-mouth. ‘Boomers will absolutely need it,’ says Wilson. ‘They’ll come looking for us.’