Athleta's Gretchen Harris, merchandiser, left, and Grace Altenau technical designer, center, discuss the fit of one of their pants being worn by Julie Alger, right, a fit model at Athleta headquarters in Petaluma, March 7, 2012.

Athleta finds the right fit in Sonoma County

The inspired, healthy vibe of the Athleta brand is apparent in the entryway to its headquarters in Petaluma.

Three cruiser bikes stationed by the door are ready to take employees for a quick jaunt to a coffee shop. A larger-than-life photo of a yogi stretching in front of a mountain greets visitors in the reception area. And floor-to-ceiling windows look out over the panorama of Shollenberger Park, where teams hold meetings on trails to hash out ideas or test new gear.

The company's path, like its culture, meanders from the traditional trajectory of most retailers.

At a time when many retailers are focusing on expanding their presence on the Internet, Athleta is launching a major expansion into brick-and-mortar stores. It is backed by the resources of Gap Inc., which spent $148 million to acquire the catalog and online brand of women's athletic clothing in 2008.

Today Athleta has 200 employees in Petaluma, where it designs its own apparel, tests its products on models, crafts seasonal catalogs, manages a network of stores and fields customer service calls.

It draws its workforce, its design sense and much of its corporate values from the outdoors ethos of Sonoma County, where the company was founded in 1998.

"This is where our talent lives," said Scott Key, senior vice president and general manager of Athleta. "Part of the value proposition of Sonoma County is the lifestyle this brand is about, the ability to get outside."

Its expansion plans are ambitious. In the span of about a year the brand has opened 10 stores, extending its physical presence as far as New York City. The company plans to open an additional 20 stores this year, and aims to have 50 Athleta locations across the country by the end of 2013.

The Gap acquisition gave the company the expertise it needed to successfully move into brick-and-mortar retail, Key said.

"One of the core competencies of Gap Inc. as a company is running retail stores," said Key, who spent more than 20 years at Gap before moving into the top spot at Athleta last year. "It is the bread and butter of how Gap Inc. has become a very large specialty retailer. And so the knowledge, skills, abilities, the access to capital, all those things were capacities that Athleta inherited as part of the acquisition."

Gap Inc., which also owns Banana Republic and Old Navy, does not disclose annual revenues for Athleta, which is part of its direct division. The direct unit posted $1.3 billion in sales in fiscal 2010, up 16 percent from the previous year.

Athleta brought an unusual competency of its own to the fold. Having been a catalog retailer for so long, the brand knew where its customers were, and that has helped it determine the best locations to open stores.

"We have a history as a direct retailer," Key said. "One of the distinct advantages is that you have a good idea of where your customers live."

For that reason, Athleta's flagship store in San Francisco is located outside the city's main shopping mecca, Union Square. Instead it's on Fillmore Street in a neighborhood once dotted with jazz clubs and now lined with boutiques and pastry shops.

Inspirational imagery towers over colorful merchandise in the San Francisco store. Mannequins are modeled after female athletes instead of the traditional form. More than a dozen variations on leggings and capris stand on mannequins, many tailored for specific activities like relay running, yoga stretching or hiking, and generally selling for $60 to $90. The retailer also sells athletic skirts to pull over leggings for customers who want to "cover their assets."

Free yoga, pilates and circuit training classes are held several times a week at the store and at Alta Plaza Park, a block away.

Back in a conference room in Petaluma, "fit" models, many of them professional athletes, try on tailored spandex jackets and skorts to provide feedback to the designers. Press boards line the hallway with layout ideas for the summer 2012 catalog, and racks of patterned fabrics provide inspiration.

"Everything to do with our production is really right here," said Tess Roering, vice president of marketing. "We're really fortunate that provides for a lot of collaboration."

Meetings are more likely to happen walking on a trail than indoors.

On a recent weekday afternoon, Tracy Byrnes, who works in merchandising at Athleta, met colleagues from the company's ad-hoc running club, all of them wearing various cuts of Athleta capris and tops as they prepared for their afternoon ritual.

"Anybody can show up," Byrnes explained. "It's just a way to get out together."

Dogs are allowed, and one canine named Pixie had his own nameplate on his caretaker's office door.

"It makes it feel like more of a casual, family atmosphere," Roering said. "And it also gets people outside."

In a workout room off the company kitchen, employees or outside instructors lead cross-fit, pilates and yoga classes throughout the day. Yoga mats are curled up in purple cubicles with striped towels.

Down the hall, the customer service team answers phone calls, and can grab samples and try them on in dressing rooms to better understand customer concerns.

Designed by women for women, the products have ruching and tailoring for a woman's contours, rather than the "pink it and shrink it" approach that many sportswear manufacturers take to women's gear, Roering said.

"Having the call center embedded inside the business unit, we see as a real competitive advantage, because we're just that much closer to our customers," Key said.

The company also uses Facebook to communicate with customers who have questions or concerns about their products, one of many ways Athleta embraces social media. On its website, dozens of yoga instructors, skiers, runners and ordinary athletes contribute to the "Chi blog." Readers can sign up for "Chi-mail" or RSS feeds to be notified when new blog entries are posted.

"It's a place for us to provide inspiration and education," Roering said. "It's all provided by folks we think are inspiring."

The company has a YouTube channel with videos about how to work out using kettle-bells, how to cycle in a "skort" and what it's like behind the scenes at an Athleta photo shoot. And many of its apparel items are pinned on social media site Pinterest.com with embedded links to Athleta's online shopping pages. The company also is creating a workout music station on Pandora.com, the personalized Internet radio service.

In traditional media Athleta launched its first national advertising campaign, "Power to the She," in January, landing spots in Oprah magazine, Fitness, Shape, Real Simple and more. It also will be the first women's apparel brand to advertise in Sports Illustrated, Roering said.

Even with the national attention, Athleta intends to keep its headquarters in Petaluma for the foreseeable future. It has signed a long-term lease on its current location and plans to add to its local staff of 200 soon, Key said.

"Just look outside the window. Why would you want to move?" Key said. "We're committed to being here."

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