The timing for Peloton was appalling. The top-flight digital fitness company last week recalled 125,000 treadmills after it reported sucking on children and pets, resulting in injuries and at least one death.
The $ 165 million spend is hampering Peloton’s efforts to move beyond connected stationary bikes, as competition intensifies significantly. Not only have gyms reopened in the UK and capacity increased in the US, but outdoor activities are attracting and rival digital offerings have proliferated.
Peloton was a big winner from Covid-19. Revenue jumped 141% year on year for the quarter ending March and subscriptions have more than doubled. It could have done even better with home customers: the company struggled to keep up with demand, had to embark on expedited shipping, and recorded a net loss of $ 8.6 million.
Meanwhile, gyms have suffered greatly: Industry group IHRSA estimates that 17% of America’s 40,000 health clubs closed last year, including several high profile bankruptcies and others are suffering. In the UK, DW Sports entered administration and Virgin Active tries to restructure.
Global spending on physical activity topped $ 828 billion per year before the pandemic, with just under half for active participation and the rest for clothing, equipment and technology, according to Global Wellness Institute.
But exercise depends on routine, and the pandemic has changed everything. Some people improved their fitness during lockdown: NHS ‘Couch to 5K’ app downloads climbed 92 percent Last spring. But two in five Americans said they gained unwanted weight, with a typical gain of 15 pounds.
As companies reopen, fitness businesses have a rare chance to develop new habits. Health clubs are moving to win back old customers and attract new ones. U.S. revenues have rebounded to more than 80% of 2019 levels, although visits are lower, says Daxko, who provides information technology to clubs. “There is a real sense of positivity in gyms right now,” says Richard Darwin, who runs UK group The Gym Group.
Digital vendors, from apps like MyFitnessPal to connected rowers and mirrors, need to build on their lockdown explosive growth, attract more customers and, in most cases, find ways to be profitable.
“There is this notion that connected fitness has devoured the gym. That didn’t happen, ”says Simeon Siegel, analyst at BMO Capital Markets, who compares the rise of digital to the growth of e-commerce. “The reality is that people still like to go to the stores and the same goes for the gyms.”
Although Peloton has 2 million subscribers, not everyone can afford – or has room for – such bulky equipment. Planet Fitness, America’s largest publicly traded health club, has 14m members alone, and 73 million Americans went to the gym in 2019.
Some companies are better placed to take advantage of the new environment. No-frills chains, such as Planet Fitness, Gym Group, and Europe’s Basic-Fit, offer low prices that appeal to customers who want to combine digital and in-person experiences. Several now offer their own applications.
The pursuit of hybrid work will challenge small chains as well as mid-priced options: fewer people will want to pay for a place they only visit a few times a week. And early US data suggests downtown clubs are recovering more slowly. “There’s going to be a move from the fairly expensive annual gyms to a low-cost options network,” says Anna Barnfather, recreation analyst at Liberum.
High-end health clubs are also expected to thrive, as the market turns. Their classes, personal services and social experiences cannot be easily replicated. The affluent may have bought Platoons to get past the lockdown, but they can afford to do both. Indeed Equinox, the luxury chain frequented by financiers, went from formwork last year to reflection whether to make public.
Peloton’s hot streak could end after the five-fold share price last year. Bike sales ‘are down’, shares have fallen 40% since January and the company just ran its ffirst promotion since 2019. Optimists say its obsessive audience – the average number of home screens subscribing to 26 workouts per month – prepares it to woo advertisers and become a larger streaming platform.
I can’t help but remember all the exercise junk my family has accumulated over the years, from blocks for step aerobics and adjustable weights to the clothes rack turned into a cross-trainer. . Maybe the digital element gives these gadgets more stamina. Personally, I would prefer to hike.
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