Peloton was a lockdown sprinter, now it has to run a marathon to fight the competition
Peloton was known for revolutionising the fitness sector during Covid. Its stationary bike, launched in 2014, was the beginning of its journey. The company’s evolution has been fuelled by millions of pounds in funding and technology to create the brand we know now: the flagship bike, which works in tandem with a monthly video class subscription to the thousands of classes on offer.
Six years later, Peloton is a juggernaut of home workouts, with its bikes becoming one of the main winners of the pandemic. Even the Chancellor, Rishi Sunak, has become hooked on the bike.
Nine out of 10 people spent money on “treats” during the pandemic at a whopping collective cost of £57.6bn, according today the How We Live report. But people are suffering from serious lockdown-splurge remorse and Peloton bikes were listed as one of the most commonly regretted purchases. Hardly a league table you want to top.
Perhaps, therefore, it iss no surprise at all that Peloton reported a fall in sales earlier this month and watched shares in the company take a 25 per cent tumble. For the three month period from September, the company reported a loss of USD$376m. If you track the company’s users this year, the number of subscribers added during the last quarter slowed and those subscribers that stayed worked out less than in 2020.
As gyms started to reopen, many well known chains like PureGym claimed they recouped 70 to 80 per cent of their members lost during the height of the pandemic. The warning signs were there: gyms are back and the competition, slimmed down in the pandemic, is fierce.
The fitness brand is also grappling with several other challenges after its treadmills had to be recalled following safety issues. This, in itself, could have spelled serious reputational damage for the company.
There is no doubt they have developed an initiative product which people enjoy using, but in order to ride the storm of the challenges they face, they need to diversify their business and create new revenue streams.
The winners of the battle for new-age fitness will be the company who is able to create partnerships with other brands, develop new products and create new channels to reach their audiences.
Think of the competition in streaming: ultimately, it is a battle for quality and variety. Netflix has funneled huge time and money into creating its own content to both enhance its brand value and sweet talk people away from other streaming platforms.
For Peloton, this is also true. With traditional gym equipment having a sleek, well-designed product was enough. No more. To reduce churn in subscriptions, users need to be satisfied and engaged with the content – not just the bike.
During the pandemic, the number of fitness brands expanding into streaming to boost gym subscriptions was astronomical. From yoga studios in Australia to apps like Class Pass, the content race for fitness is on.
In an attempt to reach new customers, Peloton has partnered with Delta Airlines to bring its classes to their in-flight entertainment systems. It’s the first time people will be able to stream it outside of its app or hardware.
Peloton was revolutionary for many, but if it wants to keep its status, it needs to keep moving.