Are the gears shifting on Peloton’s performance?
First on the agenda was a look at the industry’s key trends, among which the specialist noted the growing awareness of how community and accountability enhance the “fitness experience”. Next, the TAM was explored: “Fitness is actually a human need”, they explained, concluding that “the TAM, in my opinion, for fitness, is everybody on the planet”.
Recent years have seen the trend of digital fitness offerings take off. The former VP outlined the competition – including Apple and Lululemon – and commented on the positives and negatives of these platforms. The latter company recently acquired Mirror, an at-home fitness start-up, which “seems extremely strategic and very smart for the master brand Lululemon, which is trying to monetise the sale of sweat-wicking apparel.”
Whether the end of the pandemic and vaccine roll-outs could put the brakes on Peloton’s performance was also discussed. “I do think there will be this waterfall of interest by people to go back out into the world… However, the gym experience, in my opinion, for most people, was not entirely positive.” Added to this, “the last earnings report said the churn was still very, very low, under 1%”.
Delivery delays for both the Bike and Tread might not be entirely negative. “From a brand perspective, I believe firmly that scarcity is not all bad… the idea that so many people want what you have that you have to wait in line has been a proven tactic for high-value brands.”
The company’s apparel business is partly geared towards brand awareness. “It creates a shared conversation with another Peloton member… but it also strikes up a conversation [with] a potential purchaser.” They noted that its quality is “at parity, if not below, the major apparel brands in the fitness space”, and therefore is more about the owner making a statement.
Other topics included were the strength of Peloton’s strategic partnerships, the lifetime value of customers and Tread’s prospects.
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