After the year we had in 2020, we have realized that the unexpected can happen at any time, causing disruptions to our daily lives. The pandemic has disrupted many sectors, including the fitness industry.
Instead of going to the gym, people had to cancel their gym memberships and start working out at home by either setting up home gyms or signing up for virtual workouts. Exercising from home blew up, and high-tech at-home equipment, such as Peloton bikes, increased the flexibility to do so.
But it wasn’t just people who had to adapt – the whole fitness industry had to as well. Fitness equipment sales increased to cater to everyone trying to stay fit while being indoors, and gyms and fitness instructors had to give workout classes online to keep earning an income.
Health and fitness apps increased in downloads by 47 percent in the second quarter of 2020, with only 15 percent of gym members think that they can achieve their fitness goals through a gym membership in 2021.
One company that took the world by storm during the pandemic is Peloton. They launched their smart exercise bike in 2012 and could meet consumers’ needs when the world shut down and stayed home. Doubling their business in 2020 and generating $1.8 billion in revenue, they released a treadmill in September 2020 and bought Precor, a commercial fitness equipment company.
About Peloton
Peloton’s beginning is rooted in the concept of bringing boutique fitness experience into the home, as it’s challenging to get a workout in while struggling to juggle a career and family.
Peloton uses a combination of technology and design to connect its users through fitness by providing online classes and world-class instructors to get you in shape.
Peloton is most known for its original Peloton Bike; it got users excited because they can be in a workout class without the hassle of going to a gym. Not only that, they have outstanding features, unlike any other at-home workout equipment. The Peloton has a large screen, front and back speakers, and the ability to work out in one of the thousands of classes available in their Peloton All-Access Membership.
The American company doesn’t just have one bike anymore. They have expanded their gym equipment options to the Bike and Bike+, and treadmill options. Peloton Tread and Peloton Tread+ is the newest addition to their range.
Users can access workout videos and classes through their app that gets used on mobile or a tablet. The app is an innovative way to gain customers who don’t own the equipment. The app works with Apple Fire, Roku, Apple Airplay, and many more streaming services. To get users hooked, they offer two months of free subscriptions before you have to start paying.
On the Peloton Digital app, users can choose from more than ten different workout types. These include boot camp, stretching, strength exercises, cycling, yoga, and meditation. It allows them to work out with other users, track their progress with metrics, and earn achievements when they push themselves.
Another product Peloton offers bike accessories. These include Peloton shoes, bike mat, and heart rate monitor. Customers can also purchase resistance bands and from a variety of Peloton apparel.
Peloton has over 3.6 million users, with 500,000 streaming fitness content from their app without any machines.
Even with an increase in competition, Peloton can hold its own in the growing market thanks to user retention and engagement. Investors find that this is an excellent reason to buy stock in this booming market.
Peloton Interactive (NASDAQ: PTON)
Peloton shares rose by more than 400% in 2020, making it one of the best stocks to own for that year. However, Peloton has experienced a loss in 2021, down by nearly 40%! Investors are understandably concerned about buying Peloton’s stock, but there are still many reasons why you should still consider buying in 2021.
During the pandemic, they enjoyed growth in their brand and doubled their revenue. Peloton was an excellent stock to buy even before the pandemic, but the pandemic propelled their business.
Peloton’s business model has been getting imitated the world over, with new businesses popping out everywhere. Investors might see the increased competition negatively, but it means the first-mover has disrupted the market when competition increases.
Peloton has created a superior experience, with Peloton users working out on average 20 times per month in fiscal 2021. Because Peloton’s machines are getting used and they have a 92% retention rate, there’s very little chance another company will come in and steal their existing customer base.
Peloton has increased tremendously over the last year and has a market capitalization of $29 billion. While some investors believe that the stock may be overvalued, others believe there is no other way for the at-home fitness market to go but up. If investors begin buying Peloton stock, expect healthy long-term growth.
The Future of the Fitness Industry
The global pandemic has impacted how we live our lives, and our lives will never be the same again. Because of this, people have realized they can get their workouts anywhere and at any time, and presumably, not many people will go back to gyms to save money and time.
- People’s Perception of Fitness Will Change
During this past year, people have understood the importance of their fitness levels and their mental health. Physical activity is essential for optimal health, with fit and healthy bodies fighting diseases easier.
Healthier lifestyles are being adopted. With our lives slowly heading towards a new normal, health and exercise professionals will need to start facilitating a change and creating opportunities for themselves.
- Bringing Fitness to Consumers is Evolving
To help stop the spread of COVID-19, governments worldwide had to close gyms, resulting in many closures and job losses. However, these closures have forced the fitness industry to move to virtual platforms, changing how workout programs get delivered to consumers.
Peloton and other fitness companies that provide live-stream fitness classes have had a massive competitive edge over traditional fitness facilities, as an almost unlimited number of consumers can access their workouts without the facilities having to pay rent.
There are two ways virtual fitness classes can get delivered:
- Synchronously, also referred to as live stream, consumers can follow a class while being broadcast over the internet and taught live.
- Asynchronously, also referred to as on-demand, consumers get to choose a workout of their choice from a library of previously recorded workouts.
Fitness professionals who were put on furlough or lost their jobs had to adapt and started providing private or group classes on various streaming services, such as Zoom, Instagram Live, or Facebook Live.
Live or on-demand, consumers had to find solutions to get their workouts done at home, and if a fitness company didn’t adapt and create business opportunities for themselves, they lost out!
- You Can’t Replace the In-Person Experience
Even though consumers can access workouts over an internet connection, nothing can replace the feeling of getting a workout in person. People crave human connection and interaction, and some are bound to start getting the itch of heading back to the gym, even though we feel it’s unnecessary right now.
While apps and online classes are ideal and appropriate, you can’t be surprised when people begin flocking back to gyms when it’s safe to do so.
- Direct Marketing via Social Media
Social media has become a way for fitness industries to connect with their consumers directly. Whether it’s a fitness company or an individual personal trainer, they can create workout plans and market them directly to their social media platforms.
Providing engaging content and promoting their services to their follower piques interest, therefore increasing their conversion rates and sales. Delivering solutions to those that need it, direct marketing through social media can change how the fitness industry grows.
Will Brick and Mortar Gyms Adapt to Survive?
With the increase of at-home smart fitness users combined with gyms and studios struggling to get on their feet, it is evident how the fitness market is evolving. Traditional gyms are beginning to reinvent themselves; a third at-home fitness space enters the same market – virtual fitness platforms.
Peloton went the right way by entering into both at-home gym equipment with the Peloton Bike and Peloton Tread, then stepping into virtual fitness with their membership program increasing their market share. The lack of competition allows Peloton to withstand any competition coming their way.
Peloton’s Chief Membership Offer compares the at-home fitness industry to the video game industry. Video games used to get played in malls and arcades. Today, it has completely shifted to at-home playing while still connecting with other users in live play. The fitness industry is headed in the same direction, with Peloton at the forefront.