The suits at fitness firms and gyms worldwide are sweating on trading figures that have plunged through the floor.
Even giant American corporations like Peleton feel the pinch as stock prices plummet post-COVID.
Some reports suggest that one in five gyms in the States has closed and that the industry has lost nearly $30 billion in revenues as they were forced to close during lockdowns. In addition, the eight-month closure has seen more than a million gym regulars switch to teaming with a personal trainer, exercising at home or dropping their fitness regimes.
Peloton is a case study for the fitness and wellness industry.
Before COVID struck, the company had a $50 billion valuation. Now, that’s collapsed to less than $10 billion following the global lockdown.
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Peloton No Longer Rides High
Many customers thought the company had taken them for a ride by selling them expensive fitness equipment and online classes before the pandemic. However, the lockdown gave many time to think about their experiences and alternative ways to keep fit.
Of course, Peloton made money during the lockdown. The business floated in 2019 at $29 a share, and by January 2021, stock values had climbed to $160, but everything had gone downhill.
Today, the company is worth around $8 billion. However, this could alter due to changing fortunes as Peloton now sells fitness equipment and clothing through the online marketplace Amazon.
But the question Peloton and other businesses battered by COVID lockdowns must answer remains.
How long will the changes triggered by COVID likely last?
Layoffs And Production Cuts
Peloton likes to think the business is fit for purpose, but the figures suggest otherwise.
Peloton makes and sells exercise equipment directly to consumers. The starting price for an exercise bike is £1,150, while a course of online classes costs £12.99 a month. Although these prices are correct, the company says 2.5 million registered users have signed up for classes, paying £39 a month each.
Sounds good, but working on numbers released in November 2021, Peloton posted sales down $1 billion as the number of classes sold fell to 16 a month from 20 a year earlier. The downturn is hurting as the company is now considering layoffs and production cuts.
The New York company’s CEO John Foley said: “In the past, we’ve said layoffs would be the absolute last lever we would ever hope to pull. However, we now need to evaluate our organisation structure and the size of our team with the utmost care and compassion.
“We feel good about right-sizing our production, and, as we evolve to more seasonal demand curves, we are resetting our production levels for sustainable growth.”
Keeping Fit Is A Top Priority
A recent survey reveals fitness, wellness, and well-being are vital for a growing number of consumers – 40 per cent say keeping healthy is a top priority.
The results also suggest gyms and online providers need a hybrid solution to take their businesses forward.
“The question is what will happen to the fitness consumer—if their use of at-home solutions and equipment will keep them away from the gym or if they will rush back,” said the report from media firm McKinsey.
“The answer appears to be something in between. The fitness industry is shifting from surviving the COVID-19 crisis to looking for ways to thrive in the next normal, building consumer relationships that last and grow.
“Providers of solutions and services for fitness practices both inside and outside the home will need to reassess their value propositions, articulate their roles in consumers’ fitness routines, and commit to an approach that will win over the right consumers for them.
“Specifically, providers of on-site fitness solutions should consider a more hybrid approach that keeps consumers figuratively and digitally connected; makers of in-home tools and equipment should lean into the normalization of DIY fitness.”
Fitness, Wellness and Well-being FAQ
Who is Peloton?
Peloton is a company based in New York, USA, which makes exercise equipment, like bikes and treadmills, for gym or home workouts. The equipment is linked to online courses.
What’s COVID got to do with gyms closing?
The roll-out of successful vaccines has seen the end of months of COVID lockdowns and restrictions, but the impact of the virus on gym and leisure businesses still lingers. Gyms and pools were among the last businesses to reopen. Unfortunately, many did not survive enforced non-trading, while consumers changed habits to exercise less and stay at home.
What are fitness, wellness and well-being?
The terms are often interchanged, but each has a different and distinctive definition.
- Fitness relates to the condition of a body, looking at aspects like strength and stamina
- Wellness is adopting behaviours and activities that lead to better health
- Well-being is the result of keeping fit and caring for wellness – essentially, how good you feel about your mind and body
How much does a gym membership cost?
Gym membership costs in the UK are between £10 and £40 monthly. How much you pay depends on the type of gym and the facilities provided. Many gyms offer free introductory sessions and other deals.
What are hybrid fitness solutions?
For gyms, hybrid solutions mean combining on-site facilities with smartphone apps or online courses and sessions.