Peloton Interactive, Incorporated., the US-based media and fitness equipment firm based in NYC, is experiencing a slump in its sales, leading to many other unfortunate events. Over the last few months, this had happened since home-based fitness equipment saw a jump in popularity when the pandemic was at its peak.
The CEO of Peloton, John Foley, has decided to step down, and the $3 billion company is laying off 2,800 of its workers. The company has also scrapped its schedule for setting up a new plant. As vaccination rates went up and gyms commenced with opening once more, the business was struck hard. The firm’s market value slid to $9.8 billion from $50 billion the previous year as of the beginning of February 2022.
What are the main products of Peloton?
The company’s main products are treadmills and Internet-linked stationary bicycles that allow monthly contributors to take part in training sessions through streaming media distantly. The company collected a subscription of US $39 every month from the subscribers for accessing its training sessions and extra attributes on their fitness equipment. Subscribers who exclusively access the content with a website or app are asked to pay $12.99. To make the services more affordable, the exercise equipment company came up with enticing discounts for its digital subscriptions available to students, healthcare personnel, tutors, and first respondents.
Why did Peloton witness so much growth over the past few years?
Established on January 3, 2012 (10 years back), Peloton witnessed phenomenal growth in its sales during the Covid_19 pandemic. The principal reason behind this was that people were unable to get outside to do exercises and instead were looking for home-based fitness solutions for keeping themselves slim and trim.
What went wrong?
However, 2022 has put a different ball game before the fitness equipment giant. Everything is opening up as the pandemic is waning. People are thronging the gyms once again. Consequently, the demand for Peloton’s subscriptions has dipped substantially, and the company is feeling the heat for sure. The CEO John Foley is quitting, taking responsibility for the company’s mal performance on himself. In fact, the company’s stakeholders were demanding this move one month ago.
To fulfill market demand, the company’s operations were boosted too fast, according to Foley’s statement. Besides, there were over investments in particular domains of its operations.
Now, what should Peloton do to save itself?
Currently, to save Peloton from slumping further in terms of revenue and once again head it towards the path of expansion by controlling its three million-plus dedicated members, the company must adopt the following steps:
1) Inclusion of more products into its product portfolio
Peloton has to add more products for fitness, other than treadmills and stationary bikes. This move would diversify its business and attract more customers.
2) Virtual product subscription in smartphones
The company has to launch virtual products subscription in smartphones so that the customers do not have to invest in any fitness equipment. This is a boon for them.
3) Expansion in more countries
To compensate for its drastic revenue slump, the fitness company has to grow its business in various unexplored territories and nations.
4) Setting up physical gyms in profitable locations
The company has to seriously think about launching physical gyms in areas that would gain considerably. Maybe, a thorough market survey would help.
5) Launching branded shoes and apparel might help
If the company can introduce Peloton-labeled footwear and apparel, it can attract many new customers and start making money once again.
6) Diet food may be a good idea to revive it
People have become quite conscious about nutrition during the post-pandemic years. The company can penetrate the diet food trade to try its luck by launching Peloton packaged healthy diet.
As the former CFO of Spotify and Netflix, Barry McCarthy assumes the new CEO’s role in Peloton; the company is undergoing a considerable reorganization throughout all segments to prop up its operating costs. The company has also halted the production of its flagship treadmills and stationary bikes for a few months to cope with the situation.
