The US’s gym, health, and fitness club industry was estimated to be worth an astounding $32 billion in 2020, and this figure is likely to rise as governments push for individuals to make healthier lifestyle choices in the wake of the global pandemic.
Even more impressive is the value of the US tech market, which is estimated to be around $1 trillion.
One company, in particular, has succeeded at combining the potential of these massive industries to make a genuinely enticing and robust business proposition; that company is Peloton Interactive. By merging the latest technology with exercise equipment, Peloton has made it easier than ever for users to keep on top of their health while simultaneously navigating their busy everyday lives.
That being said, with high-value industries comes intense competition, and Peloton is by no means the only company to have found a way to integrate our digital and physical lives successfully. Health and fitness-based technology is an industry in and of itself, and the products that are being created within it are evolving at a rapid pace.
To find out how well Peloton performs against its key competitors, read on.
Peloton: An Overview
Peloton Interactive, Inc is an American exercise equipment company founded in 2012 and headquartered in New York City. It offers connected fitness products with touchscreens, allowing users to stream live and on-demand classes under the Peloton Tread and Peloton Bike names.
The company markets and sells its interactive products directly through retail showrooms and on its website. In addition to the physical products that it sells, Peloton also provides connected fitness subscriptions for different household users, giving them access to its classes. In this respect, Peloton Interactive covers all bases for fitness and health, allowing the easy integration of users’ digital and physical lives.
As of June 2021, Peloton had approximately 5.9 million members, and in the wake of higher sales, it is now expecting an annual revenue of more than $4 billion ($3.9 billion was forecast initially).
Peloton was founded to bring “immersive and challenging workouts into people’s lives in a more accessible, affordable, and efficient way.” Its mission statement is: “Peloton uses technology and design to connect the world through fitness, empowering people to be the best version of themselves anywhere, anytime.” If you are interested in reading more about other companies’ values, we have compiled a list of the most powerful and enduring mission statements.
As of August 2021, Peloton Tread is available within the UK, US, and Canada. The company also has a London studio.
In 2020, Peloton Interactive won Best Virtual Streaming Experience in Women’s Health Magazine. This isn’t the only award the company has been successful at winning; it also won Retailer of the Year in the Forbes 2020 Retail Awards and has been awarded Best Place to Work in New York by Comparably.
Peloton Business Strategy
Peloton Interactive’s business strategy incorporates two revenue models: subscription and production. It manufactures products such as the Peloton Bike or Tread and sells them while also offering an app subscription service that allows users to access classes that can be done on Peloton products.
The original Peloton Bike has recently been reduced in price by $400, though it is still an eye-watering $1,495. The Peloton Tread is even more expensive, starting at $2,495 – not to mention all-access membership and accessories must be bought separately.
Despite the fact that Peloton’s price point is high compared to some of its competitors, it does offer a financing option to its customers, which allows them to choose a payment plan that works for them. Customers can spread the cost over 12, 24, 39, or 43 months.
In September 2021, Peloton expanded its portfolio to include a private label apparel brand, Peloton Apparel. This clothing line aims to be high-performing and body-inclusive. By launching an apparel brand, Peloton will be able to promote itself through clothes, generating wider brand recognition and, if the right people are seen wearing its clothes, desirability.
As of August 2021, Peloton Interactive is facing an investigation by the Department of Justice and Department of Homeland Security after a child was pulled under one of its treadmills and killed. It recalled 125,000 of its treadmills in May following the incident, although at first, the company insisted there was no reason to stop using the machine.
Given that there have been numerous other reports of safety concerns, this blow will be difficult for Peloton to fully recover from, and it perhaps explains the company’s decision to reduce the price of its products.
Peloton SWOT Analysis
A SWOT analysis assesses the strengths, weaknesses, opportunities, and threats to a business. It is cost-effective and beneficial for generating business insights.
- Brand recognition.
Peloton enjoys strong brand recognition, particularly in the US, which has been aided by awards from the likes of Women’s Health Magazine. While many companies manufacture exercise equipment, few have successfully combined this with the latest technology to create a comprehensive subscription-based fitness solution, which has helped consolidate the brand’s notoriety.
- Quality content.
Customers can access both live and on-demand classes; the content Peloton produces is constantly being refreshed and updated. This keeps customers engaged and increases the overall value of Peloton as a brand.
- Unique business model.
Rather than entering into a niche market and focusing on one product, Peloton has sought to cater to all aspects of an individual’s fitness journey by providing both equipment and education through technology-based tools.
- Limited customer base.
Though Peloton is well-known throughout the US, its expansion into other markets has been slow. Its products appeal to a wide range of people, yet its customer base is concentrated in one area.
- Safety concerns.
Negative press coverage can irreparably damage a company’s reputation, and this may be the case with Peloton after a child was killed in an accident involving one of its products.
- High price point.
There’s no getting around it – Peloton’s products are expensive, and this undermines the company’s mission to bring affordable fitness to everyone.
- Diversifying product portfolio.
Currently, Peloton offers two products – the bike and the treadmill – with two variations of each. However, the fitness market is much bigger than running and cycling; the company could introduce thousands of products to appeal to a broader range of people.
- Research and development.
If Peloton invests heavily in R&D practices, it will be better able to differentiate itself from competitors by providing superior products and services.
- Bigger potential customer base.
Not only is the population increasing at a rapid rate, but the global pandemic has also made many people realize the importance of good health and fitness; Peloton has the opportunity to take advantage of this by appealing to those who are looking to begin their fitness journey.
- Dependency on bike sales.
Peloton’s product range is limited, with the majority of its revenue coming from the sale of exercise bikes. This means the company is overly dependent on the success of one product; any fluctuations in buying habits or any new competitors have the potential to destabilize the success of Peloton’s whole business operation.
- Consistent losses.
Peloton is hemorrhaging money. In 2020, the company posted a net loss of $313.2 million, compared with a net income of $89.1 million. The company’s problems have been catalyzed by safety concerns and the subsequent recalling of its products in May.
- The gym.
While Covid-19 has made many people reassess the role of exercise in their lives, the pandemic is now drawing to a close, meaning that many gyms and in-person classes are resuming. Peloton faces competition in this respect because people are unlikely to want to spend time exercising at home when they have been forced to do so under restrictions for the past two years.
Peloton Competitor Analysis
The fitness tech industry is extremely valuable, and that value will only increase as governments implement more health initiatives in the wake of the global pandemic.
This is a challenging market to dominate because there are so many different approaches to exercise and fitness, but Peloton is undoubtedly one of the leading brands within the US. To find out how it measures up to its competitors, read on.
MIRROR is a fitness startup that was founded in 2016 with the aim of developing a connected fitness system. The company is owned by Lululemon, a yoga and activewear brand, and is headquartered in New York City.
It has secured a significant amount of funding over the past few years – a total of $38 million prior to 2019 – from the likes of Spark Capital, First Round Capital, BoxGroup, and more. In 2019, it was valued at $300 million, indicating that Peloton’s ongoing success could be under threat from new companies that offer more innovative and exciting products.
MIRROR’s success is down to the ingenuity of its core product, a full-length mirror that doubles as a gym. The company boasts on its site, “all you need is two feet of wall space to turn any room into a complete home gym.”
With house prices rising, forcing young people in particular into rented accommodation that offers limited space, it’s no wonder MIRROR has taken the fitness world by storm. The price of The Mirror starts at $1,495; this comes with a 30-day risk-free trial and a standard warranty. Customers can also choose to spread the cost over a more extended period, paying as little as $32/month.
However, like Peloton, MIRROR membership does not come with the product itself but can be purchased for an additional $39/month. This gives customers access to over 50 genres of workouts, live and on-demand classes, 1-on-1 personal training, and unlimited access for up to 6 household members.
Personal training classes are what puts MIRROR ahead of Peloton.
In 2020, Mirror generated $170 million in revenue, and in June of that year, Lululemon announced its acquisition of MIRROR for $500 million.
The Mirror is used by businesses across a number of industries, including hotels, residential buildings, gifting programs, and corporate wellness programs.
SoulCycle is a fitness company owned by Equinox Group. It was founded in 2006 and offers cycling and spinning workout classes in 99 locations across the US, the UK, and Canada.
The SoulCycle brand is renowned in many fitness circles for its cult-like following, which has inspired a ‘love it or hate it’ attitude. This is largely down to the company’s mission to “bring Soul to the people.” It elaborates on its website: “Our one of a kind, rockstar instructors guide riders through an inspirational, meditative fitness experience that’s designed to benefit the body, mind, and soul.”
In addition to the classes it holds, which can be accessed via an app, SoulCycle also has a clothing line that is stocked in various high-end stores such as Selfridges in London. It is likely to have more success selling apparel than many of its competitors because SoulCycle’s mission is about more than fitness; it’s about cultivating a particular state of mind and way of life, thus making users more likely to want to represent the brand by wearing its clothes.
A new CEO, Evelyn Webster, joined the company in December 2020 with the hope of helping to bring customers back to in-person classes following the global pandemic, helping SoulCycle to compete more effectively with rivals like Peloton.
SoulCycle caters to predominantly high-income households since classes can cost upwards of $38 each. The company has been accused of perpetuating a toxic work environment and an unhealthy culture, but its strength is and will always be its incredibly loyal customers.
Information about SoulCycle’s revenue over the past couple of years is difficult to find, likely because the company has suffered during the pandemic, with its usual customers being unable to attend in-person classes due to restrictions.
Life Fitness is an American fitness equipment company that is headquartered in Rosemont, Illinois. It was founded in 1977 and is responsible for creating the industry’s first electronic stationary bicycle.
Since then, the company has significantly expanded its product portfolio, including everything from cross trainers and benches to kettlebells and equipment racks. It also has a consulting service which offers advice about creating fitness facilities such as gyms.
Life Fitness products such as the Integrity Series Treadmill can be fitted with various consoles according to the users’ needs, offering a range of functions including integrated TV, instructor-led workouts, Apple Watch connectivity, and streaming apps.
However, these high-tech products come with a big price tag that can be anywhere between $10-15,000. This explains why Life Fitness predominantly targets people looking to build large-scale fitness facilities.
In June 2021, Life Fitness and PEAR Sports formalized a long-term strategic partnership that aims to use the PEAR platform to power the Life Fitness consumer experience.
The company’s annual revenue is estimated to be around $587 million.
Equinox Group is an American luxury fitness company that was founded in 1991 and is headquartered in New York, New York. It operates several lifestyle brands, including Precision Run, Equinox Hotels, Project by Equinox, PURE Yoga, and Blink Fitness.
Equinox has recently undergone a membership rebrand to integrate digital and in-club offerings, so users can access benefits anywhere, anytime.
New members enjoy numerous benefits such as unlimited classes, industry-best programming, a complimentary personal training session, and 15% off their first purchase.
Equinox’s mission is “in everything we do, we create the possibility for people to maximize the potential within themselves,” and this supportive, empowering message has been key to the company’s ongoing success.
The initiation fee (excluding during deals) is usually around $100, whereas the monthly fee for one person with access to all clubs is $230. While that figure is pretty expensive, Equinox delivers on the luxury and exclusivity that it promises.
Equinox Group’s consolidated revenue was reported at $650 million last year.
How Peloton Stands Out
Peloton’s iconic brand has allowed it to remain popular and relevant despite the recent bad press, and the brand recognition surrounding this company is its real strength. Peloton has over 5 million members, indicating the high quality of its fitness classes. By catering to each stage of the users’ fitness journey, it has managed to sustain a high level of customer loyalty.
Frequently Asked Questions
Question: Which company is the fitness industry market leader?
Answer: Because each fitness company has a slightly different product portfolio and structure, there is no single market leader. Rather, there are a number of them, and Peloton is certainly one due to its substantial revenue and large customer base. However, it will be difficult for Peloton to maintain its strong position in the future after suffering the consequences of product safety concerns.
Question: What is Peloton’s competitive advantage?
Answer: Peloton is an extremely well-known brand with a large customer base. Many of its competitors have an intense, cult-like following which has catalyzed a ‘love it or hate it’ attitude. In contrast, Peloton caters to individuals who want to balance fitness with their everyday lives.
Question: Who is Peloton’s biggest competitor?
Answer: In terms of revenue alone, Equinox Group is Peloton’s biggest competitor. However, there are other considerations to account for, such as technological innovations, price points, and reputation. In this respect, MIRROR has a clear edge over Peloton because its product is more innovative and desirable to younger generations.
Question: Why choose Peloton?
Answer: Despite recent safety concerns, Peloton has been operating for nine years and has had considerable success during that time, winning awards from the likes of Forbes. It has achieved widespread brand recognition, and Peloton’s ongoing popularity indicates that its products are of high quality.
The home fitness industry, in particular, is likely to struggle over the next year as many people return to gyms in the post-covid world. As a result, companies like MIRROR and Peloton will have to continue innovating and taking advantage of the latest technologies to stay relevant.
Whether or not Peloton will bounce back from the safety concerns that have been raised over the past year is as yet unclear, but such a well-known and loved company will surely be able to weather the storm.