Proton or Jim? Why decide? — What does this mean for fitness companies?

Megan Thompson is exercising on an exercise bike at his home in New York City.

Michael Loccisano | Getty Images

Julia Yuriev hasn’t built and bought a cave yet proton Although it is a bicycle, a 38-year-old public relations expert is actively considering it.

Yuriev said he likes to take group classes at a local fitness studio. However, she does not feel that her choice is sufficient as she has resumed. She said she might consider jumping into her home gym for her Los Angeles apartment, as many of her friends have already done.

“Home fitness is still a consideration for me,” said Yuriev. “Yoga Studio [near me] We only offer certain classes with such limited capacity. They are shrinking … Therefore, due to rules and labor shortages, not all types are currently available. “

People in the Yuriev situation are increasingly opting for a hybrid approach. This may be a surprise to some investors who are betting that their consumer fitness option is one or the other. Consumers sweated at home, as they did during a pandemic, or returned to the gym after receiving the Covid-19 vaccination.

The Peloton and Planet Fitness stocks reflect this idea. Last year, Peloton’s share price soared by more than 440%, Planet fitness‘The stock made a 4% profit. This year, Peloton’s share has declined 36% to date, while Planet Fitness has increased by about 2%.

Visit to the gym on rebound

Demand for home fitness equipment has slowed from the blazing pace of 2020, but is still growing. According to the NPD Group, US sales surged 85% from 2019 levels to $ 3.7 billion last year. According to market research firms, fitness equipment sales were up 20% year-on-year until August, up 108% in two years.

The NPD Group was unable to provide forecasts for this category, Analyst Matt Powell said He expects the market to remain strong as people seek out activities to stay fit. He said sales would normally increase again in January.

Meanwhile, foot traffic to the fitness center has improved. According to Jeffreys, visits fell by only about 8% in early October compared to the same period in 2019. According to Jeffreys, gym chain LA Fitness and The Edge Fitness Clubs membership recovered fastest from the pandemic downturn, followed by Crunch Fitness and 24 Hour Fitness.Mark Wahlberg-Support F45 training It was the biggest delay, he said.

Customers wear face masks when lifting weights during a workout at Planet Fitness Gym as the closed area was reopened by the Covid-19 pandemic in Inglewood, CA on March 16, 2021. To do.

Patrick T. Fallon | AFP | Getty Images

“We’re definitely seeing clear data showing that people are getting comfortable again when they return to the gym,” Jeffreys retail and fitness analyst Randy Conic said in an interview. “What’s likely is that demand for gyms will accelerate quite dramatically … but [at-home] Fitness equipment is likely to remain a little stronger. “

Peloton and Tone, Peaked in January as consumers committed to a New Year’s resolution. Later, in August, when the Delta variant became a widespread threat, the number of searches increased slightly, Jeffreys said. Online searches for home training products such as skipping rope and yoga mats reached a record high in April 2020, but these searches have declined since then.

Still, Conic expects many US households to opt for a hybrid approach to their workouts when given the option.

“People will find that they can exercise in the gym three days a week and then do something in their home or basement and they can do it three or four days a week,” he said. “It’s all convenient.”

This idea is reflected in the recent products of fitness companies.proton Have a wellness program for a growing company..Mindbody, a booking platform for the health and wellness industry I want to deal with business Because they bring the workers back to the office building.

Lifetime fitness, High-end gym chain Published earlier this month, Redesigned the mobile app and launched a digital-only subscription during the pandemic. It’s still an option marketing to customers today.

Mark Mullett, co-founder and co-CEO of Obe Fitness, said the rapidly evolving landscape has allowed people to choose from what he calls a “fitness buffet.” Obe is a home fitness app that offers livestreaming and on-demand training classes to members who pay $ 27 a month.

“We love fitness buffets. You exercise at home three days a week, one day you go to your local studio and the next day you go running with your friends,” says Mallet. “Our job is to ensure that people get all the content, all the communities, and all the results they need.”

Mr. Obe recently started a spin class for members who have a bike at home or use a bike at the gym. The company also gapAthleta brand Investor Most organize face-to-face workout events.

Intensifying competition at home

As demand grows, soaring new entrants create more crowded spaces and companies are spending more to attract users.

proton Increase plan announced in August We advertised because we touted the low price of the bike and redesigned the tread. 24.5% of sales for the three months to June 30 were up from 14% in the previous year.

Hydrow, connected rowing maker Count Lizzo and Justin Timberlake as investors, In October, we debuted a marketing campaign called “Hydrow High”. Throughout the holiday season, it will appear in print and digital advertising, as well as on television. The company declined to comment on how much it would spend on the project, but said it was the most extensive effort to date.

Hydro, a $ 2,295 rowing machine maker, said it has secured nearly $ 200 million in funding.

Source: Hydro

“One of the goals of this campaign is to explain the boat in an easy-to-understand manner so that it can be accessed and appealed to more people,” said Gretchen Saegh-Fleming, Chief Commercial Officer of Hydro. Says. “The idea of ​​Hydrohigh is that people feel very good and strong after a workout.”

One of Hydrow’s rowing machines sells for $ 2,295, while Peloton’s original Bike costs $ 1,495 and Tonal’s weightlifting machine costs $ 2,995. Lulu LemonMirror devices retail for $ 1,495, while light boxers and home boxing devices cost $ 1,695. That’s just a few examples. You can also use the vertical climbing wall CLMBR to pay $ 2,799 to upgrade your home gym. Frame Fitness, a connected reformer machine for Pilates, is pre-sold for $ 2,999. There are many others.

In addition to equipment costs, users pay a monthly fee to access the content. For example, Peloton membership is $ 39 per month. Tonal membership is $ 49 per month.

“The explosive growth in home fitness is directly parallel to the explosive growth in e-commerce over the last decade or more,” said Simeon Siegel, an analyst at BMO Capital Markets.

“As consumers gave them a mission, the doors were opened to throw dollars at various connected exercise equipment manufacturers,” he said. “Similar to the number of start-ups that erupted throughout e-commerce when consumers gave retailers permission to enter the living room.”

The most successful companies are those that keep the churn rate as low as possible. That is, people stick to it monthly.

“Ultimately, engagement is important,” says Siegel. “So what is it that prevents someone from canceling? That’s the biggest question out there.”

Peloton is one of the only listed connected fitness companies that publishes churn rates, and its churn rates remain very low. Peloton’s average monthly connected fitness churn for the most recent accounting quarter was 0.73%. The previous quarter was 0.31%, the lowest in six years. Its churn rate tends to be low in the winter months.

Tonal and Hydrow are reportedly seeking public offerings to give investors deeper insight into user trends. Both companies refused to comment on their plans.

Building a community

Meanwhile, Peloton is betting that branded T-shirts, hoodies and sweatpants will serve as walking signs even if some users return to the gym.

In September, in parallel with the company’s large-scale marketing efforts for its clothing division, it dropped the biggest option ever. Advertisements for Peloton apparel can be found on billboards, digital subway slots, and even empty storefronts in New York City.

People are walking in front of stores in the SoHo district of New York City, where Peloton advertises its apparel line.

Source: Kevin Stankiewicz, CNBC

“When you see someone wearing Peloton, you realize that you’re part of that community together. There’s something sweet about it,” said Jill Foley, vice president of apparel at Peloton. It is stated in. “It’s really powerful.”

Entrepreneurs in this space say building a community is important — whether it’s a gym or home. Khalil Zahar, founder and CEO of home boxing business Fight Camp, said companies that make users feel like they belong to a group of like-minded people will be the ones that will withstand the challenges in the coming months. ..

“Now that we’re back in the gym, many of the concepts that worked for fitness connected during the pandemic may no longer be feasible in the post-pandemic world,” Zahar said. rice field.

“But there is a silver backing for consumers, as it will definitely force companies to make their products better, and companies that survive these next few years of transition are much stronger. It will be, “he added. According to Zahar, the best products are those that continuously deliver new content and have attractive instructors.

Returning to Los Angeles, Yuriev said he is still working to justify the cost of buying a home fitness machine such as Peloton, in addition to taking group classes. She said her friends also motivated her to make decisions.

“Especially flexibility in all remote work is important,” she said. “And I really need a sense of that community.”

Proton or Jim? Why decide? — What does this mean for fitness companies?

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