The Corona crisis revealed not only economic losers, but also some winners. In addition to companies such as Netflix and Amazon, there are also a few rather unknown companies that were able to profit from the pandemic. Due to closed gyms, for example, fitness equipment for the home experienced a real boom. Accordingly, Peloton as a manufacturer of premium fitness bikes and treadmills was able to find many buyers for itself. Recently, however, demand unexpectedly and suddenly declined.
Building halt between February and March
Peloton has definitely revolutionized the world of home fitness with its combination of classic fitness bike and smart Internet features. Here, one can access fitness classes either on demand or live. Participation in shared cycling is not the only option. A membership with Peloton also allows you to take part in classic fitness or yoga classes. Thus, the company has now created a user-friendly, but also expensive alternative to the classic gym. However, according to internal documents of the fitness equipment manufacturer published by the CNBC news channel, the company now has to pause its production temporarily. Thus, no more bikes are to be built between February and March. The reason for the production pause is said to be the sudden slump in demand.
A roller coaster ride
The problem Peloton is currently facing highlights the impact bad timing can have. As gyms closed during the Corona crisis and the number of home office workers increased, so did demand for home exercise equipment. But the company simply could not meet the demand due to a far too small location allotment. Over time, the warehouses filled up and the crowd of buyers could be satisfied.
Now Peloton has set up mass production, but demand has plummeted. That it could come so, the manufacturer of fitness equipment already suspected in November. After all, the company already had to admit then that the originally forecast sales of $5.4 billion were a bit overambitious. Instead, Peloton lowered this to $4.8 billion.
Additional costs for customers to come
Peloton itself must now see that the shrinking demand does not threaten the existence of the company. Accordingly, from now on, they want to charge $250 more when buying a Peloton bike. This will ultimately be an all-inclusive cost for the delivery and assembly of the premium bike. The company also wants to increase the price of its smart treadmill “Tread”. Here, the costs are even to increase by 350 US dollars. But the price increases are not to be the only two lifelines of the company. Peloton also wants to cut some jobs. Let’s see if the plan works out.