During the pandemic, fitness apparel retailer Lululemon purchased a connected fitness company called Mirror in 2020 as a way reach cooped-up consumers.
Later renamed Lululemon Studio, the $500 million decision was driven by the surging demand for at-home fitness equipment and the shift in consumer preferences toward home workouts.
At the time of the acquisition, it was a merger and acquisition (M&A) that broke from the traditional pattern that usually stressed expanding market share and scale. That said, this acquisition reflected a paradigm shift in Lululemon’s approach, as the company focused on prioritizing complete and holistic experiences over products.
However, things have changed drastically since then, and Lululemon is now seeking to sell its hardware. According to recent reports, the athleisure company has contacted Hydrow, one of its competitors, to explore the possibility of selling Mirror, its in-home fitness venture, due to the financial strain it has caused.
The outbreak of COVID-19 led to a increased demand for at-home fitness solutions. In response, several companies in the fitness industry started providing virtual fitness experiences and equipment to support home workouts.
The pandemic allowed fitness-oriented companies like Lululemon, which specializes in high-quality workout gear and apparel, to flourish. As consumers sought more comfortable attire for their home workouts and ways to cope with being confined, Lululemon’s offerings became more appealing.
But Lululemon did not just stop at its core offerings. In a surprising move, the company acquired Mirror, an at-home fitness startup that provided interactive workout classes through a wall-mounted screen.
Mirror’s appeal was the physical hardware that consumers could buy and the range of workout options, including weekly live classes, on-demand workouts and personalized one-on-one training experiences. At that time, customers could purchase Mirror for $1,495 and subscribe to its services for a monthly fee of $39. Additionally, personalized training sessions were available at an extra cost of $40 per session.
Like Mirror, Tonal also witnessed a surge in demand for its at-home fitness technology during the pandemic. The company’s digital strength-training system offers tailored workout experiences using digital weights and resistance bands. In late 2020, the company reportedly raised $120 million in a second round of venture capital funding.
“I’ve had a Tonal for almost two years,” NBA player Stephen Curry said in a prepared statement distributed by Tonal at the time, and who is also an investor.
See also: Tonal Raises $120M For Connected Fitness Growth
Peloton, recognized for its connected indoor cycling bikes and treadmills, also enjoyed a spike in popularity during the pandemic.
However, what goes up must eventually come down.
With the easing of lockdowns and the reopening of gyms and fitness studios, the at-home fitness trend slowly lost its steam.
Consumers are now hesitant or no longer see the need to spend money on expensive gym equipment and hardware. This has led to a decline in demand for Mirror’s products and a negative impact on Lululemon and other fitness players who have invested heavily in equipment.
So Lululemon is seeking to divest its Mirror hardware. But, of course, it’s not just Lululemon experiencing a turn of events.
Peloton also faced its own challenges and attempted to stay afloat by partnering with Amazon, acquiring Precor for $420 million, launching its own private label, reducing prices on its hardware to make at-home fitness more affordable for consumers, and even featuring a rental model. To further streamline operations, the fitness company also conducted layoffs. However, Peloton’s efforts were hindered by a recall of 27,000 bikes and the death of a 6-year-old child who became trapped in a Peloton treadmill.
See also: Peloton Embraces Rental Model After Founders Exit
It remains uncertain whether Hydrow, a manufacturer of connected rowing machines, will proceed with its deal.
Overall, at-home fitness is likely to remain a popular option for many consumers, but the industry is clearly transitioning back toward in-person fitness. As a result, companies specializing in at-home fitness equipment must adapt to evolving consumer preferences to sustain growth.
For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More