Peloton and Lululemon announced a five-year global strategic partnership last week, with the goal of uniting fitness content and athletic apparel to forge a collective community boasting more than 20 million members and guests.
This week, Lululemon is laying off about 120 employees who support Lululemon Studio — the business arm that includes the fitness device Mirror.
Lululemon’s recent layoffs follow a prior round of workforce reductions earlier this year when the company parted ways with 100 employees from the Lululemon Studio business. Back then, Lululemon justified this move as a strategic shift towards prioritizing digital content.
In 2020, Lululemon’s acquisition of Mirror was seen as a strategic move to expand beyond apparel and into the burgeoning at-home fitness market. The Mirror device, a sleek interactive mirror offering various fitness classes and personalized workouts, aligned with Lululemon’s commitment to wellness and lifestyle. It seemed like a perfect synergy between a renowned athleisure brand and innovative fitness technology.
The sudden announcement of Mirror’s shutdown was met with surprise. The closure of this fitness platform raised questions about the viability of such ventures and the challenges of sustaining them over the long term. While Mirror undoubtedly had its appeal, it struggled to reach a broader market and faced competition from established players like Peloton.
Speaking of Peloton, the fitness giant faced its own set of hurdles. Despite growing during the pandemic, with people turning to home fitness solutions, Peloton grappled with challenges such as product recalls and supply chain disruptions.
In fact, in August, PYMNTS said, “The state of recalls. That’s what it feels like with Peloton,” referencing Peloton’s loss surpassing expectations and a decline in new quarterly subscribers. The fitness company attributed these challenges to the recall of its bike seat post and seasonal patterns.
In the quarter ending on June 30, the company reported a net loss of $241.8 million, a significant improvement from the loss of $1.26 billion in the corresponding period of the previous year. Revenues also declined, reaching $642.1 million, from $678.7 million the previous year.
Read more: Seasonal Trends and a Recall Prompt Drop in Peloton Subscriptions
Now, under the new arrangement between the two companies, Peloton will assume the role of the exclusive digital fitness content provider for Lululemon, while Lululemon will become Peloton’s primary athletic apparel partner.
According to a press release, the two brands are set to involve their worldwide communities in the United States, Canada, the United Kingdom, Germany, and Australia through technical athletic apparel, real-life experiences, special programming, and original content.
As of Oct 11, co-branded apparel from Lululemon’s product lines will be accessible for purchase both at Peloton retail stores and online in the U.S., U.K., and Canada. This availability will gradually extend to all five of Peloton’s global markets, reaching full coverage by March 2024.
Starting Nov. 1, members of Lululemon Studio’s All-Access program will have access to thousands of Peloton classes at their existing subscription rate. Peloton’s content will receive ongoing updates on the Studio device and companion app, including new content generated by Lululemon through the spring of the following year.
Read more: Peloton and Lululemon Partner to Create 20 Million-Strong Community
Just as the new agreement shows promise, so did Lululemon’s acquisition of Mirror when it initially emerged, setting a new acquisition standard during that period, while Peloton made significant strides during the pandemic.
However, these developments in the fitness sector highlight the intricate nature of the fitness-as-a-service model. While the demand for at-home fitness solutions is there, achieving success in this field comes with challenges stemming from competition, technological hurdles, and shifting consumer preferences.
In this context, the narrative surrounding Lululemon’s acquisition of Mirror and the obstacles encountered by Peloton offer insights in this ever-evolving industry, underscoring the importance of innovation and adaptability in ensuring sustained success.