The deal comes as the global pandemic has shut down gyms nationwide, leaving U.S. consumers finding ways to digitally transplant their gym workouts into their homes — a real boon to home fitness providers.
Consider connected-bike company Peloton. The continued consumer lockdown led Peloton to report $524.6 million in first-quarter sales — a 66 percent year-over-year increase. The company’s stock price has also roughly doubled in the past two months, touching an all-time intraday high of $60 a share last week.
Even though gyms in many states are starting to reopen, they face capacity caps and concerns that all but the most dedicated gym rats will be wary of returning to amid the pandemic: potentially high-risk enclosed spaces.
Mirror taps into that trend with its connected, wall-mounted mirror devices that livestream fitness classes into a consumer’s home.
“In 2019, we detailed our vision to be the experiential brand that ignites a community of people living the sweatlife through sweat, grow and connect,” Lululemon CEO Calvin McDonald said in a statement announcing the Mirror deal. “The acquisition of Mirror is an exciting opportunity to build upon that vision, enhance our digital and interactive capabilities and deepen our roots in the sweatlife.”
The relationship between Lululemon and Mirror dates back to 2019, when the former invested in the latter’s $34 million funding round. That fundraising left Mirror with a valuation slightly north of $300 million. Overall, Mirror had captured $72 million from investors and was considered the largest and best-known of a host of emerging connected fitness-tech tools to challenge Peloton.
But insofar as Lululemon’s business has been fitness apparel rather than fitness itself, the Mirror purchase is surprisingly lateral. Why did Lululemon agree to shell out half a billion dollars to tap into the connected-fitness wave?
In two words: contextual commerce.
The world of personal fitness might never go back to a time where brick-and-mortar gyms were the central hub of exercise.
“There’s [already] been a move toward omni-fitness, or a hybrid type of approach that can combine what you want to do in a health club with what you do outside of a health club,” Ryon Packer, chief product officer at ABC Financial, a fitness industry-focused software provider, told PYMNTS in a recent digital discussion of the industry’s future. “The pandemic has certainly pushed and accelerated that move substantially.”
However, Lululemon’s current business involves providing clothing for consumers to go to the gym. Today’s customers might not care so much about having a cute outfit to exercise in if they’re working out alone in their garages.
But if that same customer works out with a Mirror and is seen by others who are also online, perhaps he or she won’t show up in ripped sweats and a stained T-shirt. And just as Lululemon’s athletic wear is often sold in physical gyms, Mirror could provide an online platform filled with potential buyers as well.
Will the purchase work out for Lululemon?
We imagine that will largely depend on how long consumers avoid traditional gyms in favor of working out in front of a Mirror. But with COVID-19 cases on the rise in America, that pull could be getting stronger — not weaker — in the coming months.
Selected by Fintech Tube