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Time to ride, and buy: Peloton to acquire Precor

Erika Beras Dec 22, 2020
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Peloton's sales have doubled during the pandemic. Above, a woman rides her Peloton at home in California in April. Ezra Shaw/Getty Images
COVID-19

Time to ride, and buy: Peloton to acquire Precor

Erika Beras Dec 22, 2020
Heard on:
Peloton's sales have doubled during the pandemic. Above, a woman rides her Peloton at home in California in April. Ezra Shaw/Getty Images
HTML EMBED:
COPY

Peloton, the interconnected exercise equipment company known mostly for its pricey bikes, is acquiring Precor, a supplier of commercial fitness equipment in a $420 million deal.

This has been a big year for home exercise equipment, and Peloton has been a winner in this pandemic — sales have doubled. But that growth has come with supply chain issues, and this deal may be the answer to Peloton’s problems.

This time last year if you were talking about Peloton, the conversation probably centered around that strange, viral ad. A woman gets a Peloton, props it up next to her living room window, sweats through a bunch of rides — and her life is changed.

But a year later, with stay-at-home orders, Peloton sales and subscriptions grew and grew, topping a million. And with that growth came supply chain pains. Some customers wound up waiting weeks for bikes.

Sridhar Tayur, an operations management professor at Carnegie Mellon University, said Peloton has a plan.

“Buying manufacturing capacity as well as kind of the supply chain that kind of goes along with it that gets manufactured products to the consumers,” Tayur said.

Faster, too because, Precor has factories in the U.S. And Tayur said this could work for Precor, too.

“They might have built a supply chain expecting a certain gym kind of demand,” Tayur said, but people aren’t exactly crowding into gyms these days.

What is crowded is the space Peloton wants to dominate. Echelon Fitness makes cheaper interconnected bikes. Apple just launched a competing fitness platform. And now lots of gyms and studios offer streaming classes.

Americus Reed, a marketing professor at the Wharton School at the University of Pennsylvania, said Peloton has to think around the next corner.

“The way to stay out in front of this is to make sure you’re in a position to deliver kind of the next add-on aspect to this,” he said.

So the bike screen now swivels, and you can hop off and take a yoga class. And with this acquisition, Peloton wants to make sure customers are getting everything they want as soon as they want it.

COVID-19 Economy FAQs

What are the details of President Joe Biden’s coronavirus relief plan?

The $1.9 trillion plan would aim to speed up the vaccine rollout and provide financial help to individuals, states and local governments and businesses. Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, while advancing his objective of reopening most schools by the spring. It would also include $1,400 checks for most Americans. Get the rest of the specifics here.

What kind of help can small businesses get right now?

A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.

What does the hiring situation in the U.S. look like as we enter the new year?

New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.

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