Peloton – a key supplier of stationary bicycles and other home exercise equipment – announced on Tuesday that it planned to purchase Precor, a leading manufacturer of commercial exercise equipment. In some ways this is a “typical” transaction in that a company is buying a complementary product supplier. However, a closer look shows the role the COVID-19 pandemic has played in bringing these companies together.
Demand for Peloton-branded stationary bikes and treadmills surged during the pandemic as people sought to maintain their physical fitness by exercising more at home, due to their reluctance to go to a gym, or because gyms were closed due to local or state mandates. However, Peloton had trouble meeting this increased demand, as shipping delays meant that its Taiwan-manufactured products took days and weeks to reach customers.
The purchase of Precor will help alleviate these shipping issues, as the company has plants and warehouses in the US, thus allowing Peloton to head off future supply issues by expanding its domestic manufacturing print (a move made by many other firms during the COVID-19 pandemic). The acquisition also positions Peloton for future growth. While many people will continue to exercise more extensively at home, others will return to their gyms with a vengeance – particularly as vaccines reduce the risk of the disease. Peloton will then see sales gains as gyms re-stock their facilities with the exercise equipment supplied by Precor.
For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including the Freedonia Focus Reports collection which features a wide variety of concise reports including recreation industry titles such as Sports Equipment: United States and Recreation: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.