Parties Agree to ‘Stay in Their Lane’ in Five-Year Strategic Agreement
By Gary Symons
TLL Editor in Chief
The fitness war is over, as lululemon and Peloton have signed a strategic global partnership in which both parties agree to stick to what they know best.
The two fitness companies were formerly embroiled in legal action, with lululemon accusing Peloton of copying their clothing lines, and Peloton pointing fingers at lululemon’s Mirror device and Peloton-like fitness classes.
It turns out both companies did better when they stuck to their own skillsets. lululemon’s fitness classes based on the $995 Mirror device did not see a lot of uptake, and in fact, the $500 million acquisition of Mirror turned into a bit of an albatross for the apparel giant. The acquisition was written off earlier this year, essentially becoming worthless, which also forced lululemon to search for strategic alternatives to the device.
Likewise, business analysts said Peloton’s dive into the fitness apparel business was largely a failure.
The partnership stems from both companies realizing that “dabbling in areas outside of their core competencies was not yielding results,” said Neil Saunders, a retail analyst for GlobalData, in an interview on CNN. “Peloton’s push into apparel was a failure as the selection was weak and looked incredibly lackluster in stores. The company was not doing sufficient volume to justify the operation. lululemon’s Mirror device was a flop because it was too expensive and too complex.”
Licensing Law: Peloton Sues Lululemon After Branding Breakup
It appears both companies have now buried the hatchet—or yoga mat—and have committed to a partnership in which both can focus on their key competencies.
Under the agreement announced on Sept. 27, Peloton will become the exclusive digital fitness content provider for lululemon, and lululemon will become the primary athletic apparel partner to Peloton.
The two companies say they will collectively their global community of members in the United States, Canada, the United Kingdom, Germany and Australia “through technical athletic apparel, real life experiences, special programming, and original content, expanding the brand awareness and reach for both companies.” As well, some Peloton instructors will become lululemon ambassadors.
“We’re excited to collaborate with Peloton to connect with our highly engaged communities across North America and in markets around the world,” said lululemon Americas president Celeste Burgoyne. “As a leader in technical athletic apparel, this partnership will create a powerful product offering for Peloton Members and fans. Our two companies share a vision to advance wellbeing through movement, and this partnership ensures our lululemon Studio Members will have access to the most expansive and dynamic offering of fitness content possible.”
Similarly, Peloton said bringing lululemon’s wildly popular athletic wear into their business will be a huge benefit for members.
“Our brands create transformational experiences, products, and content that build meaningful connections and unlock greater possibilities for our Members, anytime, anywhere,” said Dion Camp Sanders, Chief Emerging Business Officer at Peloton. “By bringing together the best in fitness content with the best in athletic apparel, we’ll give our communities one-of-a-kind experiences and special content that will inspire them to achieve their goals.”
So, what does that mean in practical terms?
First, beginning on Oct. 11, co-branded apparel across lululemon’s product lines will be available for purchase at Peloton retail stores and online at apparel.onepeloton.com in the US, UK, and Canada, and in all five of Peloton’s global markets by next March. The co-branded apparel will be launched over the course of three new events that will be added to Peloton’s already scheduled Peloton on Tour, starting with an activation in Chicago on Oct. 5–7.
Secondly, starting on Nov. 1, lululemon Studio All-Access Members will have access to thousands of Peloton classes for the same price they pay today, as Peloton becomes the exclusive provider of digital fitness content to lululemon Studio Members.
Peloton content will be updated on a weekly basis on the Studio device and companion app, with new Studio content produced by lululemon through spring of next year. In addition, exclusive Peloton content will be available to people who sign up for lululemon’s free Essential membership program, which currently has more than 13 million members. By contrast, Peloton has seven million members, so the partnership holds obvious appeal.
And what about the ‘broken Mirror’? It appears the pieces will be promptly swept up and thrown in the dustbin of history, as lululemon intends to discontinue selling the lululemon Studio Mirror before the end of the year, although it will continue to provide ongoing service and support for Mirror devices. lululemon will also discontinue its digital app-only membership tier on Nov. 1, and current lululemon Studio app-only members will be offered an opportunity to become a Peloton App One Member.
“In the months ahead, we look forward to bringing this partnership to life with Peloton and leveraging the strengths of both brands to further support our growing guest and member communities on their fitness and wellbeing journeys,” said Burgoyne.
The deal is seen as a positive for both companies, but is expected to be a bigger benefit for Peloton, which suffered a dramatic drop in membership as the COVID pandemic came to a close. Peloton shares jumped a healthy 7% on the news, with investors seeing access to lululemon’s somewhat fanatical fan base as a long-term positive for the company’s bottom line.
As the retail analyst Saunders put it, “The partnership is beneficial for both firms, but Peloton arguably needs it more as it is still on very shaky ground financially.”
TLL Offering Free Listings For Licensing Agencies in New Publication
United Talent Agency Bringing Star Power to Toy Fair New York