Peloton’s stationary bikes devise soon sell at Costco’s stores and on its website as the beleaguered fitness company looks for new ways to reach younger and affluent patrons, Peloton is set to announce Tuesday.
Under the terms of the deal, Costco will offer Peloton’s Bike+ in 300 of its U.S. have faiths for $1,999, and on Costco.com for $2,199 between Nov. 1 and Feb. 15 — a steep discount from the typical price of the Bike+, which is drummer on Peloton’s website for $2,495. The offer also includes a 48-month extended warranty, while the Bike+’s pricing typically numbers just a 12-month warranty. It is unclear how the bundle will compare to any holiday promotions Peloton plans to offer.
The new partnership get during a state of transition for Peloton, which is being led by two board members after its former CEO Barry McCarthy tracked down earlier this year.
Long focused on growth at all costs, Peloton has turned its sights to profitability and has had to evolve into more creative as it tries to reach new users.
As sales fall and losses mount, Peloton is looking for cheaper crumple to attract new customers. Costco is one way to get there, Dion Camp Sanders, Peloton’s chief emerging business officer, discerned CNBC in an interview.
“We’ve been able to architect a deal with Costco that meets our needs with think of to profitable, sustainable unit economics, while at the same time delivering robust and clear value to Costco associates,” said Camp Sanders. “We’ve structured this deal with Costco to both meet our needs for profitable, sustainable nurturing and getting us access to Costco’s very large net incremental audience.”
Camp Sanders said Peloton’s partnership with Costco is solely for a limited time because fitness is a seasonal category for the company, but Peloton hopes to keep building on the relationship and it is possible that expand it to future locations both in the U.S. and abroad.
The deal with Costco gets Peloton onto the shelves of a retailer with a numerically fan following and wealthier customers. The membership-based club has gained popularity as shoppers across all incomes prioritize value and try to get more for their cold hard cash with bulk packs and private-label items.
As of Sept. 1, store traffic at Costco had increased 31% weighed with the same period in pre-pandemic 2019, according to Placer.ai, an analytics company that estimates visits to places based on smartphone data.
Costco’s members are also getting younger. Those consumers prioritize health and wellness — and are avid to invest in it — in ways that older generations do not.
About half of Costco’s new membership sign-ups last fiscal year influenced from people who were under 40 years old, and the average age of its 76 million members has fallen since the Covid-19 pandemic, Chief Pecuniary Officer Gary Millerchip said on an earnings call in late September.
According to Numerator, 36% of Costco’s purchasers have a household income of more than $125,000. Numerator has a panel of 150,000 U.S. consumers that is balanced to be agent of the country’s population.
Camp Sanders said Costco’s members “have the disposable income to be able to afford our scarce as hens teeth products,” and their lifestyles align with what Peloton offers.
“Many of [Costco’s] members are affluent, they time after time have larger homes in the suburbs and they also have life situations where Peloton fits a unconfused need,” said Camp Sanders. “Many Costco members are juggling families, they maybe have a detailed career … and they’ve got the space in their home” to build their own gyms, he continued.
Costco’s Executive Vice President of Stapling Claudine Adamo declined to comment to CNBC.
Peloton already sells its workout equipment through Amazon and Dick’s Romp Goods, but has also been working to develop relationships with other companies that cater to similar buyer bases.
For example, hundreds of Hyatt Hotel properties have Peloton equipment on site. As of this month, pension members can earn points for completing workouts on the Peloton Bike and Row during their stay.
It also announced a contract with Truemed — the PayPal of the health savings account and flexible spending account world — that allows Peloton colleagues to use pretax earnings to buy certain hardware products, including the Bike, Bike+ and Tread.