Peloton plans to sell its deluxe stationary bike at Costco to reach holiday shoppers

[October 23, 2024]  By CATHY BUSSEWITZ

NEW YORK (AP) — Peloton plans to sell its deluxe stationary bike at Costco this holiday season as the struggling connected-exercise company seeks to broaden its customer base.

The Peloton Bike+, a stationary bike that enables riders to participate in online classes and work out with a virtual community of friends, will be sold at a discount online and in 300 Costco stores from November through mid-February, the companies announced Tuesday.

The model will sell in Costco stores for $1,999 and will require self-assembly. That's about $500 cheaper than buying a new bike directly through Peloton's website, a purchase which includes delivery and setup. Costco will also sell the Peloton Bike+ on its website for $2,199, which includes delivery.

“The Costco brand is incredibly powerful and respected in the U.S. and abroad," Dion Camp Sanders, Peloton's chief emerging business officer, said in a news release. “Costco members know they are shopping for high quality products from trusted brands with the best value.”

The partnership with Costco is a way for Peloton to cast a wider net and make its products more accessible, said Angeli Gianchandani, an adjunct instructor at New York University's School of Professional Studies.

“Costco might be known for low cost, but at the same time they don’t shy away from carrying high-end products,” Gianchandani said. “And this falls in line with that strategy and how they carry their product selection to really appeal to a wider demographic that’s affluent, and they appreciate quality and value.”

Once marketed as an exclusive, aspirational brand, Peloton began rebranding itself to be seen as more accessible as it grappled with falling sales and a plummeting stock price. In August 2022, the company made its exercise bikes and other gear available for purchase on Amazon in the U.S.

The Peloton Bike+ is a step up from the original Peloton bike because it has a rotating touch-screen and a resistance knob that can be set to automatically adjust to an instructor’s recommendations. To participate in classes, riders purchase an all-access membership for $44 a month, which also includes classes in meditation, strength training, yoga and other disciplines.

 A Peloton bike is shown on Nov. 19, 2019, in San Francisco. (AP Photo/Jeff Chiu, File)

Peloton’s choice to sell at Costco “appears to be based not just on Costco’s size and formidable footprint, but the nature of the demographics that shop at the warehouse club,” said Kimberly Whitler, an associate professor of business administration at the University of Virginia. “Specifically, it appears that they are attempting to reach younger, wealthier individuals who are likely a prime demographic group.”

Costco Chief Financial Officer Gary Millerchip said on an earnings call in September that about half of the retailers new members this year were under 40 years old.

Sales of Peloton bikes soared during the early days of the coronavirus pandemic, when gyms closed and many people stayed home to reduce the risk of contracting or spreading the virus. The company's share price surpassed $150 in late 2020.

But the growth was unsustainable, and slowed when pandemic restrictions began to ease. Peloton also issued damaging recalls including one of about 125,000 treadmills in 2021 after they were linked to a child’s death and dozens of injuries, and another of more than 2 million bikes that had a seat post which could break during use.

Facing these challenges, Peloton's stock price began a long tumble. It has been trading below $7 a share for all of 2024.

In May, Peloton cut 400 jobs and CEO Barry McCarthy stepped down. Peloton also has been selling refurbished bikes on its website, charging $1,145 for a used standard Peloton and $1,995 for a used Peloton Bike+.

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