Strategy: Lululemon and Peloton
When possible, I like to share real-time examples of strategic concepts you can use in your interviews. Today, the concept is Right to Win and the example focuses on news stories addressing Lululemon and Peloton collaborating after their respective attempts to expand their business models failed.
As you read the excerpt shared below, think about:
Failed Product and Brand Extensions
Right to Win in a space based on product/company strengths and weaknesses
Imagine the types of prompts you could get around product failures
Imagine product pivot questions
What other kinds of questions could come up where you could refer to this story
From Sherwood Snacks Newsletter:
After trying to copy each other, Lululemon and Peloton spin up a fitness partnership
Sporting Lulu on the Peloton… a match made in pricey fitness heaven. Lululemon and Peloton announced a five-year strategic partnership, hoping to set aside their fitness rivalry like a pair of discolored yoga pants. After the news on Wednesday, Peloton (which has been on the struggle bus for a while) saw its stock jump 15%. It’s the first time the spin-bike maker will share its workout classes with another company.
What Lulu gets: It’ll become Peloton’s main apparel partner and be able to stream Peloton classes on its Lululemon fitness app, which has 13M members (nearly double Peloton’s). Also: some Peloton instructors will become Lulu ambassadors.
What Peloton gets: The companies didn’t disclose any deal terms or revenue-sharing plans, but Peloton could broaden its reach with the help of Lulu’s app and brand-name-apparel power (its equipment sales have plunged since the pandemic boom).
When life gives you lemons… Peloton tried to make the leap from hardware into apparel, but that didn’t fly. Meanwhile, Lulu tried to make the leap from sportswear into hardware by splurging half a billion dollars on futuristic home-fitness startup Mirror in 2020. Lulu was riding high from lockdown home workouts, and hoped people would spend $1.5K for vertical screens that stream classes. While demand for comfy Lulu fits has stayed strong, Mirror disappointed. Lulu said it would stop selling Mirror devices this year and direct users to Peloton classes instead.
THE TAKEAWAY
Stayin’ in your lane can be wise… Peloton tried to branch out with apparel to rival Lululemon, while Lulu tried to sell hardware to rival Peloton. Those competitive bets soured, and now the two are trying to make Lululemonade: joining forces so they can both do what they’re best at, together.
