Why Peloton plans to build a massive retail store footprint

Brian Sozzi
Editor-at-Large

Mass store closures have become the norm in retail these days as more people shop online. But for connected fitness startup Peloton (PTON), opening stores is a new frontier viewed as an untapped sales opportunity.

After all, many people will simply need to be convinced in person to spend $2,000-plus on a Peloton smart spin bike or $4,000 for a treadmill. Moreover, judging by Peloton’s pre-IPO filing, it plans to launch a hose of new products in coming years. It’s also likely the company unveils cheaper versions of its bikes and treadmills to attract new users — so space for people to test out all of this stuff is crucial.

“We’re massive believers — as we release new products — of retail as a place to demonstrate. We do test rides and runs where consumers can come in and try the bike and tread. As we launch more new products, that will become more important,” Peloton President William Lynch told Yahoo Finance.

Lynch should be pretty at home opening up modern day retail stores — he led Barnes & Noble as CEO for close to four years.

Lynch said Peloton now has 80 showrooms — aka retail stores —open across the country. That’s up from the 74 listed in its late August S-1 filing. The company plans to open six more showrooms in Germany shortly.

“We’re big believers,” Lynch said, adding he thinks the profitability per location is “the highest in all of retail right now.”

J.C. Penney (JCP) can’t boast that one.

Fitness equipment old at retail stores — typical

Saleswoman helping woman browsing cardio machines at home gym equipment store [Getty]

Fitness equipment in retail stores is nothing new. Sears for decades was the largest seller of exercise equipment such as treadmills, bikes and free weights. Dick’s Sporting Goods (DKS) still has a small portion of its stores dedicated to exercise equipment.

More recently, Best Buy (BBY) has allocated floor space to Peloton rival FlyWheel-connected bikes and Hydrow rowing machines. Unlike Sears and Dick’s Sporting Goods, Best Buy has actually put knowledge staff in place to explain the power of these techie machines to often first-time users. In doing so, it only raises the potential of a sale.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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