The outbreak is hardly over, but a sense of perspective – some of it decidedly unconventional – is settling over the global commerce picture.
For example, owners of Chinese gyms emptied or closed by the Coronavirus are scrambling to offset lost business by live-streaming workout routines and providing home fitness equipment, temporarily following the model pioneered by Peloton. As an example, one gym in Guangzhou with about 1,000 clients has had to go virtual.
While the fitness industry in China sweats it out financially, Peloton seems positioned to profit from the outbreak. As an indication of that, when the market started to tank in February, stocks of the company that pioneered internet-connected home exercise equipment rose.
“There are a select few stocks that seem to be rising in this uncertain time, one of which is the high-tech, at-home fitness company Peloton, best known for its $2,000 exercise bike,” according to Needham Analyst Laura Martin. “With new COVID-19 hotspots in South Korea, Italy and Iran, we believe certain U.S. consumers will be less comfortable over time going to their gym and more likely to order a PTON [Peloton] bike to stay home.”
Major fitness center chains in the United States have already conferred with one another to develop contingency plans in case the virus spreads here. Gyms could close or clients might avoid them, making the case for safer home workouts.
While Chinese gyms are renting equipment looking only at the short term, Peloton sells its high-end bikes and other fitness equipment along with subscriptions to its exercise classes for long-term use. Analysts believe that fitness-minded Peloton consumers will likely remain subscribed after the Coronavirus crisis subsides, raising the prospects of long-term profits for a company that promotes virtual sweaty togetherness.
Peloton’s mantra – connecting its adherents so they can “bond, inspire and grow stronger together” – illustrates how the company caters to customers who enjoy the sense of community with other fitness buffs, even if it is only online.
In fact, Peloton’s CEO John Foley made no bones about the fact that the firm’s ability to market virtual reality is as important to its profitability as the equipment it sells. “To the extent that we stream close to 1,000 hours of live programming around the world every month, it’s hard not to say we’re a media company…” noted Foley during the company’s September IPO.
In the meantime, McKinsey has checked in with its estimation of COVID’s quantitative effect. It believes regions that have not seen a rapid spreading of the virus (such as the Americas) are increasingly likely to see more spread before it quells. Lower product demand and decreased consumer spend could slow growth of the global economy between 1.8 percent and 2.2 percent instead of the 2.5 percent envisioned at the start of the year.
“Unsurprisingly, sectors will be affected to different degrees. Some sectors, like aviation, tourism and hospitality, will see lost demand (once customers choose not to eat at a restaurant, those meals stay uneaten),” stated McKinsey. “This demand is largely irrecoverable. Other sectors will see delayed demand. In consumer goods, for example, customers may put off discretionary spending because of worry about the pandemic, but will eventually purchase such items later, once the fear subsides and confidence returns. These demand shocks – extended for some time in regions that are unable to contain the virus – can mean significantly lower annual growth. Some sectors, such as aviation, will be more deeply affected.”
The fashion industry is also gaining perspective. Sun Dayong, a Chinese designer, has created the “Be a Batman” shield, which is “more like a mobile safety device intended to save the human race from the virus outbreak using UV light to sterilize itself.” The high-fashion shield is made from carbon fiber and is shaped like bat wings that would be worn like a backpack. A film stretches between these supports, similar to the membrane of a bat’s wing. This frame has wires hot enough to kill any pathogens.
All good on the fashion front. The smart money, however, might be on frequent hand-washing.