Recently lululemon athletica and Peloton announced a new five-year strategic partnership, signifying Lululemon’s Pivot to Peloton as the exclusive digital fitness content provider starting in November 2023. However, the stunning announcement is that lululemon is discontinuing selling Mirror, a connected at-home interactive device providing access to live and on-demand classes through a $39 monthly subscription. Lululemon acquired the Mirror business in June 2020 for $500 million in cash — the company’s first acquisition and a remarkable outcome for Brynn Putnam, Mirror’s founder who started the business at the end of 2016 before launching the product in 2018.
Calvin McDonald, CEO explained the rationale: “In 2019, we detailed our vision to be the experiential brand that ignites a community of people living the sweat life through sweat, grow and connect. The acquisition of Mirror is an exciting opportunity to build upon that vision, enhance our digital and interactive capabilities, and deepen our roots in the sweat life.”
The 2020 acquisition was built on a mid-2019 partnership when lululemon bought a minority stake in Mirror. Therefore, sufficient business and competitor due diligence seems not to be the core issue.
By March 2023, the Mirror business was written down by 90% with reports that the fitness subsidiary was up for sale, but with no takers.
It seems that lululemon had convinced themselves that through Mirror they could reproduce a compelling studio experience for the home, formulating what they saw as the essential ingredients of:
1 Content variety
2 Personalisation and
The CEO doubled down on this rationale in 2021 as US gyms reopened following the Covid-19 pandemic.
I always want to know where a fitness proposition fits into the lives of exercising consumers. Is Mirror a gym subscription substitute or a gym complement?
I admire leaders with the capacity and conviction to know when a strategic pivot is needed. How easy it would be to persevere to validate the acquisition — give it more time, refine the product, add new content, enter new markets, and so it goes — the sunk cost fallacy is a persuasive cognitive bias. Perhaps the art of leadership couples a compelling vision with strategic agility.
What are your thoughts on this pivot to Peloton and unplugging the magical interactive mirror? Please join the conversation on our LinkedIn post.