‘Mirror’ing the Future
Lululemon playing the strategic acquisition card to head in the direction of evolving consumer sentiment by incorporating Mirror, with its innovative and versatile product, under its fold
A large portion of the world’s population has been homebound over the past several weeks due to the pandemic, resulting in massive digital shifts. Even once things cool off, it looks like the world would witness some significant changes away from the norms prior to the pandemic. And some of the folks set to gain big via this evolution include fitness apps and home fitness service providers. One such product that has been making news lately is Mirror.
Everyone loves working out (alright, let me rephrase, everyone loves the feeling of accomplishment after an intense workout) in a fitness studio alongside mirrors, being trained by professionals. However, time and budget constraints have served as hindrances over the years. Brynn Putnam decided to create a product that offers a professional workout experience while bypassing the time and money needed to physically travel to a gym. And thus, in late 2018, the world said hello to Mirror.
Now, I first became aware of Mirror after watching an episode of Ellen’s 12 Days of Giveaways series last Christmas, where every member of the audience received their own Mirror. And with it making to the news recently, I decided to Google it up a bit. What is this product? Well for starters, it’s a pretty cool mirror requiring less than two feet of wall space. But one’s not to be fooled by its chic yet simplistic design, as this humble mirror doubles down as ‘a yoga studio, a boxing ring, a personal trainer and so much more’, in the startup’s own words.
The LCD screen comes to life via an app and streams fitness sessions. The user’s heart rate and calories are tracked via a bluetooth heart rate monitor worn around the waist. The reflecting screen allows a user to see exactly how they’re moving and hence make adjustments to his/her posture. The device also suggests less intensive versions of exercises to manage any injuries once the device analyses your performance. In addition, there are weekly live classes with other Mirror members, real-time feedback and one-on-one personal training. Of course, subscription fees, personal training fees apply.
As someone who tries her best to stay active via home workouts guided by apps and videos, there are quite a few pain points to it. Lack of feedback on routines or postures, location constraints preventing working out in front of a mirror and frankly, lack of motivation to finish a routine after a point. Mirror seems to be addressing all these and has grown significantly since its inception in September 2018. And now, Lululemon wants in on the action.
Lululemon deals in athletic and sports apparel and gear. Their website also offers some home workout drills. Already an investor in Mirror, the company recently announced a deal to buy Mirror for $500m, a valuation up ~66% from its late 2019 valuation.
Clearly, the deal makes a lot of sense, Lululemon would be able to expand in the fitness industry — from apparel to training, a cool and different kind of vertical integration. Unlike the traditional model of vertical integration along the supply chain, this is a form of integration along the ‘fitness industry chain’ so to speak, offering immense cross-sell opportunities. The company can leverage its brand to drive Mirror sales and harness Mirror’s loyal and growing customer base to drive its apparel sales. With both the companies having a similar customer target segment, Lululemon’s customer acquisition cost is bound to reduce. Despite some concerns about it being a pretty pricey deal, this is a smart move to capture the next big trend in the fitness space.
The best part about Mirror is that it has offered itself immense scope to grow and expand. The company can easily cater to evolving fitness needs, add in new activities onto the system and very well expand beyond fitness as well. Unlike a treadmill or an elliptical which takes up immense permanent space and offers pretty restrictive workout opportunities, Mirror is extremely versatile. Why, it can offer dance lessons, educational lectures, make-up and fashion advice, all without having to remodel the basic structure of its product. Hence, one must factor in all these opportunities as well, and doing so makes the deal seem not so pricey after all. Bank of America analysts believe that Mirror can generate revenues of $700m and reach 600,000 subscribers by 2023, adding immense value to Lululemon.
With the office situation evolving, WFH trends gaining, a renewed focus on health and wellness and the formal office wear and gym markets looking uncertain, the combined entity of Lululemon+Mirror seems to be in a good spot. And of course, the opportunities are immense. Who knows, maybe the day isn’t far off when you look into a mirror to get fashion advice (‘Mirror mirror on the wall…does my jacket match my top?’), switch over your classes for the day, connect with friends and of course, catch up on fitness. All in one place!
