Store closures have become a common occurrence over the past couple years. As a result of pressures from the COVID pandemic and more recent rising inflation, even well-established companies like Walmart, CVS, and Loft have been forced to shutter stores since 2020. But while there have been clear struggles in the grocery, pharmacy, and clothing sectors, athletic chains are also feeling the heat. In fact, two of the most popular athletic companies have just announced plans to close multiple locations in the near future. Read on to find out which competitors are both paring down their physical footprints.
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These aren’t the first closures that athletes have had to deal with in 2022.
Back in June, Nike announced that it would be exiting the Russian market completely by permanently closing all of its brick-and-mortar stores in the country. The company had previously closed its more than 100 Russian stores temporarily in March amid the country’s invasion on Ukraine, but just three months later, Nike revealed that the stores “will not reopen.”
Here in the U.S., Olympia Sports announced in July that it would be shuttering all of its retail stores before the end of the year. The Maine-based sports retailer is set to shut down permanently just a few years before its 50th anniversary, with its 35 remaining stores closing by the end of September, an Olympia Sports spokesperson told the Portland Press Herald.
If you’re a fan of indoor cycling, you might be disappointed by these new closure announcements. Both Peloton and SoulCycle have just revealed that they will be closing locations soon. Peloton CEO Barry McCarthy told employees in an Aug. 12 memo that the company is planning a “significant and aggressive reduction” of its retail footprint in North America, starting next year, Bloomberg reported. According to the news outlet, Peloton currently operates 86 stores throughout the U.S. and Canada, and the company also plans to shutter 16 of its warehouses across the continent.
SoulCycle, on the other hand, is gearing up to close 25 percent of its locations, CNN reported on Aug. 15, and these closures are set to start even sooner than Peloton. According to the news outlet, SoulCycle is shuttering 20 of its 83 U.S. studios in in the coming days: six in the New York City area, five in California, and others in Washington, D.C., Massachusetts, Illinois, Florida, and Georgia. The company is also planning to end its presence in Toronto, which will take SoulCycle out of Canada altogether.
McCarthy told Bloomberg that the official number of Peloton closures will be determined by negotiations with landlords, but that the savings from its store closures will be reallocated toward marketing and selling its products in other ways. “We need to be where our customers are when they make purchasing decisions,” McCarthy told the news outlet, adding that foot traffic shows they “increasingly do that online.”
SoulCycle has also pointed toward customers data in regards to its decision to close stores. “As riders continue to return to in-studio classes there have been many shifts as a result of the pandemic,” a SoulCycle spokesperson told CNN. As a result, Insider reported that SoulCycle CEO Evelyn Webster told staff the following during an Aug. 12 company meeting, “The timing was appropriate to look at our studio footprint by market to understand whether we continue to believe that we had indeed oversaturated some markets, and the conclusion is that after much work and analysis, that perhaps we have.”
Through its downsizing, Peloton will also increase the prices of its stationary bicycle and treadmill products, as well as slash an additional 800 jobs—making it the company’s third round of layoffs in 2022, according to Insider. “We have to make our revenues stop shrinking and start growing again,” McCarthy said in the staff memo, per Bloomberg. “Cash is oxygen. Oxygen is life.”
For its part, SoulCycle will lay off about 75 of its approximately 1,350 employees as a result of its closures, according to CNN. Bryan O’Rourke, a fitness analyst at the International Health Racquet and Sportsclub Association, told Insider that Peloton is struggling as many people return to in-person fitness after the height of the pandemic, while SoulCycle hasn’t been able to regain its pre-pandemic momentum because of increased competition from Peloton and other at-home fitness offerings.
O’Rourke did have some words of optimism, however. “Going forward, if management of Peloton and SoulCycle can make the necessary cost adjustments without destroying quality fitness experiences and teams of people who make those experiences great, their prospects remain good for the long term,” he said. Sucharita Kodali, principal analyst at business research and analysis firm Forrester, also told Insider that the “good news is that they shouldn’t be getting any viable new competitors in the space.”