They say that hindsight is 2020. Since we are well into 2021, we now have the benefit of hindsight when we look back at the year that will forever be associated with COVID. Some companies fell apart. Others flourished. Enough time has passed that we can start drawing initial conclusions about how the business world has changed since the onset of the COVID crisis. This analysis covers Technogym, a company that is helping the world fight off “lockdown body”.
WHO IS TECHNOGYM?
Technogym is a gym equipment manufacturer based in Italy, but they are planted firmly in the premium segment within their industry. For example, the company has partnerships with F1 teams Ferrari and McLaren. According to McLaren, Technogym provides a bespoke machine “designed specifically for Formula One drivers… the only piece of equipment that comes close to replicating how the neck muscles are used when driving”. Founded in 1983, the company has become a world-leading supplier of high-end gym equipment. They have partnerships with Italian football clubs Juventus FC, AC Milan, and Inter FC. Additionally, they have supplied equipment for 7 Olympic Games. It is for good reason that they are well-known within the fitness industry as one of Europe’s elite brands.
HOW DID COVID IMPACT THE COMPANY?
It seems like a lifetime ago, but this time last year, Italy was experiencing a horrific onset of the COVID pandemic. The country, then the entire continent, soon went into a swift lockdown. That meant that Technogym’s core clientele had to close down as well. We can see the impact of the early stages of the pandemic by taking a look at the company’s stock price.
Technogym’s stock lost about half of its value within two short, scary months. Since then, however, the company’s stock has recovered steadily.
HOW DID THEIR STRATEGY CHANGE DURING COVID?
To understand Technogym’s recovery, all you have to do is take a look at their website. You will notice a very overt theme: home workouts. Of the five products featured on their homepage, five centre around working out from home. The feeling is not one-note, however, since all of their featured products attack the home gym from different angles. One focuses on “group” exercise via online fitness classes streamed through a stationary bike’s television, others focus on a complete weightlifting machine that offers a large variety of exercises, and another even focuses on getting some core stability by using an exercise ball as a home office chair. Sales of fitness machines and online training programmes directly to customers rose by 50% in the first half of 2020.
This focus on the home gym setup is the result of long-term planning. According to the company’s CEO, “think that the Home & Consumer segment could come to represent around 50% of our total revenues in four years from now. And profit margins match those of the professional segment”. Many companies were forced to pivot in the last year, but very few companies were able to do so successfully. This pivot was only possible because Technogym started this pivot years in advance; had they not prioritised the creation of home workout equipment—and had that equipment not been ready for people to buy in the early stages of the lockdown—then a bad year could have turned into a ruinous one. Sales of exercise machines and online training programmes directly to customers rose by 50% in the first half of 2020. The company had long been preparing for the future of exercise, and when the future appeared far sooner and in a different form than anybody had expected, they were ready.
WAS THIS STRATEGIC CHANGE SUCCESSFUL?
Despite the trials and tribulations of 2020, Technogym’s market cap is still valued at just over 2 billion EUR. Their stock is not quite back where it was before the crisis, and there is no telling what could have been for the company. That said, they have righted themselves in a time when many industries have tripped and fallen hard. Their professional segment will come back once Europe’s population is vaccinated; even if we do not know exactly when that will be, it is sure that there will be a substantial rebound. The only question is if the exercise ball will bounce as high as it did before.