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Articles from FASHION JEWELLERY (284 Articles)











Pandora is coming to terms with untangling a history of bad decisions.
Pandora is coming to terms with untangling a history of bad decisions.

No surprise, Pandora got it wrong

Has Pandora’s management finally admitted that the company’s arrogance was the wrong approach? COLEBY NICHOLSON explores.

Less than two years after announcing that it would focus on its company-owned and franchise stores, thereby closing thousands of wholesale accounts from its independent jewellery retailers, Pandora Jewelry CEO Alexander Lacik announced last week that that might have been a poor decision.

Really?

Lacik, who joined Pandora in April 2019, believes the company might have lost “a lot of new customers” and may need to refocus on distribution to independent jewellery stores – the very businesses that it once discarded!

Pandora now has a problem. As I wrote at the time: “There’s an old adage: ‘Be nice to people on your way up because you’ll meet them on your way down.’”

The article, entitled ‘For Pandora, arrogance is a two-edged sword’, dealt with many of the company’s woes, mostly as a result of its own actions.

Alexander Lacik, CEO Pandora Jewelry
Alexander Lacik, CEO Pandora Jewelry
"We have seen there are some opportunities that we have forgone by reducing the multi-brand presence so much. A lot of new customers might come through a multi-brand store rather than a Pandora concept store."
Alexander Lacik, CEO Pandora Jewelry

It’s no secret that the brand has been in the doldrums for some time, and not just with consumers. It first became ‘on the nose’ with the industry and its retail stockists when it started closing accounts and, according to some, treating independent jewellers – which Pandora calls ‘multi-brand stores’ – as second-class businesses.

Many retailers complained that Pandora had created a retail caste system; independent stockists were denied some of the product available to Pandora's stores, or delivery of product to them was delayed until after it was first received at own company-owned and franchise stores.

Regardless, Pandora stayed on track with its new strategy, closing accounts worldwide; its entire strategy centred on its branded stores.

So it was no wonder that many independent Pandora stockists decided to decrease their focus on the brand – or quit it entirely, closing their account before Pandora could!

Change of strategy

But hold on. That was in 2018, right?

It’s 2020 now, and, unsurprisingly, there have been significant and continual management changes at Pandora head office, as well as in its overseas territories, as sales declined and declined and then declined some more.

So what’s the latest ‘light bulb moment’ at the once-mighty P?

During an earnings conference presentation to stock market analysts on 4 February, Lacik declared that maybe the company got it wrong.

“There hasn’t been an awful lot of attention to multi-brand stores in the last few years. The push has been [company] owned and [franchise] operated stores. We have seen there are some opportunities that we have forgone by reducing the multi-brand [independent stockists] presence so much. A lot of new customers might come through a multi-brand rather than a concept store,” he said.

So, back when company management was closing hundreds of accounts, did no senior manager stop to think, ‘Wait, we might lose new customers if we close all these jewellery store accounts’!

Really?

It should have been as clear as the nose on your face. Surely you don’t have to hold a Harvard MBA to recognise there would be ramifications from such a decision? 

Background reading: Pandora: The beginning of the end?

In July 2018, in an article entitled ‘Pandora: the beginning of the end?’ I wrote: “By continuing to reduce the number of retail stockists and hoping that the brand loyalty is so strong that customers will travel to buy, or will shop online, then Pandora must have faith that a reduced retail footprint will not cause further sales decline.”

I went on to observe, “Of course, that depends in part on the strength of its product offer, but it also belies one important factor: the impulse purchase. Wide distribution enhances the chance of impulse purchases and inexpensive jewellery can often be exactly that, especially when it comes to gift purchases.

“One would hope that Pandora has ‘done the numbers’ in that regard; because there is no doubt that, historically, thousands of independent jewellers around the world have been instrumental and influential in the success of building ‘Brand Pandora’ into the industry-changing phenomenon that it became. There may never be anything like it again.”

"So, back when company management was closing hundreds of accounts, no senior manager stopped to think, ‘Wait, we might lose new customers if we close all these jewellery store accounts’? Really?"

Of course, it’s only fair to point out that reducing its retail distribution was not the only cause for Pandora’s fall from grace. There are many other problems that have helped that, including poor designs.

Continuing sales decline

Stock market analysts have written that Pandora’s ‘fourth-quarter operating profit beat forecasts despite disappointing sales in China, while it said its 2020 organic sales growth is expected to fall by 3–6 per cent.’

Perhaps Pandora never ‘did the numbers’, when it made the far reaching decision?

When I wrote ‘Pandora: the beginning of the end?’, the company’s stock price was trading at DKK488, today it trades at around DKK350 – a 30 per cent decline. It has plumbed as low as DKK240.

So, where to now? Speak to its former and current independent stockists and you will get the same feedback: Pandora’s management style is still “arrogant” and “conceited”.

If Lacik is hoping to reignite a once powerful independent wholesale channel, broadening its distribution outside of Pandora-branded stores, in order to get those ‘lost customers’ and impulse purchases, then he might well have a rocky road ahead.

For most jewellers, it could be a case of once bitten twice shy, and Pandora sales staff will have to overcome meeting the same (discarded) people on the way down.

That’s not pleasant for either party.

 

• Feedback and tips: info@jewellermagazine.com


More reading:
Pandora revenue falls once again
Pandora’s management merry-go-round continues
For Pandora, arrogance is a two-edged sword
Pandora: The beginning of the end?

Background:
The Pandora Phenomenon
Birth of brand Pandora


 

Jeweller ranked #1 and also #3

 











ABOUT THE AUTHOR
Coleby Nicholson

Former managing editor • Jeweller Magazine


Coleby Nicholson was publisher and managing editor of Jeweller magazine for over 12 years. He has covered the jewellery industry for more than a decade and specialises in business-to-business aspects of the industry.

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