Danish jeweler Pandora rose to fame to become a household name after launching its signature charm bracelet in 2000, almost two decades after married couple Per and Winnie Enevoldsen began their modest jewelry business in Copenhagen with imported goods from Thailand back in 1982.
Their success in the Danish market pushed them to think outwards, leading to the company’s international expansion into the US market in 2003, followed by Germany and Australia in the following year.
Fast forward 14 years later, Pandora’s Thai-made fine jewellery is sold in 100 countries through over 900 concept stores, not to mention the 10,000 other retail distributors around the world.
Funny how one little charm bracelet propelled the brand into the global limelight and accounts for 77% of the company’s global sales.
How did this all happen?
One has to take a look at the evolution of the fine jewelry industry to understand Pandora’s success.
The bracelet popularized the brand because of its upscale look and relatively affordable pricing in a market dominated by Tiffany and Co and Cartier. The price of a Pandora bracelet starts at $35 and with more than 800 charms to choose from, the consumer can collect and customize their own bracelet that often signify a milestone in life.
The charms bracelet is the top selling product for Pandora. Image: Fortune
“They tapped into the consumer’s desire for jewelry pieces that are highly specialized.” – Erica Russo, fashion director of accessories and beauty at US department store Bloomingdale’s.
“There’s something for everyone, so there’s a wide appeal for shoppers,” continued Russo.
With a lucky charm under its belt, Pandora issued an IPO in October 2010 to raise $2.1 billion and now the company is the third biggest jeweler in the world behind Cartier and Tiffany and Co, but with a third of its market value wiped out earlier this year, can it maintain this position?
The growth of the global jewelry and personalised accessories market in general has been stumped over the years thanks to macroeconomic factors such as inflation and unemployment plaguing the industry. But global geopolitical and economic uncertainty are not the only things slowing down growth.
Legacy jewelry brands are also slow to identify the shift in their audience’s behavior.
Long gone are the days where women only acquired new pieces of jewelry as gifts from husbands or significant others.
Today, with the increase in women’s purchasing power, ladies are buying their own jewelry — a fact still largely ignored by traditional jewelry brands.
A survey by Jewellery Consumer Opinion Council found that as a jewelry consumer, the [female] demographic is largely underexploited and ignored by the broad spectrum of the jewelry industry.
Unlike previous generations, millennials and Gen Z don’t find the charm of brands like Tiffany & Co as attractive or as Neil Saunders, CEO of retail research firm Conlumino says,
“Millenials are increasingly unmoved by brand names and seeking more bang for their buck, Tiffany’s “old-world luxury” charm isn’t working.”
“Although the brand is not seen as negative, it is seen as being somewhat tired and traditional,” noted Neil. “ Young consumers especially see it as a brand for the older and a different era.”
Not to mention that the younger generation has more options and exposure to smaller brands through online shopping. With its shares suffering and only one successful product, Pandora needs to adapt to the market situation to survive now more than ever.
Pandora shares drastically drop in 2017 after years of high growth
In an effort to move beyond its charm bracelets, the company is actively pushing its line of rings and necklaces, marked by the company’s 2015 Mother’s Day campaign “The Art of You” that featured three female generations passing down jewelry pieces – no men.
“Pandora has deep ties to charm bracelets that memorialize times and people. What’s new here is we’re taking that heritage and bringing it into the future, where it’s also about self expression,” explained Caitlin Ewing, Executive Creative Director for marketing agency Grey that collaborated with Pandora for the campaign.
The campaign hit its target, sale shares of the company’s rings rose to 13% from 4% in 2014.
Pandora’s ‘The Art of You’ campaign popularized its ring selections. Source: Canadian Jeweller.
Furthering its priority to target millennial women, Pandora also launched a global campaign called “Do”, proving no matter where you are in the world, there are values that all women share.
“Today’s consumers expect you to have a point of view and a voice an enable them as opposed to being a director of them. The Pandora voice is all about inspiring women to be true to who they are,” said Charisse Ford, Chief Marketing Officer for Pandora Americas.
However, the company is not without misses. A recent holiday campaign by the brand in Italy received backlash for its marketing message that was deemed sexist and forced the company to release an apology and pull its ads from subway stations.
Pandora also distances itself from the image of a traditional jewelry brand with rich heritage as seen by the lack of narrative or celebrity endorsement to gain a wider audience.
Another standout factor from Pandora is the way it operates its business.
“One of the reasons why Pandora has been so successful is we don’t behave like a jewelry company, but more like a fashion brand,” said Isabella Mann, Pandora VP Marketing for APAC.
Similarly to how fast-fashion companies function, Pandora releases new product lines seven times a year, only two months apart, much more often than traditional jewelers that do it quarterly.
It seems to be meshing well with a generation with shortening attention spans as Pandora was the only “new luxury brand” chosen as a favorite by affluent millennials in a survey by MVI Marketing.
One of the biggest contributing factors to Pandora’s rapid growth is how the company took full control of the supply chain process.
By setting up production in Thailand, the company was able to decrease its operational costs and maintain the quality of its products. The company plans to produce 200 million pieces per year by 2019 Q4 and promote the Thai jewellery industry at a global level.
Pandora also controls distribution in India and Africa by buying back local franchises that sell its jewelry, both in the branded concept stores and shop-in-shops.
In growing markets like Asia, that contribute to 19% of the company’s overall business and registering the fastest growth rate for jewelry, Pandora wants to maintain the brand rather than build stores.
The opening of Pandora store in Hong Kong. Source: HK Citylife.
“It’s no longer about building the brand, but about maintaining the brand. You’re not going to see loads of Pandora stores opening anymore,” said Mann.
Without new store openings, the company has more resources to focus on its online strategy.
Its ecommerce store opened in the US in 2015 after testing the European market a few years earlier. The company’s online store is now available in three continents including Asia Pacific but in Southeast Asia, Singapore is the only market where shoppers can order online through its website.
Pandora’s online store is available for customers in Europe, America, and Asia Pacific.
Pandora’s journey as a relatively new jeweler has been filled with instances of trial and error as it emerges from legacy luxury brands such as Tiffany and Co as a front-runner in the lagging luxury jewelry retail scene.
By cutting costs through effective manufacturing practices, leveraging ecommerce to shift away from brick and mortar, and even creating PR buzz through controversial advertisements shows the brand’s agility on responding to adversity and obstacles.
The company seems well on its way to achieve its aspiration to become the world’s most loved jewelry brand.
If diamonds aren’t forever, Pandora jewelry is.