Coffee is the second-most traded commodity in the world after crude oil. The ubiquitous drink commands a sizable US$100 billion market globally, with exports accounting for US$20 billion.

But as traditional coffee drinking markets in the West exhibit signs of stagnation, Asia is stepping up to fill the void. Indonesia, India, and Vietnam are ranked within the top five fastest-growing markets in the world.

 

Part of the reason behind this spurt is product innovation in the value chain. The number of new coffee products in Asia rose by 95% between 2011 and 2016, offering consumers tantalizing choices and catering to local palettes.

Specifically, it was the growing role of coffee pods that spurred and accounted for 26% of global coffee retail innovation in 2016.

“As emerging market consumers develop their taste for coffee, innovation is stepping up a notch as drinkers trade up from instant to fresher-tasting coffee […] pod and capsule sales will [continue to] increase,” says Johnny Forsyth, global drinks analyst at Mintel.

This presents a rare opportunity for FMCG brands to cash in. Tea has generally been the caffeinated drink of choice across most of Asia but a combination of glitzy marketing, an increased footprint of global coffee brands like Starbucks, and “cafe socialization” is changing habits.

Nescafe Dolce Gusto doubles down on Asia

The Dolce Gusto machine was first introduced by Nescafe in 2006 as a cheaper alternative to its premium Nespresso offering. The mechanics are similar; consumers insert ‘pods’ of coffee to make instant drinks like cappuccinos, latte macchiato, espresso, and hot chocolate.

Sales of the machines have been rising steadily in Asia due to Nescafe’s social media campaigns to engender brand loyalty.

The company launched its first Southeast Asian customer relationship management program in Singapore. The email marketing campaign segmented users based on their individual profiles and alerted them about offers, new flavors, and seasonal products.

“From the highly-engaged Facebook following, we know that consumers enjoy that the brand is sophisticated but not too serious […] It has allowed us to develop a new, innovative programme which really engages members,” said Will Adeney, VP of marketing analytics for Ogilvy One.

More recently, in Malaysia, Nescafe deployed social listening strategies to further entrench Dolce Gusto as a fan-centric brand. The company learnt coffee drinking wasn’t an activity done in isolation; connoisseurs loved to document it on social media with a prodigious amount of hashtags. Engagement from followers was robust.

Key themes and hashtags linked to coffee in Malaysia.

This helped Nescafe develop marketing campaigns around user-generated content. Its fans were already posting brand images on social – why not give them an enhanced platform?

Nescafe leveraged user-generated content along with its own collateral.

Why does this matter? Because according to Nielsen, the most credible advertising comes from people we know and trust.

83% of people have faith in the recommendations of friends and family.

Another interesting caveat: 53% of millennials indicated that user-generated content has influenced their purchasing decisions.

To tackle developing markets like Thailand, Nescafe launched a subscription commerce campaign powered by ecommerce enabler aCommerce. The offer, first introduced in August 2016, enticed consumers to sign up for a yearly subscription of coffee pods with the perk of a free Dolce Gusto machine.

Consumers only needed to pay via credit card, which would be billed automatically every month for a total of 12 recurring payments. It was a novel concept in Thailand, which still mainly relies on cash-on-delivery as its primary payment mechanism.

But the success of the campaign prompted the global coffee behemoth to launch another similar subscription campaign, this time revolving around Nescafe Gold & CoffeeMate.

Blending online & offline

Coffee drinking in Asia may be accompanied by a blitz of social media activity, but there’s a large offline component, too. It’s a way for friends and family to bond, building meaningful experiences and connections along the way.

It’s because of this factor Nestle has relied on pop-up campaigns inside shops and department stores. Visitors to a Tokyo mall last month were greeted by Pepper, the famous humanoid robot, who proceeded to ask them if they wanted a coffee.

An embedded tablet helped determine the size, type, and strength of the beverage and payments were facilitated via Alipay.

The timing of the campaign deliberately coincided with Chinese New Year celebrations and was designed to grow the brand in mainland China, where Starbucks is aggressively promoting its stores.

Another campaign in Australia placed expertly-trained staff across large department stores in the country to educate potential customers about the benefits of Dolce Gusto machines.

This particular promotion targeted Mother’s Day, typically one of the busiest retail days in Australia.

In 2013, Credit Suisse analysts estimated that about 55 % of Nestle’s coffee sales came from developing markets.

Such continued product innovation and catchy campaigns probably mean the figure is much higher now.

To tackle new and competitive markets like Southeast Asia, the best retail strategy is a blend of online strategies like subscription commerce to capture Internet-savvy consumers and traditional offline customer touchpoints to win over the world’s next population of coffee drinkers.

You might recognize a signature Burberry trench coat because of its distinctive check pattern.

When Burberry first came to life in London in 1856, CEO & founder Thomas Burberry was, at the time, only 21 years of age. The brand focused solely on outdoor attire in its early days but quickly established a reputation for quality and longevity.

In 1879, Burberry received a patent for its ‘gabardine’ fabric – a water-resistant, breathable material that it would use for trench coats. The company went from strength to strength, opening a store in the upscale Haymarket area of London in 1891, designing its signature equestrian knight logo in 1901, and supplying outdoor attire to South Pole expeditioners in 1911.

Burberry’s popularity skyrocketed after its trench coats were used by British infantry forces during the First World War. An outpour of patriotism boosted its brand identity with members of the public clamoring to buy the products after the end of the war.

Further validation came in the form of high profile celebrity endorsements by movie stars such as Humphrey Bogart in Casablanca, Audrey Hepburn in Breakfast at Tiffany’s, and Peter Sellers in Pink Panther.

The UK luxury brand is best known for its sharp coats and jackets but has also ventured out in designing shoes, scarves, bags, & other accessories. By the mid-1980s as a result of spreading itself too thin and chasing short-term profitability goals, the brand started to stagnate. What happened?

The makings of a crisis

The 70s and 80s were rewarding for Burberry in terms of its bottom line. It signed licensing agreements with many global manufacturers to design suits, trousers, shirts, and accessories and distributed them via independent retailers as well as its own stores. The effect of this expansion i.e. higher operating profits was felt well into the 1990s.

But the licensing partnerships also had an unintended effect: counterfeit products flooded markets across the world, particularly in Asia, causing price disparities that existed even in original products.

Western countries were subjected to higher rates and items were often rerouted back to markets; for example, cheaper bags in Asia were exported back to Europe resulting in a blow to its image.

Burberry had severely diluted the power of its brand by adopting a mass-market route. Once associated with list-A celebrities and daring thrill seekers, Burberry had rapidly lost its aura of glitz and glam.

Shockingly, the elitist brand was now equated with thuggery, chicanery, and hooliganism; adopted en-masse by ‘Chavs’ – a pejorative British term used to describe degenerates and lowlifes. Bouncers would turn away people wearing Burberry outfits as it was assumed they would cause trouble once inside.

Shudder.

Turnaround

“Burberry was not able to identify its target group of consumers because of its uneven distribution and licensing policies in different countries of operation,” says Arittra Basu, business development manager at Westin Hotels.

The long road to redemption started in the late 1990s after Burberry hired Rosie Marie Bravo to steer the ship. She immediately tried to stem the decline by reducing the company’s footprint in Asia, ending price disparities, and appointing a new creative head to reestablish the brand’s core values.

In 2006, Angela Ahrendts was appointed the new CEO and began a journey leading the company to reemerge as a force to be reckoned with.

Initially, there were subtle design changes. The check pattern was scaled back and started to appear less and less on merchandise. Stringent measures were adopted to crackdown on counterfeit items and the licensing agreements were gradually rescinded to centralize design and operations under one roof.

But the most important decision made by Ahrendts, along with Chief Creative Officer Christopher Bailey was the declaration of their vision to see Burberry as the world’s first fully digital luxury company.

The brand had, in their opinion, appealed to an older clientele for far too long. It was time to catch the attention of suave and fashionable millennials.

Digital would be central to the brand’s way of thinking and customers would be treated to the same experience whether online or in-store.

One of the most popular campaigns Burberry launched was the ‘Art of the Trench’, a unique play on user-generated content to bring consumers at the forefront.

Art of the Trench. Photo credit: Creativity Online

This was a standalone website where customers were encouraged to upload photos of themselves wearing their trench coats. They were featured on the main page for 15 minutes and customers could share these photos on social media feeds. There was also an option to click on a product and be redirected to Burberry’s main site to purchase it.

The campaign was a resounding success. In 2015, it was reported to have gained almost 25 million pageviews since launch.

Another hugely popular campaign was initiated to promote Burberry Kisses, a lipstick brand launched by the company. For this, it partnered with Google to enable users to send personal messages, sealed with a virtual kiss.

Users from 13,000 cities sent these virtual kisses within the first 10 days of launch.

In 2012, Burberry tried to bridge the gap between the online and offline shopping experience via its Regent Street London store. The store featured huge screens where catwalk shows around the world could be viewed live and the individual products were available for instant purchase.

“Burberry Regent Street brings our digital world to life in a physical space for the first time, where customers can experience every facet of the brand through immersive multimedia content exactly as they do online,” said Burberry CEO Angela Ahrendts. “Walking through the doors is just like walking into our website.”

Not only can shoppers buy online from Burberry’s digital properties, they can also choose to pick up in-store or have a sales associate order from the website for them while visiting an outlet. Burberry’s also experimented with flash commerce features via Twitter as well as allowing users in China to order via WeChat.

In China Burberry took the unusual route of opening a store on Tmall; a strategy consistently avoided by upscale brands. The move was meant to counter the growing grey market for its goods as well as embrace the Chinese penchant for online shopping.

Its savvy use of social media has also engendered the growth of a loyal community. The brand has embraced Snapchat to provide peeks into upcoming lines and fashion shows. Burberry’s YouTube channel has over 300,000 subscribers and hundreds of videos that not only showcase trench coats, but also includes makeup tutorials, music jams, and other engaging content.

And the result of all of this? In 2011 Business Insider placed Burberry in the top 10 brands of the world with a growth percentage of 86% as judged by an estimate of its brand value. That far outstripped any other company on the list.

Burberry shares, which languished in the $200 range in 2002 now trade at $1,539.

Of course, challenges persist. Weakening demand for luxury brands hurt Burberry’s profitability last year with the CEO saying that the product range “needs to be refreshed”.

But if it continues with its sharp focus on digital and out-of-the-box thinking, it should be able to weather the relative storm.

“Burberry’s digital strategy […] has so far not only put it at the top of the fashion luxury category but among top players across industries,” wrote Digiday.

With almost 4,300 store locations in 69 markets across the world, fast fashion retailer H&M is a quintessential example of a brand that constantly strives to provide high-quality products at affordable prices.

It’s come a long way since its humble origins.

The first store of what would eventually be known as H&M was opened by Swedish entrepreneur Erling Persson in 1947, after inspiration during a trip to New York. Initially, the store catered to womenswear alone; and was called Hennes, Swedish for ‘Hers’.’

The addition of menswear came after Hennes acquired Stockholm-based retailer Mauritz Widforss in 1968. Stores were rebranded as Hennes & Mauritz with international expansion to Denmark, Norway, U.K, and Switzerland starting the next year.

The acronym H&M was adopted as the firm’s official name after it went public in 1970.

Photo credit: Wikimedia

Unprecedented expansion

H&M has grown by an average of 20% year-on-year in revenue since the 1980s. Part of the reason for this ferocious germination has been its ability to unearth the latest trends and sense what its target consumers aspire for.

Like other fast fashion companies, the product pipeline is quickly replenished as its marketing and design teams work in unison to keep clothes, shoes, & accessories up to date.

But it’s not enough just to make products that people want to buy. Brand building involves striking a chord with your audience; a message that H&M has carefully crafted over time.

Its focus on sustainability as a major ethos for the brand has earned acclaim. Consumers can drop off unwanted garments (of any brand) to H&M stores globally, which will be recycled and used in future products.

H&M explains that the global ambition is to work towards a “sustainable fashion future”, where unwanted clothes are used for fresh textile fibers and ensure no garments wind up in landfills.

The drive towards sustainability, which has been embraced by everyone at the company – from the CEO to middle management – is an example of how the company has always sought to redefine itself (and save itself from a PR disaster). Much like its products, the global retailer has tried to avoid stasis and remain top of mind for shoppers.

It first introduced online shopping in 1998 when the concept was still nascent, and in the 2000s set on a spree of international expansion, which saw further store openings in Europe, the US, and East Asia.

But central to the strategy of top line growth was the constant addition of new stores. This entailed costs – locations for new outlets need to be scouted, linking the store to a centralized supply chain, hiring staff, and ensuring all brand guidelines are adhered to. Not only does it take time, it can also prevent a fast fashion brand like H&M from trimming prices as much as it would like.

Challenges lurk

Despite H&M’s original launch of its online store in 1998, analysts are unequivocal in their opinion that the company has been slow to adapt to the internet age.

“We view value fashion retailers as the clothing retail segment most disrupted by online,” explains Anne Critchlow, an analyst at Societe Generale.

Digital disruption has eaten into H&M’s business. Pure play fashion ecommerce sites like Asos, Zalando, Zappos, and even Amazon private label brands don’t have to contend with managing expensive offline inventory and retail space. It helps them keep prices low in an attempt to undercut retailers like H&M.

Asos recorded US$2.6 billion in sales last year – a fair distance behind H&M – but the brand operates with a fraction of the same overheads as the Swedish retailer.

Euromonitor International estimates that online channels account for 14% of the global apparel and footwear market, with an overall size of US$231.7 billion. In developed markets, this statistic is even higher: 15.5% for the US, 18.7% for the UK, and 25.9% for China.

H&M is physically present in 69 countries but only offers ecommerce in 43.

The primary target market for fast fashion brands are digitally savvy millennials, which begs the question, why have they been so slow to respond?

CEO of H&M, Karl-Johan Persson says the company has made mistakes in its strategy.

2017 was a disappointing year for the company with its share price sliding to the lowest level since the 2008 financial crisis and the announcement that it would close 170 stores in 2018.

But the company plans on a net addition of 220 stores, causing even further consternation from investors who want it to double down on ecommerce and trim expensive offline forays.

“Fast pace is vital,” affirmed Karl last year, signalling H&M’s intention to accelerate its efforts towards ecommerce.

H&M stock isn’t performing well at all.

But this needs to happen sooner rather than later.

“[H&M and Zara] have been lagging definitely and they do need things like just faster delivery times; shoppers want it now,” explains Maureen Hinton, global retail research director at GlobalData. “They face a tougher, more competitive market who have less to spend and far more competition with Zalando, Amazon, and others.”

What’s the future?

At the moment, H&M seems to be concentrating on markets with large growth potential. Its decision to open up new stores in India helped increase revenue in the country by almost 100% and resulted in 12 new outlets. The retailer is also selling online in India, hoping to capitalize on the ecommerce rush in the South Asian state.

But this seems to be a repetition of the old business model, which hasn’t exactly gone to plan. The writing’s on the wall. US retailers are in significant stress as they haven’t prepared for the digital age.

Millennials demand an omni-experience i.e. a consistent experience across both online and offline. Zara, has already picked up on this trend with its popup shop in London trying to bridge the gap, whereas H&M only realized it needed to integrate physical and online stores after a 2% drop in Q3 compared to last year’s figures.

The company is also relying on its presence on Alibaba’s Tmall to improve its online footprint in overseas markets.

It seems like H&M is finally aware of the fact that it needs to improve its overall purchasing experience. Nils Vinge, H&M’s head of investor relations, told LA Times that they’re deploying algorithms to support forecast demand and reduce the chance of markdowns.

But are these feeble attempts enough to survive in the hypercompetitive environment that fast fashion operates in today?

Part of the reason startups like Asos and Zappos have been able to snatch away market share is because millennials care more about the product, and less for brands. 51% have no preference between private label and national brands.

For H&M, it’s not enough anymore to sell relatively cheap products. The entire retail experience needs an overhaul and it better start doing that soon or the stock price might see a sustained nosedive.

The Background

Back in 1851, a small apothecary was established in the neighborhood of East Village, New York by John Kiehl. Breaking away from typical drug stores that offered common compounds and nostrums prepared onsite, John chose to open a store that focused on essentials oils, homeopathic and herbal remedies to achieve his objective — keeping the local community happy, healthy, and feeling their best.

The apothecary remained in the family for 70 years until it was purchased by Kiehl’s apprentice, Irving Morse, in 1921 before his son, Aaron Morse, took over in 1950 and added grooming products for men and women to the brand’s product line.

Aaron was also the one who introduced free samples to customers and is still practiced at today’s global cosmetics powerhouse Kiehl’s.

More than 12 million Kiehl’s sample packets and tubes are given away each year.

Fast-forward to 2000, Aaron’s daughter Jami Morse Heidegger decided to sell the business she inherited to L’Oreal for approximately $100 million. The brand had become immensely popular among fashion enthusiasts and skin-care connoisseurs worldwide and impossible for her to continue managing.

“It was like a snowball rolling downhill and just getting bigger and bigger. I created something I couldn’t control” – Jami Morse Heidegger

Jami Morse Heidegger, third-generation Kiehl’s heiress and her husband, Klaus Heidegger
Source: Retrouve

After being acquired by one of the largest cosmetics companies in the world, Kiehl’s expanded to 2,000 locations in 61 countries and was well on its way to the top of the beauty industry. What could go wrong?

The Challenge

Jami always feared her business would become a brand fighting for money, attention and space.

The thought of selling her business to L’Oreal didn’t appeal to her at first because L’Oreal had a reputation in building mass brands like Maybelline and had never managed a niche, boutique brand before.

But after it grew to a size she could no longer handle, she had no choice but to hand the brand over to a corporate looking to compete in the burgeoning specialty market.

Kiehl’s was afraid that under the management of L’Oreal, consumers would no longer view the store as independent and cutting-edge but rather as a revenue-generating corporate machine.

“[The challenge is] to grow and export the Kiehl’s way without changing it. We soon realized that we needed to stick as closely as possible to our business model on a global basis, to create a consistent Kiehl’s experience around the world,” said Kiehl’s General Manager Worldwide, Cheryl Vitali.

How were they going to keep a tight leash on L’Oreal?

Inside Kiehl’s apothecary during its early days. Source: Yahoo

The Strategy

The company didn’t want a flashy marketing budget or fancy model to be representing its brand.

“We want to keep the line [Kiehl’s] very exclusive,” said L’Oreal USA’s former chief executive, Guy Peyrelongue.

In order to appease the wishes of the Kiehl’s family, L’Oreal maintained the brand’s identity and its distribution model while ensuring its stores around the world matched the look and feel of the original apothecary in East Village.

Kiehl’s was on a mission to set strict brand boundaries for consistency and product control. And it worked.

Any one that has ever stepped into a Kiehl’s apothecary will recognize the iconic skeleton, Mr Bones, next to the famous Harley Davidson motorcycle.

“The motorcycles entertained the guys while the ladies shopped — and it was also a very clever way to introduce Kiehl’s men’s products to them,” – Chris Salgardo, president of Kiehl’s USA

Kiehl’s shops around the world look almost identical thanks to the brand’s strict guidelines. Source: Marie Claire

The brand also spends heavily on the development of products and ingredients, almost 3 to 5 times more than competitors. Its contribution to multiple charitable efforts also proved to be a successful way to hook customers to not only buy for themselves, but also feel proud to gift Kiehl’s products.

In Thailand, Kiehl’s introduced the country’s first ambassador and offered free samples together with a 5-minute consultation. Source: mThai

The company’s success in the US made global expansion a next natural step. In line with L’Oreal’s focus on digital marketing and ecommerce to capitalise growing consumption, Kiehl’s went online.

“It [online] enables us to get to know our customers better and interact more effectively with them, while remaining true to the brand’s rebellious and offbeat style” – Cheryl Vitali

By 2013, Asia had topped global sales of natural personal care products. The popularity of natural products was driven by major economic changes and rise in disposable incomes, especially among the Chinese, who had become more health-conscious.

The chart shows the sales of natural personal care products by region in 2013; Asia is the leader in sales. Source: Kiline Group

Southeast Asia also displayed the highest-growing demand for beauty and personal care causing Kiehl’s to invest heavily in performance marketing and its website with the help of ecommerce enabler and e-distributor aCommerce.

Beauty and personal care is expected to grow the most in Asia Pacific from 2016-2021. Source: Euromonitor

A fear many brand managers face is consistency across channels. How do I ensure the brand is rightfully represented at all customer touchpoints?

In the case of Kiehl’s, the company successfully projected its edgy and young vibes through bright colors and flashy images on its website in Thailand and Indonesia.

Kiehl’s website was localised for Indonesian customers.

The brand preserves its mission to make each and everyone of its customers feel good by utilizing technology. Kiehl’s recently implemented artificial intelligence and a text messaging model in its stores and online to keep customers engaged and taken care of.

“We’ve learned the first purchase happens in store, and online we’ve created tools to extend services to make a cycle,” Julia Mavrodin, Kiehl’s associate vice president of e-commerce and digital marketing said.

Through historical data collected from online orders, Kiehl’s can accurately estimate when a customer will run out of an eye cream or facial cleanser and send a text message to prompt the customer to order a new one.

A sample text message that Kiehl’s sets to keep their customers replenished with its goods. Source: Digiday

By introducing a direct channel to converse with customers, the brand is able to track where and when customers buy its products, even at partner retailers like Sephora or Nordstrom.

This allows the brand to stay top of mind and shield customers from buying unauthorized products off of e-marketplace like Amazon at the same time.

To this day, Kiehl’s has remained one of L’Oreal’s fastest growing brands and broke the symbolic $1 billion sales mark in 2016.

The Future

Kiehl’s is looking to capitalise on its brand power in new markets like the Middle East and Latin America to ultimately spread the brand’s legacy and become the number one skincare brand in the world.

“To get there we will need to pay even closer attention to our customers. After all, that has been the secret of our success for the last 160 years.”

The Background

Swearing by its mission to be “the first choice carrier with touches of Thai”, Thai Airways International (THAI) has long been identified by its quality service, onboard catering and friendly welcome, as reflected by its position among the top 20 best airlines in 2017 by Skytrax.

The national carrier of Thailand was founded in 1960 as a joint venture between Thailand’s domestic carrier, Thai Airways Company (TAC), and Scandinavian Airlines System (SAS) to later become state-owned in 1977 through an acquisition by the Ministry of Finance. The Ministry today holds more than 50% of the company’s shares.

Aside from being a commercial airline, the national carrier extends its offerings to transport goods, parcels and mail by air to cities around the world.

Its catering department also brought its renowned first-class menu to land through a bakery franchise called Puff & Pie in 1997 that surprisingly became one of the unit’s main income generators.

The efforts led to more boutique restaurants openings in 2013, targeting young customers that look for unique dining experiences.

Puff & Pie Bakery shops are located at many airports, leading public hospitals, and government offices in Thailand. Source: EDTGuide

Shielded by the local government and profiting successful side-businesses, how did the prestige national airline hit so much financial turbulence?

The Challenge

From 2013 to 2014, Thailand’s economy essentially shut down as the citizens protested against then Prime Minister Yingluck Shinawatra, the sister of Thailand’s former president, Thaksin Shinawatra.

The country’s political unrest damaged the tourism industry as many travellers were weary of visiting Thailand due to safety concerns and locals suffered from slow economic recovery.

Protests against then Prime Minister Yingluck Shinawatra. Source: The Malay Mail

Less flights into the country naturally impacted THAI as witnessed in the company’s reported cumulative losses since April 2013 of over $500 million. Lower passenger numbers, fuel prices and foreign exchange losses were also among top attributing factors.

Following the protest of Yingluck in 2014, Thai Airways’ annual number of passengers dropped from 21.5 million in 2013 to 17.8 million in 2014.

Thai Airways annual passenger numbers from 2008 to 2014. Source: CAPA – Centre for Aviation and company reports

To make matters worse, the airline had expanded its fleet by seven aircrafts to 100 planes in the fourth quarter of 2013, which was one of the factors, among weak Thai baht, that resulted in a total net loss of $487 million.

Thai Airways annual net loss (in THB, billions): 2008 to 2014. Source: CAPA – Centre for Aviation and company reports

Even the company’s catering business couldn’t reverse the heavy losses.

Those [catering unit] high-margin businesses currently contribute only 20% of our revenue, while 80% of revenue is from ticket sales,” said Usanee Sangsingkeo, Executive Commercial Vice President and acting President of Thai Airways International

The companies troubles were quickly summed up:

The company [THAI] had not made profit for four consecutive years” – Nikkei Asian Review

How did the company manage to bounce back?

The Strategy

As 80% of the airline’s revenue came from ticket sales, the airline had to pay more attention to its main income generator to save itself from seeing more red.

Thai Airways should focus on profitable routes like Japan and premium offerings,” said Chakrit Puechpan, Executive Vice President of MFC Asset Management, which holds shares in the airline.

Well, the company was in luck.

In June 2013, Thai citizens received a visa exemption to Japan, a favorite international destination for Thais. This, together with the low fares provided by competitive online travel agencies, and the emergence of online travel reviews encouraged more Thais to travel and kickstarted the country’s tourism once again.

Social media was also a large factor that influenced more travellers to pack their bags. Given the popularity of Facebook pages like Ar-Pae.com, Pro Addict, and Chang Trixget that share travel discounts and promotions and garner millions of  followers. To reach a demographic that would be highly interested in using its services, the company established partnerships with Facebook groups and offered them exclusive promotions to lure more customers.

Roughly 23% of travellers in APAC often look for great travel deals when consuming content.

Amid the fierce competition from low cost airlines, THAI could no longer afford to sell its tickets at prices much higher than competitors.

To reach a demographic that would be highly interested in using its services, the company established partnerships with Facebook groups and offered them exclusive promotions to lure more customers.

Thai Airways promotions on promotional page, Ar-pae.com. Source: Ar-Pae.com

To compete with the influx of budget airlines, Thai Airways launched a subsidiary called Thai Smile to focus on domestic and regional destinations.

Thai Smile was voted as the top airline from Tripadvisor’s Travellers’ Choice in 2017. Source: ThaiIndia

Although the airline’s fare is still pricier than fellow budget airlines like AirAsia, VietJet, and NokScoot, many travellers still find full-service carriers like Thai Airways to be more bang for the buck given perks like a flexible business class cabin.

By 2015, the number of domestic passengers rose to 31.3 million, from which Thai Airways and Thai Smile transported 6.1 million passengers, 28.8% higher than the year before.

To expand its profit centers even more, Thai Airways launched an ecommerce site called Thai Shop to sell branded merchandise such as luggage and backpacks online. The company partnered with ecommerce enabler aCommerce to successfully capture online demand from channels popular among travellers like search engine to boost its online presence.

Thai Airways ecommerce website, Thai Shop, selling travel essentials and branded merchandise.

The Future

The airline plans to revamp its fleet of aircrafts by adding 30 more new planes over the next five years to boost its competitiveness and maximize fuel efficiency to save on operating costs. But could it be too soon?

The airline’s financial status has recently improved after years of challenges. The plan for new aircraft purchases may be too early and could result in a jump in debt,” said Siam Tiyanont, an analyst at Phillip Securities.

The company seems to be moving in the right path as Thai Airways gained a profit of $445,000 in 2016, the first time in the last three years. Slow and steady does it to financial recovery.

The Background

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 Challenge

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

The Strategy

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.

Translation from Italian: “An iron, a pyjama, an apron, a Pandora bracelet. In your opinion, what would make her happy?” Source: Lefanfarlo Facebook Page.

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.

The Future

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.