Pandora’s management has acknowledged the company faces significant challenges, following their announcement of a new CEO and an extensive global restructuring plan earlier this month.
Rather than attributing their sluggish sales to typical retail pressures like online competition or reduced demand from China, the global jeweller is focusing on internal issues.
In an exclusive interview with Yahoo Finance UK, Pandora’s Chief Financial Officer, Anders Boyer, revealed that the company is addressing its problems through a comprehensive internal overhaul. This includes tackling ineffective marketing strategies, overreliance on discounts, and “clutter” in its stores.
Boyer emphasized that many of the issues Pandora encountered in 2017 and 2018 are within the company’s control. “The challenges we’re facing are not due to new competitors or groundbreaking technology. These are issues we can resolve ourselves, though it will take time,” he stated.
Despite the global jewellery market growing by approximately 7% in the past year to reach $356 billion (£276 billion), Pandora has struggled. The Copenhagen-based company holds a 1% share of the market and operates in over 100 countries, but has experienced stagnant sales this year.
In 2018, Pandora’s global revenue remained flat when adjusted to Danish currency, with online sales and revenue from stores open for more than a year declining by 4%, signaling trouble in the retail sector.
While the new CEO, Alexander Lacik, is set to start as late as September, Pandora is initiating its turnaround strategy immediately.
Following the announcement of the turnaround plan, Pandora’s shares surged 18% in one day. However, the stock remains down about 70% from its peak in mid-2016.
No Quick Fixes
Boyer noted that there is no single “silver bullet” solution to Pandora’s issues. Instead, the company’s two-year turnaround plan involves a broad overhaul of strategy and marketing to reinvigorate customer interest in Pandora’s “affordable luxury” offerings, including charms, bracelets, rings, and pendants.
With 2,700 stores worldwide, Pandora plans to redesign its stores and buy back older jewellery to reduce clutter, making space for new items. Retail experts have highlighted that clutter is a widespread problem in physical stores, often diminishing the shopping experience.
“Store clutter is a pervasive issue. We’re now seeing a trend towards simpler merchandising. Less is more,” noted James Bidwell, a retail expert and co-founder of Re_Set.
Pandora is also centralizing control under Jason Morgan, the new head of merchandising who will join the company this month. Morgan will oversee which products are displayed in stores, reducing local staff autonomy.
Boyer explained, “Previously, new product introductions and launches could be blocked by local decisions. We need a more coordinated global approach,” noting that Morgan’s centralized team will manage 80% of in-store product selections. “This represents a significant shift in our current practices.”
An industry expert familiar with Pandora’s strategy, who chose to remain anonymous, suggested that the company should streamline its product range and consider phasing out older lines to enhance their exclusivity. They also recommended enhancing online personalization options to attract more customers. “Pandora might be perceived as too mainstream and widely available,” the expert said, contrasting it with Swarovski’s strategy of limiting product availability.
Charm’s Enduring Appeal
Boyer remains confident that charms and charm bracelets remain a lasting category, despite recent declines in sales. “Charm bracelets have been a staple for decades, if not centuries. They are as enduring as rings or necklaces,” he affirmed.
The ultimate goal is to stabilize and eventually grow charm sales.
However, Pandora has no plans to adjust its pricing strategy. Boyer believes the “middle market” is the company’s optimal position, with charms priced as low as £10 in the UK and $14 in the US, while larger pieces cost hundreds. “Moving upmarket would restrict our customer base. We’re well-positioned where we are,” he stated.
Growth Prospects
There are still significant growth opportunities in China and Latin America. “We have a solid presence in China, but there are numerous large cities where we are not yet established,” Boyer said. India, the world’s third-largest jewellery market after China and the US, remains largely untapped.
“India is the last major market where we haven’t yet found the right approach,” Boyer acknowledged. “Its jewellery market is primarily gold-based, and Pandora is a silver brand.” The company operates a few stores in India but recognizes that its products have not resonated strongly with Indian buyers. “We need to rethink our strategy for India moving forward,” he concluded.
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