Just the other day, I talked about the rebranding that the Danish jewelry brand Pandora is currently undergoing, and today I want to talk about the reasons for such global changes in the company.
The last years, namely 2016-2018, were not the best financially. Of course, for us, as end users, this was completely invisible, but if you study various financial reports or press releases of the company, then this information is displayed in full.
In 2018, the company’s shares fell in price by almost 50%, which could not be a good result and that is why Anders Colding Friis left the post of CEO last year, although he adopted a 5-year brand development plan and some steps have already been taken, namely:
The slowdown in the company’s growth is the lack of new products that they are able to offer the buyer. The novelty should surprise and be unlike the previous products of the company. To solve this problem, it was decided to increase the number of seasonal collections of the company from 7 to 10. Also in 2018, two new lines of Pandora shine and Pandora reflexions jewelry were released. Now these lines have in their arsenal several models of bracelets, quite a lot of charms, as well as earrings, pendants, chains and necklaces.
Changing the assortment structure
The company is gradually increasing the range of earrings, rings, necklaces and pendants.
By 2022, these categories will make up approximately 50% of Pandora’s product range, up from 25% today. Management believes that this will not only provide growth, but also reduce the company’s risk as it becomes more diversified.
The franchise model that the company has been implementing for many years has allowed Pandora to quickly expand its presence in many cities and countries. But in recent years, the company began to buy back franchises and plans to reduce their number to 1/3 against 2/3 of the existing ones. This plan should be implemented by 2022.
Investments in design and production
Over the past two years, the company has invested heavily in its design and manufacturing capabilities. The company has grown from one development team to three different teams: one based in the company’s Copenhagen office, another based in Milan, and a third team focused on experimentation and longer-term ideas.
In terms of production, the company built two new facilities in 2017, which not only expanded the range and volume of products, but also reduced delivery times from eight weeks to four weeks in 2019. Shorter lead times will allow the company to more quickly adapt its product range to market needs. Manufacturing has historically been Pandora’s forte, over five times the capability of its closest competitor. With these new facilities in Thailand, which will also experiment with new technologies such as 3D printing, the company aims to further distance itself from the competition.
The new management of the company since 2018 consists of CFO Anders Boyer / Anders Boyer and CEO Jeremy Schwartz. The result of their teamwork was a detailed two-year plan called “Program now” / “Program now”, which was presented in the first quarter of 2019. In April 2019, Jeremy Schwartz resigned and was replaced by Alexander Lacik, who continued his undertakings and undoubtedly added new things to the company’s strategy.
What did they propose and what changes are they implementing? Let’s analyze.
Reducing the opening of new stores
While Pandora is opening about 250 new stores this year, management has announced that it will cut the number from 750 to 400 by 2022, with a focus on underserved markets such as China and India.
Limiting the growth of new store openings is being done because shoppers prefer online shopping. In the latest quarter, Pandora’s online store revenue increased 52% year-over-year and now accounts for 8% of total revenue compared to 5% in the same quarter last year.
More importantly for us, Pandora will reduce the number of promotions it runs. Of course, the company will hold promotions and promotions dedicated to the main holidays of the year, but their number or amount of discounts will be reviewed. According to experts, this is exactly what is needed to maintain the brand in its long-term value.
Change the design
In September 2019, the company introduced a new redesigned logo and a new store design concept.
The first store in the new design opened in the UK this year. Further, updated boutiques will be launched in China and Italy — countries that are key markets for the company. The changes also affected online stores. They have become more functional and adapted. Pandora will maintain and update its presence on partner sites such as Tmall.
Combined with the reduction in promotions, the company plans to review marketing initiatives. The peak of activity of this innovation is planned for the 4th quarter of 2019, just on the eve of all holidays. The plan includes a new type of marketing communications strategy, the development and implementation of new customer reward systems to encourage collecting and regular shopping.
The company’s rebranding entails the company’s largest marketing investment to date. Pandora plans to actively collaborate with celebrities and influencers.
Pandora has chosen Stranger Things star Millie Bobby Brown as its brand ambassador. The first campaign with her participation will be released in October. Also at the presentation of the new autumn collection 2019 were the Muses of Pandora, which were Tasia van Ree, Margaret Zhang, Nathalie Emmanuel, Georgia May Jagger, Halima Aden and Larsen Thompson.
In conclusion, the main goal of relaunching the Pandora brand as a whole and implementing the “Program Now” plan is to update the entire customer experience and increase brand relevance at all levels of interaction with consumers. All these and possibly other steps will continue until 2020. We will soon see how this will affect the profitability of the company and what the end consumer (you and I) will ultimately receive.