Lucky Charms

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Pandora MD discusses the controversy surrounding the brand’s success.

When the box opened and Pandora’s charms were launched into the world, few could have predicted the astonishing impact they would have. Pandora UK managing director Peter Andersen tells Kat Slowe what is next for the global phenomenon.

“I don’t know anything about jewellery,” Pandora UK managing director Peter Andersen says. “I didn’t come here to create a jewellery company. I came here to create a jewellery brand.”

Andersen seems well on his way to achieving his goal. In the past year, Pandora has increased its orders to 189,000 pieces a week, compared to 78,000 in 2009. This rapid growth has been driven by the launch of 47 stores over a 14 month period and has meant that Andersen has had to seek surplus production capacity from Pandora’s factories in Thailand that was previously allocated to other territories.

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On its wholesale side, the company has upgraded an estimated 150 gold accounts and 125 shop-in-shops, mostly from existing accounts which previously held either silver or gold memberships. Pandora Worldwide has five different types of account, but Pandora UK works on a basis of four: silver, gold, shop-in-shops and Pandora stores. The UK branch discharged the basic, white category, when it found it had few customers operating on this basis.

“Number-wise, the amount we have grown most in is our shop in shops,” Andersen says, “but turnover-wise, the biggest increase has come from our Pandora stores.”

It therefore comes as no surprise to hear that the company is putting a massive focus on opening its own franchise stores, though it still plans to continue opening the shop-in-shops and gold accounts.

“We just want to get everyone in line with our requirement for that model,” he says. “All the upgrades to gold and shop-in-shops have been with existing retailers. There might be about five out of the many that we have done which are new. Of our Pandora stores, only about 10 percent were not existing retailers, so we have actually grown from within. We take very few new people on board.”

Problems with the company’s production capacity, due to its rapid expansion, have meant that Pandora has been unwilling to take on new stockists over recent months. The inability to take on new stockists is why, Andersen claims, Pandora will not be attending IJL this year, though he does plan to return in 2011.

“When went to the fairs the last few times, there were customers coming to our stands asking if they could stock Pandora,” he explains. “It has not been possible for us to take on any new accounts, so we have disappointed people and we have been disappointed ourselves. It is never nice to have to say no to a potential new customer.”

The issue with production capacity has since been addressed, but Andersen plans to wait until after Christmas before signing on new customers. Instead of attending IJL, Pandora will be heading to Monaco for two days with 250 of its stockists, where it will launch its new products. With the clear intention of broadening its scope, Pandora will be unveiling a series of collections, including a line of ladies watches (Swiss made) and a series of stackable rings. It will also be launching new stand alone furniture to house the rings, so that customers will be able to try them on in store.

Though known for its bracelets and charms, Pandora has been attempting to branch out over the past couple of years with its Love Pods, Stories and Liquid Silver collections. Andersen claims these have been a success, but says their inability to live up to the achievements of Pandora’s charms has led to them being unfairly judged by the industry.

“That is very unfair,” he says, “because at the moment I don’t think many things have got the same pulling power as our charms. If you compare the turnover, the money or the pieces, to charms, then no, it is not very successful. But, to us, it is very important that we keep on building and if we did not focus on these elements, we would not be creating a jewellery brand.”

With many questioning how long the charm craze can endure, Andersen might be wise to attempt to diversify the company’s product offering. We put the same question to him that, from the resigned look on his face and the small laugh he gives, has been asked many times before.

“I, of course, don’t know how long charms will last,” he says. “If I knew, if I had a little glass ball under the table, I would probably try to get into Downing Street Number 10 instead and make a living out of that.”

But, though he cannot predict the longevity of the charmed life, this does not stop Andersen from seeking to take advantage of the phenomenon while it lasts. His ambitious plans involve increasing his total number of stockists to between 550 and 600 by the end next year, after which he will seek to grow organically. Of these, he intends 25 percent to be Pandora stores, 25 percent to be shop-in-shops, 45 percent to be gold accounts and five percent to be silver accounts.

“We cannot always convince people to start on a Pandora store, gold or shop-in-shop level, so we might have to start certain people on a silver level, but then our ambition will be to move them up,” he says.

Not everyone is keen on Pandora’s plans for expansion. Former stockist and Prestons of Bolton managing director Karl Massey has openly condemned the brand’s launch of a Pandora store in the same town in which he was operating as an account holder.

In addition, Massey has written on his website: “Deliveries are at best spasmodic and their dictatorial approach insisting that we use their furniture within our store to ensure we remain a Pandora retailer was a step too far.”

Andersen says he has never personally spoken to Massey and was unaware of the retailer’s issues with the brand, adding: “I can only say that we have opened Pandora stores where we have had accounts in the same town. But Bolton is, in my eyes, big enough to have two stockists.

“We have seen people open in the same town and same shopping centre, and it may have an influence in the first week, but otherwise people find their natural way of shopping again. We tend to increase the size of the cake and so people who already have their slice will not see a smaller slice coming their way. But, of course, it is never nice to hear people talk that way about you. I don’t enjoy that.”

Andersen also adds that most retailers are happy to invest in the furniture and quickly make their money back from the resulting increase in footfall in their stores. The only issue that has been raised, he says, is that of capacity, which is why he retains the silver account for retailers without sufficient space to hold a greater amount of stock.

“We want to be the most recognised jewellery brand in the world,” Andersen says, as he stands up to leave. While Pandora has suffered it share of problems, lack of recognition has never appeared to be one of them.

Retail categories:

Silver Account: One piece of furniture, normally a GL2, which is the basic cabinet.

Gold Account: Between six and eight square metres of furniture, including something against the wall and up to three free-standing elements.

Shop-in-Shop: Between 12 and 16 square metres in size – usually quite a large chunk of any given shop – which is clearly marked as Pandora. It will contain cabinets against the wall and a TV playing the brand’s DVDs.

Pandora Store: A stand alone outlet, with the brand name on the front and an area of around 50 square metres.

The charms Petersen would wear on his bracelet:

1. The cake – I was educated as a pastry chef.
2. The crown with 12 diamonds – I love the design, but it would have to be minus a few diamonds so that I don’t annoy my boss in Denmark.
3. The heart – I would like to think I have a big heart for the brand and the people who work here.
4. I love you – That would have to be for my wife.
5. The football – I am a Fulham supporter and my son loves football, so this would be for him, as well.

Reader question:

David Gilbert: “What was the ‘tipping point’ for Pandora?”

Andersen: “The first thing I said when I took over Pandora is that we need to be a brand and to be a brand we have to have a face on the high street, so our decision to open Pandora stores was a tipping point.”

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