Peter Andersen, Pandora’s president of Western Europe, talks us through the brand’s concept store strategy, the closing of gold accounts and the success of its rings offer.
Professional Jeweller: Rings sales doubled in 2014, comprising 10% of Pandora’s revenue compared to 6.1% in 2013, and they are now the brand’s second core product category. They also resulted in global sales exceeding DKK 1bn (£97m) last year. Can you imagine a future where this category becomes a real contender to the dominance of Pandora’s charms and beads?
Peter Andersen: That would be very nice, especially considering the global ring market is bigger than the charms and bracelets market. However, if we just saw an increase in rings because we were losing sales in charms and bracelets that wouldn’t make sense — the increases need to come together. When I started six and half years ago, our founder said to me, ‘Peter, as long as you are selling bracelets you’re fine, because every time we sell a bracelet it has to be filled’. Therefore, I monitor sales of bracelets closely, and that is still going up.
PJ: Marketing around Christmas 2014 focused on encouraging women to share their wish lists with their male partners. Will this continue in 2015?
PA: I think all men need help, so we were happy to help around Christmas. We also had quite a lot of marketing activity around men for Valentine’s Day this year. Our marketing focus will continue to be on men in 2015 because a very large proportion of our sales come from gifting.
PJ: With this in mind how are you growing Pandora’s selfgifting customer base?
PA: Rings are more difficult to gift be-cause of sizing, which makes the whole category a great opportunity for selfgifting. One of the things that really came through in 2014 was the success of touch-and-feel units for rings. Now, on the shop floor, customers can really try things on — I think that is part of the reason why we had such a good ring year in 2014.
PJ: Opening concept stores is obviously a big part of Pandora’s strategy. What can you tell us about this area of business?
PA: In 2014 we exceeded our expectations and opened 24 concept stores instead of 10, which is what we predicted. In the first few months of 2015 we opened six new concept stores, taking the total to 163. We have a healthy waiting list of partners who would like to open stores with us, when and where we can find the right location in the right city. We use a system where can calculate where we think there should be a Gold Account, a shop-in-shop or a concept store. If we think there is the right amount of customers for a concept store that’s when we try to find the right location.
PJ: With big cities and major shopping centres presumably covered, have you noticed success in smaller towns?
PA: We have smaller towns where we are very, very successful. If you would have asked me two or three years ago whether a Pandora store would be successful in some of those places I would have said no, but we are definitely seeing success in smaller towns now.
PJ: Who encourages you to take chances in certain areas?
PA: Our local franchisees. One thing that is not mentioned enough is that, of our 163 stores, we actually only own five and the remainder are all franchisees who have been with us for five or six years. We are trying to cluster them [franchise partners’ stores] so that they have a specific amount of stores in a specific area. This is an advantage because they can really know what is going on in their own region. We could be missing opportunities if we didn’t have local partners to keep us informed.
PJ: Of course, Gold Accounts have been closed in recent months with many retailers losing their Pandora accounts. What is the strategy and process behind this?
PA: We have some amazing Gold Account dealers who do fantastic sales on the square metres they have, and the same goes for our shop-in-shops. What we are trying to achieve is to show the consumer the entire Pandora universe and that is more easily done in a concept store, but we will never get to a point where the UK is 100% concept stores. That is not going to happen.
PJ: How do you choose which Gold Accounts to close?
PA: It’s location, performance and it is personal relationships, but it is also a willingness to move with Pandora. With branded jewellery we need a certain amount of space and not all jewellers want to give that space away. We are always looking to find the right mix between space and turnover, so with shopin- shops if 60% of [a business’] turnover is from Pandora, then I think it would be quite reasonable that 60% of space is dedicated to Pandora. This is a starting point of discussions, but of course it is not always mathematically perfect. However, I think it is very important that jewellers have their own brands. Not everyone is made to be living under a brand umbrella with rules, regulations and guidelines. I have the utmost respect for people who come to me and say, ‘Peter, I’m not sure if this is right for us’, because they want to be jewellers and sell fine gold and bridal jewellery without a brand attached. That is absolutely fine by me. By January 1 2015, we had closed 54 Gold Accounts and we came to a very good agreement with the vast majority of those stores. There were very few instance where couldn’t agree that this was the best option for everyone. When we close an account we buy all the jewellery and furniture back to make sure the jeweller gets a decent deal.
PJ: Presumably this means a jeweller might lose Pandora from their ‘personal’ multi-brand store, but could still have a Pandora concept store in the same region?
PA: Yes, we have partners who, in the same town, have a concept store and 300 yards down the road they have a multibrand store. It might be that we pull out of that store. Pandora is strong enough to stand on its own, but this is something I said to everyone six years ago. Luckily, lots of people trusted in Pandora a couple of years ago and they have the majority of our stores today — our biggest partner started with £2,000 worth of stock and now they have 22 stores.
PJ: Do you still see Pandora as part of the jewellery industry?
PA: There is still a big commitment from us to the jewellery industry. The majority of our partners come from the jewellery industry and most of them have had independent jewellery shops before working with Pandora [on concept stores]. We will always have Gold Accounts and shop-in-shops, but today the majority of our money is taken through concept stores.
PJ: With the growth of concept stores, are you ever concerned that you will saturate the market with Pandora. Could this result in a dip in like-for-like sales?
PA: I want to make sure that partners are relying on us for great turnover. If we start creating too many stores in one town and our partners are no longer successful, then they won’t be as loyal to us as they are at the moment. I think there is a limit to what we can and cannot have, but we look very closely at the high street to see what else is out there and what other brands are doing. I don’t think we have reached our limit. I think it is about making sure that we constantly evolve.
PJ: Similarly, with the growth of concept stores, will there come a point where your relationship with the Company of Master Jewellers is no longer necessary?
PA: The CMJ has been a great supporter of Pandora since we started. Being there [at buying meetings] and talking to the members and getting feedback is important, but also showing that we are part of something that is bigger than just a brand. Out of our five biggest franchise partners, four of them are members of the CMJ, so there is a connection there.
PJ: Returning to product, what have been the brand’s biggest successes in the last 12 months and what are the plans for the rest of 2015?
PA: Last year we launched Essence, which became 4% of our turnover straight away. We are launching our new concept this year with Pandora Rose and we are expecting a lot from that. It has had very good feedback from our partners and even better feedback from our store managers. Product is everything for Pandora. No matter what we do with stores, partners, merchandising and marketing, the product is essential.
PJ: What are your plans for the rest of the year?
PA: I want to go and see all our stores in the UK, I have seen a lot of them but there was a gap last year. So, a lot of driving is my plan! I also have a new boss [Allan Leighton left his role as CEO of Pandora, replaced by Anders Colding Friis in February], so you never know what will happen and I assume there will be some changes. From a UK point of view, I want to make sure Pandora Rose gets off to an amazing start. It launches in June, and it is important to show that every time we launch a new collection it is successfully incorporated into what we already have. I don’t want to see that it hurts any other aspects of the business; instead it should bring in new consumers while encouraging existing customers to add to what they already have.
This feature originally appeared in the April 2015 issue of Professional Jeweller. Read it here.