Their attitude stinks but should we be so quick to stick the boot in?
As the news broke of Pandora’s dismal state of affairs – its admitted failures, its diminishing board, its retreating profit forecasts – it seems that the UK jewellery trade has little sympathy for the jewellery giant that has been both a blessing and a burden to the industry.
Many jewellery retailers have relied heavily on the brand during the recession, with even the most traditional of jewellers giving up space previously reserved for classic unbranded designs to huge branded Pandora shop-in-shops to facilitate the enticing bead sales that the brand offers. Most of them admitted to personally disliking the jewellery, but at the same time saw the value in stocking what was to become a must-have product.
It is a rarity for retailers to have cashed in on the highs and dropped out before the lows – although I do know of at least two retailers who have successfully done just this and are feeling very smug indeed – and while many retailers who were never stockists are sighing a breath of relief, they will admit to having been nervous about not getting involved with the Pandora phenomenon at its height.
Val Trotter from Scottish jeweller Pebbles is one such retailer. She told me: “We have deliberately steered clear of big branded product, instead preferring to offer our customers a more individual product range. Whilst we may have possibly missed sales opportunities to those customers who want what everyone else has, there are many more who want to express their individuality and those are the customers whose needs we have chosen to satisfy. We did occasionally wonder at the height of the bead phenomenon whether we were missing something but hearing some of the horror stories about the way retailers were treated and the way Pandora opened its own outlets so close to existing retailers, convinced us that we made the right decision.”
Pandora enjoyed phenomenal success with a strong retail network of independent retail stockists, and then launched a successful own-store franchise operation that spread like wildfire. While its tactics were viewed negatively by some in the trade, its success was clear for all to see and it seemed that the jewellery brand had the branded market sewn up.
Pandora’s downfall, however, has been its brutish nature. When I first started writing about the charm and bead phenomenon several years ago we led with Trollbeads and Pandora was a secondary challenger (let’s not forget that Pandora has been going since 1982, it’s not a new concept, it has been slow burner with a very big spike recently). During this time, Pandora worked hard to build up a retail network and showed little discretion as to the partners with which it worked to do this. Then suddenly it was a power brand and it started to get its house in order.
It removed stockists it deemed undesirable, trimming its network down to create exclusive stockists per town, and then came the pressurising. I’ve heard more horror stories about dealing with the brand than our lawyers would allow me to write, but the ones that I’ve had confirmed by the brand I’ll reveal. These include forcing non-bead stock on retailers such as earrings and necklaces (which to date have been slow to sell), at times refusing to allow retailers to discount or return stock that won’t sell, and indeed sending them even more stock that won’t sell, which of course the retailers have to pay for upfront.
A retailer that I know once described this problem to me as having the potential to take down a chunk of the UK jewellery retail trade as retailers’ cash flow steadily transfers into a heap of unsellable, unmeltable, unreturnable stock in the basement that just keeps getting larger until it envelopes the business.
When I brought this up with Pandora UK managing director Peter Anderson once and asked him what the brand intended to do for retailers, he simply stated that they “need to get better at selling”.
It has been this attitude that will most likely lead retailers to enjoy this bad news rather than rally to support the business that has admittedly for many of them been a crutch throughout tough trading times.
While Anderson has blamed “ex-customers that we no longer wanted to deal with” for leading the barrage of negative comments, it is of course those no longer working with the brand that have nothing to lose by speaking freely.
Dominic Gomersall of Lumbers has been quietly vocal about his distaste for the brand and after the news broke of the brand’s misfortunes he joyfully stated, when I asked him whether he would like to comment on or off the record, that there “is absolutely no anonymity required”.
He went on to tell me: “I have rarely come across a company with less business and moral ethics than Pandora. I delighted in closing our account in January and have so enjoyed not having to fall out with a supplier on a weekly basis. Unfortunately some retailers are dependent on Pandora sales and they have had to prostitute their own beliefs to continue with the account. Yes, the added footfall and profit to my business was very useful, but not at the personal sacrifice of having to deal with a company that I grew to despise.”
But not all retailers have been quick to stick the boot it. In the US, jewellery trade magazine JCK has reported that its retailer contacts are sticking by the brand and forecasting future growth, and in the UK Jonathan Pressley of Pressleys agrees.
He told me: “I genuinely don’t think this is the end of Pandora’s bubble. I still believe another two or three years remain but with only small growth. At Pandora, they have been given in 2011 unachievable targets by their American private owners and this is causing huge friction in the company. Compared with other industries I’ve worked in, Pandora’s growth reminds me of the property market. And for years it was when not if the bubble was to burst. Moreover, figures and stats used to make predictions in the property market were national or sometimes international. However, what happened in London and the Southeast was very different to the North and Wales, for example. With Pandora, the North enjoyed unbelievable sales a year ago while Worthing and Chichester are a year behind in my opinion.”
While the industry is on fire with controversy after seeing a chink in Pandora’s armour, all consumers will see is the slogan “Our rings are now in bloom” splattered over buses in the daytime and “Unforgettable moments” broadcast into their living rooms in the evening. They won’t care how retailers are treated as long as they can buy the products they want. However, the moment that they are mistreated, Pandora needs to watch out. And according to one retailer, who does not stock the brand, and who wants to remain anonymous, this is already happening.
They said: “I have heard the name Pandora in my shop several times over the last few months but unfortunately never in a positive light. Several customers in this short time have mentioned bad experiences with customer care with their Pandora jewellery and in each case they felt very let down for various reasons. So I wonder if this customer care is also a factor here? In addition to this, I would say that Pandora jewellery has been such a fashionable thing for a while now and perhaps fashions have moved on but that the brand hasn’t moved on enough alongside this change? I know that less people are thinking now of Pandora bracelets as a desirable, fashionable item than they were, say, a year ago. I would say if they can’t sort these problems out, it might not be a good outcome for them. But hopefully they have the nous and marketing power to turn things around again.”
While the industry is enjoying its moment to come together and vent spleen about a brand that has privately frustrated them for some time, we do have to remember that there are a lot of people in the trade with huge amounts of money invested in the company. Whatever your opinion of the brand, it would be a crushing blow to the industry for Pandora to suddenly drop out of the market so let’s hope that it can turn things around, but perhaps it can use this moment as a wake-up call and readdress the careless manner in which it has treated its partners to date.
In this power brand’s moment of weakness, the UK jewellery trade has thrust a mirror in front of it forcing it to take a long, hard look at its personality as a company and while the Saatchi & Saatchi campaign paints an external dream world of thoughtfulness and glamour, the true corporate face of Pandora has proved to be very ugly indeed.