This week, an in-depth look at Pandora’s latest growth strategies. Plus, the buzzy sample sales and the mixed bag of luxury brand earnings.
The holidays will be good to Pandora.
Even in today’s unpredictable retail environment, it’s a safe bet that the 42-year-old jewelry brand will have a successful fourth quarter. With charms as a company signature, the trend cycle is working in its favor. Plus, as of 2022, it’s behind a growing lab-grown diamond jewelry business, as people are pinching pennies and the stigma around the lab-grown option has all but faded. In diversifying its offerings, now catering to more customer demographics, it’s landed on “it” items at different ends of the pricing spectrum. And, at the same time, it’s been on a growth trajectory that’s expected to stick.
“We have been doing amazing in North America for almost three years now,” said Luciano Rodembusch, Pandora’s North American gm and svp, who joined the company from Tiffany and Co. in 2021. “With every quarter, we like to celebrate the best [quarter] yet and say the best is yet to come, and that’s the spirit for the holiday season.”
For the company, the second quarter marked a gross margin record, at more than 80%, and its 10th consecutive quarter with in-store traffic above the category average, as reported in August. The company saw its organic revenue increase 15% year-over-year to $991.7 million, and it raised its full-year organic revenue growth projection to 9-12%. Pandora will report its third-quarter earnings on November 6.
Still, winning this holiday season won’t come easy. “We need to present something unique for every customer,” said Rodembusch.
That will include introducing its lab-grown diamonds to its bracelets category for the first time, including through an on-trend tennis bracelet style. In addition, the store windows will be “the best yet,” with every window telling a different story of a different product, Rodembusch said. Pandora, which will hit 600 stores in North America this year, is averaging 50 new store openings in the region annually. Its newest stores were opened to fill white spaces in California, Salt Lake City and the Northwest. In addition, Pandora sells through a concession model inside Macy’s stores, and it started a pilot partnership with Dillard’s last month.
“The biggest driver of loyalty is our in-store experience,” Rodembusch said. “During the holidays, we’ll have lines out the door for hours, despite every product being available online. … When someone gifts [a personalized item from Pandora], they don’t say, ‘Look at what I bought you.’ They instead say, ‘I bought this for you because.’ And the ‘because’ has a story that was built inside of the store. That experience adds value.”
In 2023, Pandora launched a basic, points-based loyalty program called My Pandora, which now has more than a million members. Rodembusch pooh-poohed its importance. “If you want to improve your brand loyalty, improve your core business,” he said. “Nobody [supports] a brand because of the loyalty program. Loyalty is a way to say, ‘Thank you very much.’ But the best way to say that is by making your [product] offering even stronger.”
Pandora offers more than 1,000 charms plus 100 styles each of its bracelets and necklaces. Recently, its 200-250 stackable rings have proven a draw for Gen-Z shoppers, Rodembusch said. Many of its styles can be engraved with letters, shapes or personally drawn doodles, ensuring a unique gift. The company has increasingly leaned into the opportunity to market its engraved jewelry to consumers likely wishing to commemorate an occasion. Early this month, many Chicago Marathoners went to the brand’s Michigan Avenue store to purchase a piece with an engraving of the race date.
Charm bracelets, bag charms and shoe charms, among other wearable charms, are decidedly having a moment. Etsy called out charms as a top-six gifting trend for the holidays this year, based on its search and sales data and industry forecasting. Charms make up a majority of sales for Pandora, which has maintained its positioning as the world’s largest jewelry brand based on sales volume.
“There are hardcore Pandora fans, and [based on group chats] they often know what we’re gonna launch even before our teams know,” Rodembusch said. Pandora’s Disney collaborations have earned the brand many fans, while unofficial cultural connections have also attracted shoppers — for example, many consumers came to associate a rose charm with the singer Selena, which drove sales of the product and introduced new shoppers to the company.
Pandora’s diamond business, meanwhile, is attracting a new shopper base, with the pieces priced 6-8 times that of the company’s core assortment, on average. Around 40% of diamond buyers are new to Pandora. “We’re opening up the possibility of [diamond] affordability to an upper-middle-class shopper,” Rodembusch said, calling the sparkle-creating cuts of Pandora’s lab-grown diamonds their differentiator in the growing market.
The lab-grown diamond market is growing, yet prices are declining. In 2023, Pandora saw an 83% year-over-year boost in its lab-grown diamond sales in the fourth quarter.
As for balancing Pandora’s two customer bases, Rodembusch admitted that it was a concern early on. “We were very careful not to make [the in-store diamond shopping] experience too fancy because it could scare people used to spending $50 on charms to see $5,000 price tags. … We didn’t allow diamonds to take over the store.”
He added, “Our stores are known for being warm and non-judgmental. … Every client deserves elegant treatment. Especially in our neighborhood stores, people come in with hard-earned money, and we need to honor that.”
According to Rodembusch, 90% of current Pandora sales associates started as brand fans. He’s working to use that to the brand’s advantage, leading a move from efficiency-based service to service that offers storytelling. “Taking five more minutes and offering a great experience is better than offering a super efficient experience,” he said.
North America is Pandora’s largest market, accounting for more than 30% of revenue. The local business launched the lab-grown diamond category and has continued to pioneer cutting-edge in-store experiences. Early this year, Pandora opened a private sales salon in NYC’s SoHo neighborhood where it’s also trialing tools like a vending machine that serves up jewelry recommendations based on a quiz.
On the digital front, the company is tackling “true personalization” via e-commerce, Rodembusch said. In Canada and Italy, it’s currently operating pilot websites on a new platform enabling more native content and videos. Delivering individualized shopping experiences, rather than just three or four experiences based on three or four customer segments, is the goal, Rodembusch said.
“We sit in the bottom of the [fine jewelry] market, so some people [owe our current success] to industry retraction and recession,” he said. “I don’t believe the overall diamond category will jump in the fourth quarter, but I do know that we’re attracting a lot of new customers with our diamonds.”
Through the holidays, the company will be marketing its lab diamond collection via a campaign featuring Pamela Anderson, among other celebs.
Other noteworthy news
Posts featuring sample sale steals flooded TikTok this week, with The Row’s annual sale kicking off on Wednesday and offering items for 75% off. Many shoppers reported hiring line sitters who held their spots in the queue starting Tuesday night. Shoes, chunky cashmere sweaters and outerwear were among common purchases, with several shoppers reportedly spending upward of $6,000. Meanwhile, hauls from Kering’s private sale rolled out, with shoppers clinching deals like $2,500 Gucci pullovers for less than $150. The ramped-up buzz surrounding these sales will no doubt impact brands’ future strategies.
On that note, while Kering reported a double-digit revenue dip, Hermès bucked luxury’s downward trend, owed in large part to its consistent exclusivity. The company reported an 11% year-over-year sales boost for the third quarter.
Topping the Lyst Index of the hottest brands in the third quarter was Miu Miu. The brand has become more inclusive as it’s increased in popularity, raising its prices by a low-single-digit percentage in the first half of the year with plans to implement a second price hike in Q2. Miu Miu was a driver of Prada Group’s 15% revenue growth in the first half of 2024.
Finally, on Thursday, Tapestry, Inc. released a statement following the district court ruling to block its $8.5 billion acquisition of rival Capri Holdings. “Today’s decision … is disappointing and, we believe, incorrect on the law and the facts,” it read. “Tapestry and Capri operate in an industry that is intensely competitive and dynamic, constantly expanding, and highly fragmented among both established players and new entrants. We face competitive pressures from both lower- and higher-priced products and continue to believe this transaction is pro-competitive and pro-consumer. We intend to appeal the decision.”
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