This week, we take a closer look at Panora’s latest growth strategy. Additionally, there is a mix of vibrant sample sales and revenue for luxury brands.
The holidays will be good for Pandora.
Even in today’s unpredictable retail environment, there is no doubt that the 42-year-old jewelry brand will find success in the fourth quarter. Charm is the company’s hallmark, so the trend cycle is working in its favor. Additionally, as of 2022, the company is behind the growing lab-grown diamond jewelry business as people are pinching their pennies and the stigma against the lab-grown option has largely faded. As we diversify our offering to cater to a wider customer base, we now offer “it” items at different ends of the price spectrum. At the same time, we are on a growth trajectory that is expected to continue steadily.
“We’ve had great results in North America for nearly three years,” said Luciano Rodenbusch, Pandora’s North America general manager and senior vice president, who joined the company from Tiffany & Co. in 2021. It’s not yet (a quarter), but the best is yet to come, that’s the spirit of the holiday season. ”
For the company, as reported in August, the second quarter delivered a record gross margin of over 80%, and in-store traffic exceeded the category average for the 10th consecutive quarter. The company’s organic revenue increased 15% year over year to $991.7 million, and the company raised its full-year organic revenue growth forecast to 9% to 12%. Pandora is scheduled to announce its third quarter financial results on November 6th.
Still, winning this holiday season won’t be easy. “We need to offer something unique to every customer,” Rodenbush says.
This includes introducing lab-grown diamonds to the bracelet category for the first time, including through the trending tennis bracelet style. In addition, the store’s windows will be “the best ever,” with every window telling a different story for a different product, Rodenbusch said. Pandora, which opened 600 stores in North America this year, is opening an average of 50 new stores a year in the region. The company’s newest stores have opened in Salt Lake City, California, filling vacant lots in the Northwest. Additionally, Pandora sells through a concession model within Macy’s stores and last month launched a pilot partnership with Dillard’s.
“The biggest driver of loyalty is the in-store experience,” Rodenbusch said. “During the holiday season, there are lines outside for hours, even though all the products are available online. I don’t say, “Look at something.” Instead, say, “I bought this for you.” And that “why” has a story built inside the store. That experience creates added value. ”
In 2023, Pandora launched a basic points-based loyalty program called My Pandora, which currently has over 1 million members. Rodenbush laughed out loud at its significance. “If you want to improve brand loyalty, improve your core business,” he said. “No one (supports) a brand because of a loyalty program. Loyalty is saying ‘thank you.’ But the best way to say it is to further enhance your (product) offering. ”
Pandora offers over 1,000 charms, plus 100 styles of bracelets and necklaces. More recently, 200 to 250 stackable rings have proven appealing to Gen Z shoppers, Rodenbush said. Many of its styles can be engraved with letters, shapes, or personally drawn doodles, ensuring a unique gift. The company is increasingly leaning into opportunities to sell engraved jewelry to consumers looking to commemorate anniversaries. Earlier this month, many Chicago Marathon participants visited the brand’s Michigan Avenue store and purchased merchandise engraved with the race date.
Wearable charms such as charm bracelets, bag charms, and shoe charms are all the rage these days. Etsy named charms as one of the top six gift trends this holiday season, based on search and sales data and industry forecasts. Charms account for the majority of Pandora’s sales, and it maintains its position as the world’s largest jewelry brand based on sales.
“We have passionate Pandora fans, and they often know what we’re going to release before the team does (based on group chats),” Rodenbush said. While Pandora’s collaboration with Disney has won the brand a legion of fans, the unofficial cultural connection has also attracted shoppers. For example, many consumers began to associate rose amulets with singer Selena, which boosted product sales and introduced new shoppers to the company.
Meanwhile, Pandora’s diamond business is attracting a new group of shoppers, with diamonds averaging six to eight times more expensive than the company’s core product. Approximately 40% of diamond buyers are new to Pandora. “We are expanding the possibility of making (diamonds) affordable to upper-middle-class shoppers,” Rodenbusch said, adding that the sparkle-producing cuts of Pandora’s lab-grown diamonds are making them more affordable for upper-middle-class shoppers. He said that this is a differentiating factor.
The lab-grown diamond market is growing, but prices are falling. In 2023, Pandora’s fourth quarter lab-grown diamond sales increased 83% year over year.
As for the balance between Pandora’s two customer bases, Rodenbusch admitted that was a concern from early on. “We were very careful not to make the experience[in-store diamond shopping]too flashy. …We didn’t allow Diamond to take over the store.”
Additionally, “Our store is known for being warm and non-judgmental. …Every client deserves to be treated with elegance. Especially in a neighborhood store, where people spend their hard-earned money.” We need to respect that.”
Rodenbusch said 90 percent of Pandora’s current sales force was originally a fan of the brand. He is committed to using that to the brand’s advantage, leading the transition from efficiency-based services to those that deliver storytelling. “It’s better to take five more minutes and deliver a great experience than to deliver a hyper-efficient experience,” he said.
North America is Pandora’s largest market, accounting for more than 30% of its revenue. The local company launched a lab-grown diamond category and continues to pioneer a cutting-edge in-store experience. Pandora opened a private sales salon in New York City’s Soho district earlier this year, and is also testing tools such as vending machines that offer jewelry recommendations based on quizzes.
On the digital side, Rodenbusch said the company is working on “true personalization” through e-commerce. We are currently running pilot websites in Canada and Italy with a new platform that allows for more native content and video. The goal is to provide a personalized shopping experience, rather than three or four experiences based on three or four customer segments, Rodenbush said.
“We’re at the bottom of the (fine jewelry) market, so some of us owe our current success to industry setbacks and recessions,” he said. “While we don’t expect the overall diamond category to skyrocket in the fourth quarter, we are certainly seeing a lot of new customers with our diamonds.”
The company will sell its Lab Diamond collection during the holidays through a campaign featuring Pamela Anderson and other celebrities.
Other notable news
This week, TikTok has been flooded with posts featuring sample sale steals, with The Row’s annual sale starting Wednesday, offering 75% off items. Many shoppers reported hiring sitters to line up starting Tuesday night. Shoes, thick cashmere sweaters and outerwear were common purchases, with several shoppers reportedly spending more than $6,000. Meanwhile, sales were up at Kering’s private sale, where shoppers could score items like a $2,500 Gucci pullover for less than $150. The increased buzz surrounding these sales will undoubtedly influence the brand’s future strategy.
In that regard, while Kering reported double-digit sales declines, Hermès bucked the downward trend in luxury goods thanks to its consistent exclusivity. The company reported an 11% increase in third-quarter sales compared to the same period last year.
Topping the Lyst Index of most popular brands in Q3 was Miu Miu. The brand has become more inclusive as it grows in popularity, raising prices by a low-single-digit percentage in the first half of this year, and plans to implement a second price increase in the second quarter. Miu Miu drove Prada Group’s 15% revenue growth in the first half of 2024.
Finally, on Thursday, Tapestry released a statement following a district court ruling blocking its $8.5 billion takeover of rival Capri Holdings. “Today’s decision…is disappointing and we believe it is wrong on the law and on the facts,” it read. “Tapestry and Capri operate in an industry that is highly competitive, dynamic, constantly expanding, and highly fragmented between both existing players and new entrants. “We continue to believe that this transaction is pro-competitive and pro-consumer in the face of competitive pressures from both sides of the aisle. We plan to appeal this decision.”
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