Case Study: Success in the Jewelry Industry
NOTE: Before you read this article, you may want to check out our “How to Stand Out in the Jewelry Industry” article.
Case Study: Pandora
Pandora - the Danish jewelry manufacturer and retailer - hardly needs an introduction.
An industry giant, their pieces can be found all over the world and they’re currently experiencing an upturn in a somewhat tumultuous industry.
The jewelry industry has been on a bit of a rocky road the past few years. This was attributed to a variety of factors, including the global economic recession, uncertainty over the presidential election and shifting perceptions of traditionalism amongst millennials.
After conducting extensive research, we highlighted three primary similarities in jewelry industry reports. These three points we’re emphasized as necessary changes jewelry retailers would need to make moving into the future:
- Product Differentiation
- Product Segmentation
- Emphasis on Branding
First, Pandora has segmented themselves considerably from their competition. They’ve managed to dominate by way of consumer customization.
Best known for their charm bracelets, Pandora allows those
who purchase their products to add personalized style. Generally, one will select from a range of gold or silver bracelets, often inset with Cubic Zirconia. The use of CZ’s in their product line helps to keep prices lower than if they were using organic diamonds or gemstones.
Subsequently, after the customer selects their foundational bracelet, Pandora offers a wide range of charms that can be placed on them. This is Pandora’s defining quality. “Charms” and “Pandora” are two terms routinely placed next to each other, and by some, are used interchangeably.
Regardless if you’re personally fond of Pandora’s product line, their jewelry’s look or feel, there’s no denying their popularity. Even those who have no interest in jewelry – or any knowledge of the industry whatsoever, for that matter – have usually heard of Pandora and recognize the brand.
While as of late customizable jewelry has seen an increased commercial presence, the industry wasn’t always poised this way. For a long time, when an individual shopped for jewelry, what they say was what they got. The average shopper couldn’t hand pick the components in their final jewelry product, with the exception of wedding bands and other extremely high end purchases. These segments of the market obviously allowed for more customization, but more economical brands didn’t offer this experience or service.
This is how Pandora was able to establish a foothold in the market – widespread options of customization while retaining a moderate price. Since Pandora’s inception, more companies have bought in to this idea and offer a similar product/service.
Continuing Segmentation / Differentiation
As pointed out earlier, there’s been some attention on the jewelry industry’s “unsatisfactory” performance these past few months. It seemed that even some of the market’s largest influencers were succumbing to a downturn. As online sales began to grown, traditional brick-and-mortar shops struggled, and clearly even some of the industry biggest powerhouses were struggling.
Yet, in what amounted to a precarious 2016 for jewelry retailers, Pandora saw it’s global revenue rise by 21%...
That’s something to take note of.
The National Jeweler article linked above does a great job of covering Pandora’s 2016 strategy and the company’s plans for the future, but we’ll highlight the take-away points here!
In 2016, Pandora:
- Increased revenue in the U.S. by 5%.
- Opened 27 new concept stores.
- Closed accounts with 829 multi-brand retailers.
- Placed emphasis on “shop-in-shops”.
Arguably, the bullet point that draws the most attention here is the closing of 829 multi-brand retailer accounts. This means there’s 829 stores/chains where you will no longer find Pandora jewelry. This seems counter-intuitive; the notion that revenue could increase so drastically while the number of distributors and retailers who carry their products is reduced.
But, as Pandora places more emphasis on shop-in-shops and makes their products more exclusive, they gain the ability to brand, price and market their products as they see fit. These alterations, in conjunction with whatever changes Pandora made that are not yet public knowledge, seemed to work.
Obviously, Pandora is a far-reaching global brand with extensive capital to work with. It would be unrealistic and foolish to point at Pandora’s strategy and claim, “there’s the key to success…just do that!” and that’s not the purpose of this article.
What is important to note – regardless of the size of your operation – is that these changes are indicative of the market shifts previously noted/predicted by industry researchers.
Small, medium or large – retailers and manufacturers only stand to benefit by differentiating and segmenting their products from the competition.
Easier said than done…trust us, we know.