Founded in 1982 by Danish jeweler Per & Winnie Enevoldsen, Pandora rapidly got global consumers hooked on wearing their hearts on their sleeves. Or more precisely — to wearing a sturdy silver cord with an array of heart-shaped charms and funky beads on their wrists.
But despite having huge brand awareness and a well-performing product, up until recently Pandora’s business was bleak. In 2019 alone, company profits dropped by 40%. Inventory wasn’t moving. Audiences became disenchanted with the company's bling. And Pandora’s leadership admitted to having a full-blown brand identity crisis.
So how and why did Pandora lose its brand equity? What is the brand doing to restore it? We’ve got some answers in this deep dive.
Pandora’s Journey To Success
(Per and Winnie Enevoldsen, center), Source: Flickr
Over the span of 30 years, Pandora evolved from a tiny jewelry shop to a publicly traded company with a presence on six continents. Much of the brand’s success undeniably came from the iconic Pandora charm bracelet.
The original bracelet design was developed in 2000 by Per Enevoldsen himself, with the help of Lisbeth Enø Larsen, a fellow Danish goldsmith and designer. Together they came up with the concept of selling a selection of handmade beads and charms on a metal cord.
A sample collection quickly sold out and Pandora kept pushing new charms in different materials — precious and semi-precious metals; man-made and lab-cultivated stones — at an array of price points.
In 2005, Pandora opened a manufacturing facility in Gemopolis, Thailand — one of the largest jewelry industry zones in the world. Later, it set up several more facilities. The company is very transparent about its overseas operations and consistently ensures that its local laborers receive fair compensation and have proper work conditions.
Pandora also prides itself in producing hand-finished jewelry. This means each item passes several hands during the production — from soldering to oxidizing and polishing the charms. Some of their designs such as Murano glass charms are fully handmade, and thus have a slight variation in each design, lending to its uniqueness.
Source: YouTube
Pandora didn’t invent the charm bracelet concept. The likes of Queen Victoria, Wallis Simpson, and Elizabeth Taylor donned similar styles back in their day. But Pandora made the charms bracelet both affordable and desirable.
Charms are indeed a genius concept from the product development perspective. Jewelry isn’t a commodity product you need to replenish. Yet this brand entices shoppers to return to its stores without waiting for a special occasion.
"People who buy one Pandora charm are more likely to come back, and keep coming back," says Jaime Barr, a US Footwear & Accessories expert at WGSN. "They keep the consumer hooked by rolling out new, trendy charms, essentially building a loyal base of clientele. It's an extremely smart way of building a business.”
And a profitable one too — over half of Pandora’s revenue comes from charms sales.
Between 2008 and 2016, Pandora was securing good profits across markets and strengthening its global presence by opening one shop after another.
But then the tide changed. Since 2017, Pandora’s profits have been tumbling. Sales in multi-brand stores and wholesalers took a major downturn. Old inventory wasn’t selling out as fast as the company needed. Yet the brand kept pushing new charms.
What Went Wrong for Pandora?
Pandora had a flawed merchandising strategy. Independent stockists complained that they were denied access to some inventory, reserved solely for Pandora stores. Or deliveries got purposefully delayed. As a result, they had to heavily discount the older collections to prevent deadstock. This was impacting Pandora’s brand value.
In 2018, company executives agreed that the brand was at peril. Pandora had strong brand awareness numbers, but it performed poorly at later stages of the brand funnel. Consumer preference was low because the brand no longer appealed to new target audiences.
Despite having fun and quirky designs, Pandora’s brand promise didn’t sound exciting. In fact, since the mid-2010s, brand marketers commented on Pandora’s blank brand identity. Some called it intentional. By not using a single narrative and casting a wide positioning net, Pandora manages to appeal to a wide array of target audiences.
But in the current competitive landscape, such a lack of sharp differentiation and clear-cut brand associations won’t take a jewelry brand too far. And that’s what happened to Pandora.
Thus, Pandora decided to hit a timely reset. It launched a global rebranding campaign to give the brand new sparkle.
3 Brand Lessons from Pandora
In 2018, Pandora announced its new "Programme Now" strategy — a two-year transformation plan for reigniting the passion for Pandora. The document lays out new vectors for brand marketing such as:
Revive interest and consideration of the brand
Develop a stronger, more distinctive positioning
Improve consistency between local and global marketing
The plan was sound, but the timing was off. Pandora heavily invested in re-branding its offline presence — in-store experience, relationships with wholesalers, and out-of-home (OOH) advertising. Additionally, it was going through a change in its organizational structure and operating model.
Then the global pandemic hit. So once again, Pandora had to switch gears and focus on the online experience. In 2020, the company’s ecommerce sales nearly doubled, but the overall revenue still declined by 13%.
Still, this didn’t deter Pandora from pushing ahead with its new brand vision and making mighty changes in its marketing over this year. How did the brand manage to achieve growth amidst all the calamities and what can other jewelry brands learn? Here’s our take.
1. Focus on Growing Brand Equity
Due to a poor merchandising strategy, a suboptimal cadence of new product launches, and an endless string of promotions, Pandora has a severe case of diluted brand equity. Its jewels seemed neither “precious” nor “affordable” for consumers.
So Pandora did two things to improve customers perception:
Reduced the number of stock
Updated the promotion strategy
Cutting down on a number of products is never easy but, in Pandora’s case, it was good for the brand. Its ubiquitous presence and heavy discounting deterred consumers who sought out more exclusivity.
Target audience preferences have changed too. As the former company CEO told CNN: “Consumers are preferring a simple look with fewer charms. They used to wear six to seven charms, now they wear five.”
Finally, the global pandemic also sent the jewelry market in flux. Sales volumes across product categories and markets were uneven. Some people cut down on non-essential spending. Others, on the contrary, stocked up on fine jewelry items but ignored Pandora.
All of these factors prompted Pandora to trim its product portfolio and double-down on uniqueness and customization instead.
To restore relationships with wholesalers, the company also rolled out a "buy-back" scheme. It purchased deadstock and underperforming inventory to then remake it into new products. That’s also a nice move from the sustainability perspective.
The Takeaway: Size gives you an advantage for entering new markets. But agility in operations helps you grow your bottom lines. Maintaining strong brand equity for mid-market jewelry brands is a tough balancing act.
You need to stay at the “affordable” spectrum to retain clients, but also avoid mass-market brand associations, leveling you with retailers selling costume jewelry. Pandora learned this lesson the hard way — but you don't have to.
Using brand tracking you can collect first-hand data from your customers and sharpen your positioning.
2. Fuel Brand Desirability Among Younger Audiences
Pandora has always been a “youthful” brand, appealing more to teenagers, students, and young working women. But it didn’t quite connect with Gen Z — the youngest generation with $156 billion in spending power.
Gen Z is sold on personalization, which is an advantage for Pandora. 58% percent are ready to pay more for personalized offerings, including accessories and jewelry. But up till recently, Pandora was hardly a top-of-mind Gen Z brand. So the team decided to activate this audience.
For its latest 2021 Pandora Me product lineup and brand marketing campaign, the company concocted an ideal Gen Z fantasy — modernized Y2K aesthetics, favorite TikTok creators, and endless degree of product customization and remixing options.
For the first time in a while, Pandora enlisted specific “faces” to promote its brand — Addison Rae, Charli XCX, Donté Colley, Beabadoobee, and Cecilia Cantarano — a collective of TikTok singers, dancers, and trendsetters.
With the help of new ambassadors, Pandora launched a hashtag challenge on TikTok to elevate brand awareness. At present, the posted videos have amassed over 10.8 billion views.
Source: TikTok
TikTok was just the beginning. Pandora also went after Gen Z's favorite multiplayer game — Animal Crossing.
With the help of Blarla Button, a popular YouTube streamer and game designer, Pandora presented a custom Pandora Me Animal Crossing island — a digital space, designed to promote Pandora Me.
Players can discover a digital version of Pandora’s Thailand factory, featuring solar panels and other sustainable elements. Or check out the materials Pandora uses to make its jewels. Then attend a bunch of photo locations, inspired by the aesthetics of Pandora’s ambassadors such as Charli XCX’s Greenroom or Donte Colley Dance room.
The Takeaway: Great brand ambassadors don't just drive attention to your brand, but they also help you shape your campaign’s creative vision and direction.
Tapping into their ideas can give your brand some fresh coating. Plus, influencer marketing has a strong ROI. It would be very interesting to see Pandora’s financial results from this year.
3. Transition to Digital Channels
Pandora had an online presence since the mid-2010s. But its website was secondary to selling through brand stores and wholesalers. That is until 2020 when it had to close down their stores and rapidly dial up on the online presence and ecommerce operations.
On a positive note, Pandora already had the most visited website in the luxury and jewelry products category, ahead of Swarovski, Tiffany, and many others. Given that 33% of consumers named retailer websites as the No. 1 influence for new jewelry purchases, that’s a solid advantage. But online sales figures weren’t great.
So Pandora focused on upgrading its digital brand experience to move consumers further down the brand funnel — from brand awareness to consideration and purchase.
First Pandora doubled-down on on-site personalization. In a UK trial campaign, personalized ad banners increased click-rates by 17% and the number of items added to the cart by 4%. Also, the team used a mix of consumer data and machine learning algorithms to personalize newsletter campaigns, which also led to a 60% revenue boost.
Finally, Pandora also launched several omnichannel services like a virtual assistant, digital gifting, Reserve & Collect, and virtual Product Try-On across markets. On Pandora’s mobile website, you can now try almost the entire product catalog using augmented reality (AR) technology in one tap.
Pandora’s progressive transition to bridging digital and physical shopping experience has worked. By Q2 2020 the company’s online sales soared by 176%. The positive dynamic is expected to remain in 2021.
The Takeaway: Omnichannel has become the “default” way of shopping for consumers. This means you need to up your strengths in the underperforming area — be it your digital operations or lack of a physical footprint — if you want to retain an upper hand on the market.
Final Thoughts
Pandora has always been a vibrant brand. But due to a series of missteps, it temporarily lost its allure. As brand marketers, we know that there’s an opportunity in every crisis. By first acknowledging its failures and then taking concrete steps to heal the brand equity, Pandora’s back on the market with a more distinct positioning, sharper differentiation, and creative brand marketing.
As Pandora’s CEO said, the company is slowing down its expansion efforts, and instead, plans to strengthen its brand in core markets:
"We see untapped opportunities in the United States and China, where our brand penetration is still very low. We see good opportunities to grow (there), rather than expanding into new geographies."
So if you too plan to get a firmer grip over your current market, improving your customer acumen will be essential. Our brand tracking software can provide you with the granular consumer knowledge you need to strengthen your brand.
