In an email addressed to Pandora franchisees and independent stockists that Jeweller obtained, Pandora Australia president David Allen stated, “As our business and the structure of the business changes, it is necessary for us to consider the partnerships within the network.
“Pandora has partnered with the buying groups for a number of years, however we have made the decision to change our partnership strategy and as a result we will be discontinuing our partnership with all buying groups – Leading Edge, Showcase and Nationwide.”
The email went on to explain, “This decision does not impact on our willingness to work directly with you as a retail partner of Pandora.”
Pandora operates 15 company-owned stores in Australia and New Zealand and has 85 franchisee stores. Additionally, it’s estimated that 300–400 independent jewellery stores – or what Pandora calls its “multi-branded partners” – stock Pandora jewellery.
While exact numbers are not known, Jeweller estimates that more than 200 of its multi-branded partners are members of Australia’s three jewellery buying groups.
Traditionally, the business agreement between a buying group and supplier is one where members order their own product from a supplier, and the buying group acts as a centralised billing or payment service for that supplier. The group in return receives a discount of around 8 per cent – about half of which is passed on to the individual members.
As part of Pandora’s revised strategy, effective 1 July 2015, a change in its discount structure will be implemented. “All partners [stockists] will receive a settlement discount of 4 per cent for accounts that adhere to our current trading terms,” the email read.
The new terms will apply across the board, meaning retail stockists who are not buying group members will also receive the discount.
Allen’s email explained, “As you are aware, it has always been a priority to work closely with our retail partners to provide a retail experience that is true to the Pandora brand. This focus will not change and we are committed to supporting and working with our partners to provide an exceptional brand experience.”
As a result of the new discount structure, any store that has traded with Pandora via a buying group will be required to complete a new Authorised Retailer Agreement and Credit Application by 30 June. The same will apply for stockists that don’t currently trade via a buying group.
Adapting to change
Allen told Jeweller that the decision was an important one for the company, which was why the groups had been given five months notice.
“We have valued and respected the relationship we’ve had with the buying groups since Pandora was launched in Australia. Like all businesses, we continuously evaluate our current position and where we want our brand to be in the future. Over the past three years our business model has changed significantly and we as a company are continuously changing to support that,” he said.
According to Allen, Pandora’s concept stores (franchisees) continue to be successful with “the volume of business increasing significantly over the past three years”.
He also said the volume of business from independent stores, which were not associated with a buying group, had been significant.
“We continue to maintain a balanced approach to our [distribution] network, and we continue to be committed to all of our distribution channels and partners. We are actively working with our multi-branded partners to that end and they will continue to be an integral part of our business,” Allen said.
He added that one of the main reasons for the decision to separate from the buying groups and to emphasise the importance of independent stockists was to have all Pandora retailers on a level playing field, regardless of their affiliation with a buying group. “We do not believe that an affiliation with a buying group has any strategic or commercial benefit to Pandora,” Allen stated.