Not a month goes by in which I don’t hear a retailer talk about the “next Pandora” as they yearn for another big mega-trend that will drive their profits sky high.
Likewise, so many jewellery suppliers say they want to “be like Pandora”, indicating that they hope to be the next mega-trend, starting from humble beginnings to become a $4 billion international operation in a very short time.
Few people would realise that it was only 10 years ago that Pandora debuted at the Sydney trade fair, and while that might seem like a long time ago now, it is a blink of an eye in terms of where the brand started.
When Karin Adcock stood at her small 3x3 stand for the first time in Sydney in 2005, showing the colourful little beads in white polystyrene boxes, no one would have guessed the future.
Can you imagine the stories the first tentative retail customers can now tell? Those little charms and beads went on to make a fair number of people seriously wealthy. As one retailer once remarked, “Pandora paid for a lot of new cars and put a lot of kids through private school.”
While the Pandora phenomenon largely had its roots in Australia, the product quickly took off around the world with similar results, which is why retailers and suppliers alike are now on the look-out for the next big thing.
Some argue, with a fair degree of legitimacy, that Pandora is the largest jewellery brand in the world, given that most other brand identities are within larger conglomerates – if you break sales down to individual product-brands, Pandora outperforms them all.
While Pandora’s ‘quick’ international success is the stuff of legends, there were many mistakes along the way. Jewellers who pooh-poohed it as ‘fashion’ jewellery made the first mistake – amazingly some still say it’s a fad!
Secondly, too many jewellers rode the wave without investing in their own businesses at the peak of the Pandora boom. They went about patting themselves on the back for being smart enough to choose the product but failed to build their business around the brand rather than on the brand.
They let the customers who walked into their store courtesy of Pandora leave without any attempt to turn them into their own customers for other jewellery products. They were on the Pandora bandwagon; it was money for jam.
Too few business owners become students of business, learning valuable lessons from the past. Those that do would have known that all too often bandwagons that become gravy trains can then turn into roller coasters, and that’s exactly what happened.
So when Pandora began to close hundreds of accounts, which even Blind Freddy could see was inevitable, many were left realising they weren’t that smart after all – they had been riding a gigantic gravy train.
By not taking a moment to consider that the Pandora phenomenon could continue without them, many retailers belatedly rued the day they did not turn Pandora’s customers into their own.
Without Pandora sales, many jewellers were left wanting because consumers had formed a ‘connection’ with the brand, not the store.
Industry stalwarts would know that the last jewellery industry mega-trend was probably the Swatch watch in the 1980s, and the same thing happened – lots of people made lots of money … until they didn’t!
Low barrier to entry
There’s nothing wrong with striving to be the next big thing. The ambition is not the problem; however, the problem is that many suppliers who want to be the next Pandora utter those words right before admitting that they have no marketing budget.
I find it amazing that, in a branded world, there are suppliers who still think success can come without marketing, and marketing takes dollars. I am constantly astonished at how so many suppliers can’t afford the smallest of advertising budgets and expect everyone else will do their work.
The jewellery industry has a low barrier to entry. Anyone can become a wholesaler tomorrow and I’m tired of hearing things like, “Yeah, I was overseas on holiday and I saw Watch X in a shop and when I got back to Australia I contacted them about distributing it here.”
Or, “My husband bought me some jewellery and I liked it so much I became the distributor.”
We have too many under-capitalised jewellery businesses in Australia and New Zealand all competing in a small market. Their marketing strategy is called ‘Hope’; they hope retailers will order product simply because they have it, or they hope the product will sell.
Hope is not enough and while being in a low barrier to entry industry can result in extraordinary things such as the Pandora phenomenon, the truth is such examples are rare.
What mostly happens is the industry gets clogged with an oversupply of under-capitalised businesses competing in a branded world, creating a lot of noise and relying on price alone as they struggle to survive. This ultimately takes attention away from more worthy brands.
There is nothing wrong with a low barrier to entry industry; however, retailers need to focus on new products and brands that have a good chance of success. In this fast paced, digital world there is little chance of consumer success without marketing and therefore if a new supplier’s approach to business is ‘hope’, move them on.
Worse, ‘hope’ is a hungry beast; it needs to be fed … usually by other people!
There are several reasons behind Pandora’s success – hard work; right product; right time; good management; even luck – but the real reason Pandora has been so successful is because it created a unique connection between product and consumer. Without that, it would not be where it is today.
Right now, the industry could do with a new fad to once again drive sales – another mega-trend would even be better – but if a supplier won’t invest in marketing and promotion, retailers should pass it by and find one that will.
Only then might we see the next Pandora.
More reading
The Pandora phenomenon
Birth of brand Pandora