When Karin and Brook Adcock started their Sydney-based jewellery business in 2004, they never imagined for a second that, within five years, they would be employing more than 200 staff and achieving annual revenues measured in the many tens of millions.
Nor did they dream that in fulfilling their goals they would change the face of the Australian jewellery industry and that their products would become literally an “overnight sensation”.
Not that Karin Adcock sees her success as being overnight, she retains vivid memories of the hard slog of those early days, tramping the streets until late at night, distributing leaflets under the doors of jewellery stores in the hope of stimulating sales.
“There were only so many appointments I could do in a day, so I would walk the streets after hours putting my leaflets under the doors of jewellery stores, hoping that I would receive a call. I don’t know how many stores told me politely that our product was ‘not for them’ and I would leave that store just to try another,” Adcock said.
“By the end of our first year we started 40 accounts and I personally opened 36 of them,” Adcock says. “It was very difficult and Melbourne was the hardest place to get started. I walked the streets of Melbourne for three days from 7am to 11pm to find suitable stores. I got just one new account over the three days.”
Tear-away success
Regardless of those memories, the reality is that – by any objective standard – Adcock’s Pandora Jewellery has become a tear-away success. While she was reluctant to disclose annual sales and would make no comment, industry experts believe that Pandora’s annual turnover now exceeds $100 million at the wholesale level.
The sales are being achieved across 700 retail stores in Australia, New Zealand and Fiji, including 11 company owned retail outlets. The staff head count of more than 200 includes part time retail staff (90 in head office).
Remarkably, the Adcocks did not have any experience in the jewellery industry and literally stumbled across the opportunity. In fact Adcock believes it was her lack of knowledge about jewellery that has been a key ingredient in the success ofthe Pandora business.
While on a business trip to Hong Kong from Denmark in 1994, Danish-born Karin met Brook Adcock, an Australian airline pilot. She moved to Australia in 1995 and they were married in 1997. For the next few years they dabbled in a couple of small businesses and in early 2004 Karin heard about the Danish jewellery company, Pandora.
“A friend of mine had told me about Pandora being very popular in Denmark and she suggested that we have a look at it. Within a couple of weeks I was on my way to Denmark. I went straight to a jewellery store and had a look for myself and I thought it could be very popular here.
I am very picky with jewellery but I thought the concept was great,” Adcock explained.
Flew to Denmark
“I contacted the Pandora office in Copenhagen. They told me to send them an email as they were already talking to several parties in Australia. I insisted on meeting since I was in Denmark visiting.
Finally they agreed and we met the next day. I spent three hours there and when I left I felt we had a pretty good chance of getting the agency,” Adcock said. I was told to go home and do some research and do a marketing plan for how to introduce the brand to Australia.”
In September 2004 she sent a complete business plan which had been developed. Based on their evident enthusiasm, and the quality of their plan, Pandora granted the couple the rights to Australia and New Zealand.
“Pandora thought we had some good ideas and we agreed to start the following month. The timing was just right for us. We could not have opened in Australia in a big way overnight. Pandora did not have enough product to support us with stock anyway so we had to start slowly,” she explained.
They did not count on Adcock’s tenacity and Adcock herself did not know that the Australian jewellery industry was undergoing a major shift. Branding was beginning to take hold.
It is somewhat incongruous that jewellery in Australia, and largely worldwide, has been unbranded. True, there are some jewellery brands but when compared to other consumer categories that are dominated by ‘brand’, jewellery was not. Whatsmore, consider that watches are almost solely purchased on ‘brand’ then it is even more odd that branded jewellery has been slow to catch-on.
The purchase of jewellery has largely been based on budget (gold or silver), style and design, which effectively meant that very little product was supplied on a brand basis because the industry has always been a manufacturing-based model with suppliers marketing their product around quality, price and stock service.
However, over recent years there has been a slow move to other consumer product business models of marketing the brand to drive consumer demand from retailers.
Although Pandora cannot lay claim to starting the branded jewellery evolution – though it helped drive it in Australia – it can lay a large claim to the personalisation of jewellery. The concept that you could “design” your own pieces that were more unique to you has been integral to Pandora’s success.
The consumer had to take what was on offer whether it was an 18-carat gold chain or solitaire diamond ring, but Pandora’s concept was to make it more individualised and personalised.
“Somehow we have struck a core desire to express individualism and emotions and unforgettable moments in a piece of jewellery that a person can design themselves,” Adcock explained.
Pandora founded
Pandora was founded by a Danish jewellery artisan, Per Enevoldsen. Started in 1979, the business has become a worldwide phenomenon. He comments, “At no stage did I ever dream Pandora would become what it has,” adding, “One of the reasons is that we have always been too busy concentrating on new designs and product quality, that the success sneaks up on you.”
Enevoldsen began importing jewellery from Thailand in 1982 and, along the way he started arranging for his own designs to be manufactured there. After various attempts at managing production from afar, and with sales steadily increasing, Enevoldsen decided to establish his own manufacturing facilities in Bangkok.
In 1989, he established a small manufacturing facility in Bangkok, employing 10 people. In 1999, Enevoldsen designed and patented the charm bracelet which quickly became popular all across Europe.
The bracelets have a patented threading system that allows charms to be placed, added and rearranged, by the wearer. Per Enevoldsen now lives in Bangkok and manages the two factories which employ more than over 1600 workers, thanks to the remarkable worldwide success of the Pandora products.
Australia has become the third-largest market for Pandora worldwide, overtaking Holland and by 2008 Australia represented 20 per cent of the entire production and has become a model for the Pandora operations, worldwide.
But when you meet Adcock you get an immediate impression that she was not going to fail. From establishing the business in their home garage in Sydney’s Avalon, to now operating from a 4000 square metre, purpose-built distribution centre, Adcock is quick to acknowledge that the success has only been achieved by surrounding herself with good people.
“Being a small, family oriented business where everyone knew each other and staff came on-board with a handshake and a verbal description of their role – which was pretty much, ‘you will need to wear all hats’ – today we have a HR department and (documented) job descriptions for all our staff,” Adcock said.
Private equity
Another chapter in the Pandora Australia story recently played out when the Danish parent company, Pandora Holdings A/S, acquired a 60 percent stake after nearly five years of incredible growth.
Adcock explained that negotiations began in September 2008 and concluded in July 2009 and came about after Axcel, the largest private equity fund in Denmark, acquired a 60 per cent stake in Pandora Denmark.
Founded in 1994 Axcel invests as a capital partner and aims to bring the resources and stability companies need in order to carry through a development strategy. It currently has investments in 15 companies located in very different sectors.
Axcel’s investments include the famous Danish porcelain brand, Royal Copenhagen and the company has in excess of $1b under funds management.
“We are very excited about this next stage in our life,” Adcock said. “It has taken over 10 months to finalise the agreement because there have been so many issues to work through. It was a complex and long process.”
Pandora founder, Per and Winnie Enevoldsen remain a shareholder and Per still manages all Thai production. The acquisition by Pandora Holdings A/S of a majority stake in the local operation was part of an overall international brand management strategy which saw the ownership of US operation come under the full control of Denmark as well as the UK, Eastern Europe and other territories.
As part of that the larger acquisition by Pandora Holdings A/S, the production facility in Bangkok was also acquired and quickly expanded, thereby reducing bottlenecks because of surging demand.
The success of the Australian operation was also important to Denmark because Australia quickly became a “model territory” for Pandora worldwide largely because of the Adcock’s, along with the management team’s devotion to sales, marketing and customer service.
The Adcock’s recently received the Diploma of the Danish Export Association and His Royal Highness Prince Henrik's Medal of Honour. At the ceremony, held at that other famous Danish design, the Sydney Opera House, Michael Mishevski, managing director, Showcase Jewellers was asked to speak. He started by saying, “Thank God for Pandora!”
Mishevski had made the wise decision early in 2005 to include Pandora product in his 240-store group so he witnessed the journey from day one and those four words summed-up the impact on the Australian jewellery industry.
In less than five years, Pandora has grown into a brand available in over 700 Australian stores, but the true measure of its success is not built around numbers. Pandora changed an entire industry. It changed the way jewellery stores conducted business and their perception of marketing but moreover, it changed the way consumers viewed jewellery.
Accepting Prince Henrik's Medal of Honour, both Brooke and Karin Adcock spoke more about the people around them than the company, the product or sales figures.
It was, again, classic Danish understatement!
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Birth of brand Pandora