Why did the "Chinese girl" abandon Pandora?

Stinging Institute

2024-05-10 21:41Published in Shanghai

Author: Cheng Yu

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Once upon a time, Pandora, which sold 100 million pieces a year and was known as the "zara of jewelry", is now falling out of favor in the Chinese market.

According to the financial report data released by Pandora over the years, in 2019, Pandora's sales in the Chinese market reached 1.97 billion Danish kroner (about 284 million US dollars), and from 2021, Pandora's sales in the Chinese market have been declining, respectively 1.126 billion Danish kroner (about 162 million US dollars), 737 million Danish kroner (about 106 million US dollars) and 564 million Danish kroner (about 81.44 million US dollars).

Perhaps from the perspective of time, Pandora's revenue decline in the Chinese market is related to the epidemic, but Pandora's "downhill" may not be caused by the objective environment. According to the "2023 China Jewelry Industry Development Report" released by the China Jewelry and Jade Jewelry Industry Association, the market size of the mainland jewelry and jade jewelry industry in 2023 will be about 820 billion yuan, a year-on-year increase of 14%, a record high.

In the face of the continuous growth of the Chinese market, Pandora has abruptly withdrawn from the "C position", and behind this strong contrast, it reflects the industry changes that are taking place in the Chinese jewelry market.

"Tears of the Times"

Since entering the Chinese market in 2015, Pandora has gained the favor of a large number of Chinese girls with its DIY product model of "bracelet + beads". Even within the group of loyal fans of Pandora, there is a self-deprecating golden sentence of "once you enter Pandora, it is as deep as the sea, and you can buy it home one by one".

In the market environment 10 years ago, Pandora did look particularly "clear-eyed". At that time, both domestic jewelry brands and international luxury brands were focused on standardized products, and the slight differences were nothing more than limited editions or co-branded models. However, Pandora does not sell complete bracelets, but uses the slogan "one bead represents a story" to attract consumers to choose from the brand's various shapes of beads to complete the free match.

*Image source: Pandora's official Weibo

It is worth mentioning that in 2015, when Pandora entered the Chinese market, the first batch of post-85s was just 30 years old. As the younger generation has become the mainstream group in the consumer market, the demand source of jewelry consumption has also begun to shift from increasing the sense of ritual on major festivals such as weddings and birthdays to "pleasing oneself consumption". In addition, the design of traditional gold jewelry is slightly "old-fashioned", and the pricing of luxury brands is a little "unaffordable", so Pandora, which can "enter the pit" for a few hundred yuan and is more personalized at the same time, quickly captured the "girl's heart".

As one of the earliest enthusiasts of the Pandora brand, Yoyo, a post-85s mother, told the Institute that Pandora's DIY concept was very attractive at the beginning, "because it allows you to freely match your own unique bracelets in the world." Yoyo said that he had the idea of traveling around the world at the time, so whenever he went to a country, he would go to the local Pandora store and buy a bead that could represent the local culture or have local characteristics.

"For example, dolphin-shaped beads that I bought in New Zealand. There are really no representative beads, so I will choose one that I like. Later, not only would I go out to buy beads, but also when I met something or someone with special meaning to me, I would also buy them, and then form a bracelet that is meaningful to me. Yoyo revealed that so far she has spent nearly 10,000 yuan on Pandora's beads.

*Yoyo's Pandora Bracelet

It is with the support of Chinese girls like Yoyo that Pandora has achieved rapid growth in the Chinese market.

According to public data, in 2016, Pandora's sales in the Chinese market increased by 175% year-on-year. In 2017, Pandora added 58 new concept stores in the Chinese market. By 2019, Pandora had 240 stores in China, and its stores were always adjacent to other international luxury brands in large shopping malls in many first-tier cities in China.

It's just that Pandora didn't expect that the rapid development of 4 years "thought it was the beginning, but I didn't expect it to be the peak".

Pandora's "magic" is out of order

To analyze the reasons for Pandora's decline, the epidemic is indeed a core factor that cannot be avoided.

Alexander Lacik, CEO of Pandora, revealed in a conference call that due to the impact of the epidemic, 70 of China's 240 stores were closed in 2019 as required, and the vast majority of the remaining stores located in shopping malls had basically no customer flow. He bluntly said that the business in the Chinese market is in a state of "stagnation", and the sales performance has shown an "unprecedented" decline as a result.

According to media reports, as of the fourth quarter of 2020, about 10% of Pandora's stores worldwide have been closed. In 2021, 20%-25% of the world's stores were closed in the first half of the year alone. According to Pandora's first quarter 2022 performance report, the number of Pandora stores in China had decreased to 209 at that time.

*Image source: Pandora's official Weibo

Not only is the number of stores decreasing, but the Pandora stores, which were once close to other luxury brands, are also quietly disappearing. In 2021, according to Beijing Business Daily, Pandora's main store, which was originally located in Beijing's Wangfu Central, quietly withdrew and was replaced by Cartier, a high-end jewelry brand. At the same time, Pandora in Changying Heavenly Street has "shrunk" from a store to a counter.

From the scale of operations to the overall contraction of physical stores, not only explains the decline in Pandora's revenue in the Chinese market, but also causes a further collapse of brand value.

According to the Daily Economic News, when some consumers consulted luxury recycling merchants, they were told that Pandora's bracelet "is not a luxury and does not retain its value enough". In the second-hand luxury goods recycling channel, Pandora's jewelry can only be charged by silver weight, and the price per gram ranges from 5 yuan to 10 yuan. There are Pandora bracelets purchased by consumers for thousands of yuan, which are valued at less than 200 yuan by second-hand luxury merchants.

The shrinking value of Pandora in the second-hand market is undoubtedly a "backstab" for "Chinese girls". As a result, more "Chinese girls" chose to abandon Pandora.

Also under the influence of the epidemic, the financial report data of Richemont Group, the parent company of Cartier and Van Cleef & Arpels, showed that sales revenue in the third fiscal quarter ended December 31, 2020 was 4.19 billion euros, a year-on-year increase of 1%. Sales in the Asia-Pacific region excluding Japan increased significantly, with overall sales up 25 percent year-on-year to 1,729 million euros, while sales in Chinese mainland increased by 80 percent.

According to the financial data for the third quarter of fiscal year 2024 (ending December 31, 2023) released by Richemont at the beginning of this year, Richemont achieved sales of 2.049 billion euros in the Asia-Pacific region, a year-on-year increase of 13%. Sales in China increased by 25 percent, offsetting weakness in the rest of the world.

Everyone is being affected by the environment, why is Pandora left behind? To borrow the famous words of "Anchor Li": You still have to find your own reasons.

The embarrassment of fast fashion jewelry

In fact, Pandora's "falling behind" is largely due to the serious disconnect between the brand and product positioning and the market demand.

First of all, when Pandora first entered the Chinese market, the promotional concept of "one bead, one story" was indeed a perfect fit for the pursuit of ritual and self-expression of the "Chinese girls" at that time. To this end, Pandora has also adjusted the frequency of "new products" from 2 times a year to 7 times a year, which has earned it the title of "ZARA" in the jewelry industry. But after 10 years of DIY differentiation, how much market appeal is left?

Secondly, when Pandora began to launch a large number of new products in the way of a fast fashion brand, the brand's own design capabilities gradually encountered bottlenecks, and many times it could only rely on simple changes in materials or adding colors to complete the task of "new". On social media, there is no shortage of users complaining that Pandora's design is getting more and more ugly. When a luxury brand begins to encounter aesthetic doubts, its brand appeal in the terminal market will naturally continue to lose.

Third, after the epidemic, under the market background of the awakening of the concept of rational consumption, "ZARA" in the jewelry industry has also entered a period of recession like other fast fashion brands. In addition to pursuing a sense of ritual and self-expression, today's "Chinese girl" has become more focused on practicality. One of the most obvious changes is that the "Chinese girls" who used to be keen on DIY Pandora bracelets have become popular to buy gold beans.

*Gold jewelry bought by Yoyo

In the gold jewelry market, gold bean products have a small gram weight, a low purchase threshold, and a processing fee of only 400 yuan to 500 yuan a piece, which is almost the same price band as Pandora's beads. But in Pandora, you may only buy alloys for about 500 yuan, but you can buy "real gold" in the gold market. For the same price, is it used to buy a story, or is it used to buy "real gold"? This question is obviously not difficult to answer.

What's more, because of the east wind of gold appreciation and the popularity of the concept of national tide, domestic gold jewelry brands have exploded in recent years. According to Deloitte's Global Powers of Luxury Goods 2023 report, companies from China occupy 10 of the top 100 spots, and are concentrated in the gold and jewellery industry, with well-known gold jewellery brands such as Chow Tai Fook, Lao Feng Cheung, China Gold, and Chow Sang Sang Sang among them.

In addition, another factor that is easy to overlook is that the "Chinese girls" who were once willing to pay for the story have grown up.

According to the "2023 Jewelry Consumer Trends Survey Report" released by Ipsos, 91% of Chinese respondents tend to buy jewelry with Chinese cultural heritage characteristics, and about half of Chinese respondents associate jewelry with traditional Chinese cultural elements with beautiful meanings and exquisite craftsmanship.

In strong contrast, Pandora's core products still focus on the "dreamy" and "fairy tale" style, and try to reach more young people through cross-border cooperation with Marvel, Disney and "Honor of Kings", and complete the mining of incremental users, but this makes Pandora's brand more naïve.

*Image source: Pandora's official website

As a result, with the practical advantages of gold value preservation and the blessing of the metaphysical meaning of traditional culture, Pandora's story seems to be much thinner, so it failed to catch the brand's die-hard fans and lost the basic plate. The new generation of young users is faced with diversified choices from luxury brands to national fashion gold jewelry, and Pandora, whose products are not "hard" enough, is also a little less attractive.

In fact, the current jewelry market has not undergone any earth-shaking changes, but on the basis of the pursuit of self-expression and ritual, people pay more attention to practicality and cost performance, but these two points are Pandora's weakness.

What's even more fatal is that after getting used to using the fast new fast fashion model to achieve high-speed expansion, Pandora has "turned around". Whether it is the closure of the store or the change of the store counter, the fundamental problem of the new product is not solved, the brand "story" that has been told for 10 years is not updated, and no matter how loyal the user is, I am afraid that there will be a day of "backwater".

Therefore, it is not so much that the "Chinese girl" abandoned Pandora, but that Pandora failed to keep up with the new changes in the market. And in the jewelry market, Pandora really needs a new story.

*Yoyo is a pseudonym in this article.

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