Image source @ Visual China
Wen 丨 New Game, Author 丨 Zhang Yeyou, Editor 丨 Lei Yunting
"Once you enter Panmen, you will buy them one by one." This is a phrase that is popular among Pandora's loyal enthusiasts.
In 2015, Danish jewelry brand Pandora entered the Chinese market and quickly began to expand, opening more than 200 concept stores in China in just a few years, and Pandora's "unforgettable moments" concept also quickly attracted a wave of consumers who paid for the "story".
For Pandora's loyal lovers, they value not the actual value of Pandora, but the derivative value of each bead with a story. But unfortunately, this kind of thinking that "you can like it, you can have a story, and the material is not important" does not seem to be popular among the mass consumer group.
In the second quarter of 2020, Pandora's sales in the Chinese market fell by 24% year-on-year, when the sales of many international brands in the global market declined year-on-year, but the performance in the Chinese market increased year-on-year. In the third quarter of 2020, Pandora's sales in the US market rose by 18%, but the performance in the Chinese market remained weak, with sales revenue down 23% year-on-year.
At the "Capital Markets Day" event held recently, Pandora pointed out that the brand's goal is to triple the revenue of the Chinese market on the basis of the performance in 2019. At the same time, Pandora CEO Alexander Lacik also made a bold statement: "Our goal is to become the largest and most popular brand in the light luxury jewelry market." ”
It is good to have ambition, but in the context of the intensification of competition in the domestic jewelry market, in the era of increasingly rational consumption, Pandora, whose aesthetics are outdated, the price is not matched, and the retention of value is low, it is not easy to pick up.
<h2>1. The magic of "storytelling"</h2>
There is a story in the national comic "Chinese Diary", when the business of the traditional hot pot shop has been robbed by the net red hot pot shop, the god of the hot pot seeks the help of the heroine to make his hot pot shop popular again, and the answer given by the heroine is: "If you want to fire, you only need three conditions, gimmick, gimmick, or gimmick." ”
Storytelling is the "gimmick" preferred by many contemporary companies and brands. Looking back at Pandora's development, we can see that its popularity is more due to storytelling than to the product itself.
The jewelry industry itself is a well-suited industry for storytelling, but Pandora brings with it a rare new story. Unlike many jewelry brands that sell stereotyped products, Pandora offers consumers the option to choose their own pendants and bracelets, and to personalize the bracelet in any combination.
This form of customization itself is just a change in the sales model, but Pandora is very good at "value", which it calls "women's way of expressing their own personality" and "emphasizing their own particularity".
Nowadays, there are many Pandora bracelets on the Little Red Book, and even some people have summarized the bracelet matching formulas with different bead quantities, such as relatively simple fixed buckles and pendants/charms, such as complex fixed buckles and glass/opals, pendants/charms. However, many posts on the Little Red Book have strong marketing colors, such as "Girls must have their own Pandora bracelet", "No girl can resist the temptation from Pandora" and so on.
After branding the slogan "unforgettable moments", Pandora's bracelet began to become one of the synonyms for memories and stories. Many pandora fans have a habit of buying a classic snake bone chain first, and then constantly buying beads with special significance on some shows or anniversaries, according to their mood and experience. In their opinion, the process of creating their own Pandora bracelet is enough to give this bracelet a special meaning.
In order to meet the customization needs of multiple consumers, in recent years, Pandora has not only launched a variety of beads such as letters, logo buildings, actions, festivals, etc., but also frequently launched some new theme products for consumers to choose, such as Disney series beads, constellation series beads, birthstone series beads, etc., in order to meet the different collocation requirements of consumers.
There is a Pandora loyal fan who once posted her Pandora bracelet on the Internet, and she is very precious to every story. "The first bead was a boat, and my husband and I met on the boat; he had been peeling crabs for me to eat, so the second bead was a crab; the third pink rose was the flower he gave me for the first time; the fourth blue bubble glass was bought by himself, representing bits and pieces after being with him."
Pandora's concept of "unforgettable moments" is actually the same as the "ring that can only be bought once in a lifetime" advertised by Darry Ring, which exists to sublimate the emotional value behind the brand and product. Therefore, when people buy Pandora, they come more for this added value, looking for the meaning of consumption.
It can be said that Pandora's propaganda concept does hit some consumer demands, which is in line with a generation's pursuit of ritual or self-expression, so it can develop rapidly in the global market, including the Chinese market. Pandora entered China in 2015, which is not too early, but just four years later, Pandora's number of stores in China has reached 240.
In fact, Pandora's popularity is not only due to its successful finding of a gimmick, but also because on the basis of the gimmick, Pandora has handed over the right to "storytelling" to consumers. However, a gimmick may not always be invincible, especially jewelry brands.
<h2>2. The foam bursts</h2>
Around 2018, Pandora's growth rate in the Chinese market began to slow down.
In Tanabata in 2020, Pandora launched jewelry with Chinese "folding fan" elements in the Chinese market to narrow the distance with domestic consumers, which shows that Pandora is also anxious about the slowdown in growth. But relying on the localization of one or two products is obviously not enough to stop the decline, Pandora pointed out in the 2020 financial report that there are still "structural challenges" in the Chinese market, and it is expected that the operating income in 2021 will be lower than in 2019.
Open Pandora's online flagship store, you will find the highest sales of stud earrings in the store, the monthly sales are only 700+, in the store of more than a thousand products, only the monthly sales of more than 100 products are 100+, while the monthly sales of most styles are less than 100, and the monthly sales of Pandora's "Shining Galaxy" popular bracelet are also less than 100. For a brand that was once popular, this sales volume is undoubtedly sluggish.
Pandora CEO Alexander Lacik has attributed Pandora's sluggish performance in 2020 to three major reasons, namely that Pandora's business is in a period of transformation, the impact of the coronavirus outbreak, and Pandora is making a radical change to its organization and operating model. The impact of the epidemic cannot be ignored, but in the Chinese market, the fundamental reason for Pandora's unstoppable decline is that the aesthetic is outdated and the price is not matched.
On the Little Red Book, a consumer once posted a variety of Pandora bracelets he had collected in the past few years, and the comments of 6,000 people under the post were "Forgive me for not getting its beauty", and 2,000 people praised the comments as "Only I think Pandora is very childish and low".
Compared with the world's top luxury brands such as Cartier, Tiffany and Bulgari, Pandora and Swarovski, which were established late and relied on the labels of personalized fashion brands, differentiated product concepts, and large-scale marketing to quickly stand out, have been relatively weak in design.
Since entering the Chinese market, Pandora has rarely innovated in her design style, and has always been based on the fairy tale style and dream style loved by young girls. In the eyes of Pandora's loyal lovers, once you enter Panmen as deep as the sea, pandora's beauty is indescribable, but in the eyes of more passers-by, Pandora is full of the cheap sense and earthy taste of Yiwu small commodities.
A few years ago, the pearlescent Pandora did not receive too many "ugly explosions" and "soil" evaluations, but with the arrival of the wave of simple aesthetics, Pandora gradually became the existence of more and more consumers who "can't appreciate it".
In addition, in recent years, many domestic consumers have begun to refer to Pandora and Swarovski as "IQ tax".
Nowadays, the consumption concept of domestic consumers is developing towards rationalization, and the price sensitivity is also higher. The "China Women's Double Eleven Consumption Report" pointed out that more than 70% of women will formulate clear consumption goals and shopping strategies before Double Eleven, so as to make rational consumption during the Double Eleven period. In addition, 53% of people value the quality of the product when purchasing, and more than 40% of users are more concerned about the practicality of the product.
In the era of rational consumption, Pandora's situation is awkward, because, like Swarovski, it is a brand that has nothing to do with cost performance. Pandora's material is not expensive, most of them are silver jewelry, but from the price point of view, Pandora will sell silver jewelry to the price of gold jewelry, the price of a string of custom-matched bracelets is generally around two or three thousand yuan, and what is more, there have been consumers who have spent more than 10,000 yuan in Pandora's counter with a set of bracelets.
Due to the low price of raw materials, Pandora's gross profit margin is as high as 77.4%, in contrast, the raw material transparent value-preserving jewelry Chow Tai Fook, Chow Tai Sang, Lao Feng Xiang gross profit margins are 27.4%, 41.0%, 8.18%, it is difficult to compare with Pandora.
Pandora's positioning has always been light luxury jewelry, but as far as Pandora and Swarovski are concerned, light luxury itself is a pseudo-concept, because they do not bring "mid-range prices, quasi-high-end enjoyment" in terms of quality and design, nor do they have the real collection value of jewelry, and their prices are a certain bubble.
Nowadays, after consumers pay more attention to cost performance, Pandora's story and concept are no longer moving, and it is difficult to easily harvest mass consumers.
<h2>3, the road ahead is difficult
</h2>
Even with sluggish performance, Pandora remains ambitious in the Chinese market.
Pandora pointed out that the Chinese market is an important opportunity for Pandora's future growth and a priority part of the brand's future development strategy. This prediction is accurate, Euromonitor data pointed out that from 2010 to 2018, the market size of China's jewelry industry expanded year by year, the industry market size in 2018 was 696.5 billion yuan, and it is expected to reach 874.2 billion yuan by 2022.
From the perspective of the development trend of the domestic jewelry market, jewelry brands are promising in the next few years, but from the perspective of changes in market competition pattern and consumer demand, it is not easy for Pandora to achieve the goal of "tripling revenue".
Putting aside the pressure brought by top luxury brands such as Cartier, Tiffany and Bulgari, in the Chinese market, positioning high-end regional leading brands such as Chow Tai Fook, Chow Tai Sang, Zhou Shengsheng, Lao Fengxiang, etc., the pressure that will bring Pandora, Swarovski and other brands in the future cannot be ignored, which is not only due to the higher preservation of these brands, but also because they have been extensively deployed in channels in recent years, and their scale advantages will be further reflected in the future.
In addition to the pressure brought by top luxury brands and mid-to-high-end regional leading brands, niche affordable brands such as KvK and zengliu, which continue to emerge in the jewelry industry, are also sharing Pandora's cake. Founded in 2019, the domestic brand KvK has developed an amazing momentum, and the online flagship store has so far had 1.5 million subscribers. These niche brands have a more unique personality, relatively low prices, and are more favored by a new generation of consumer groups that frequently change jewelry.
Some people say that with the gradual differentiation of domestic consumer groups, the living space of light luxury brands between high-end brands and flat-priced brands is getting smaller and smaller, which is not objective, because the existence of the middle class is destined to have a broad living space for these light luxury brands. Pandora does not represent the development of all light luxury jewelry brands, just like APM Monaco, which is similar to Pandora's positioning, has a very different performance in China.
From 2018 to 2020, APM Monaco's operating income was HK$1,441 million, HK$1,838 million and HK$1,920 million respectively, of which revenue from Chinese mainland was HK$624 million, HK$862 million and HK$1,098 million, accounting for 43.32%, 46.9% and 57.2% of total revenue. It can be seen from the gradual increase in revenue of Moroccan brand APM Monaco in the Chinese market that personalized fashion brands have room for sustainable development in the domestic jewelry market.
Compared with Pandora and Swarovski, APM Monaco, whose materials are mostly silver and zirconium, does not have high value retention, and there is a certain brand premium, but APM Monaco has two advantages, one of which is that its design is more avant-garde and bold than Pandora, and it is also more simple and elegant, and in the past one or two years, it has been loved by many stars, driving the stars to go out of the circle; the second is that compared with Pandora and Swarovski, APM Monaco's workmanship is more refined and more textured.
The upward trend of APM Monaco also confirms that in the long-term survival of the jewelry market, storytelling alone will not work. In the future, brands such as Pandora need to continue to strengthen brand recognition through design and adapt to the changing aesthetic needs of contemporary consumers, so that it is possible to give birth to blockbusters and enhance their influence through blockbusters.
In addition, for Pandora, who has a very high gross profit margin, it may also be time to consider reducing profit margins and investing more resources in quality improvement and quality control.
However, from the end of last year, Pandora integrated a new management team for China, took the Chinese market as a priority development target, increased marketing investment in the third quarter, and took internal restructuring for inventory management and employee incentives, Pandora may not have realized the root cause of the brand's decline in the Chinese market.