Reporter | Chen Qirui Edit | Xu Yue
Danish jewelry brand pandora's reform strategy is gradually working, but it still faces challenges in the Chinese market.
Interface fashion reporters recently visited and found that Pandora's store along the street in Beijing's luxury shopping center Wangfu Central was quietly closed, and cartier, a high-end jewelry brand owned by Richemont Group, has entered the enclosure decoration.
This shop is well located, with a two-storey storefront facing Wangfujing Pedestrian Street and close to the exit of the future metro Jinyu Hutong Station, which is guaranteed in terms of exposure and passenger flow. Pandora was one of the first brands to open in 2018 at Wangfu Central, and the Wangfu Central store was also positioned as the brand's global flagship store, where it opened the world's first pandora café.
Given the high-end positioning of The Palace Central, the mall's internal branding was adjusted three years after its opening, and the motivation to replace Pandora with Cartier is not difficult to understand. But in Changyaotian Street, another popular mall in Beijing that is positioned in the middle, Pandora's transition from an independent store to a small counter has somewhat embarrassed the brand.
On the public comments, some netizens said that the store's business is flat, and there is no longer the feeling of "the door is like a market" in the past, and pointed out that Pandora's design style is slightly outdated, and the service attitude of the sales staff needs to be improved.
In fact, Pandora's development in the Chinese market in recent years has fallen into a bottleneck period, and its store changes in Beijing are only a microcosm.
According to the Beijing Business Daily, Pandora CEO Alexander Lacik revealed in a conference call that due to the impact of the epidemic, 70 companies in the Chinese market have closed down according to regulations, the customer flow of the remaining stores is "almost zero", and the development of the overall retail business is in a state of stagnation.
According to the financial report data, Pandora Group recorded sales of DKK 19 billion (about 20 billion yuan) in 2020, down 11% at constant exchange rates; operating profit income was 2.684 billion DKK (about 2.8 billion yuan), and the profit margin was 14.1%, down 29.9% year-on-year. While sales in European and American countries such as the Uk, the US and Italy recovered from the third quarter of 2020, sales in China fell 23% during the quarter.
To this end, Pandora directly pointed out in the annual financial report that there are still "structural challenges" in the Chinese market, and it is expected that the operating income decline in 2021 will still be lower than that in 2019. According to the first quarter of 2021 earnings, China contributed only 6% of Pandora's global sales, with Europe and the Americas remaining its most important markets.
But that doesn't mean Pandora will ignore the Chinese market. In fact, over the past few years, Pandora has made a large-scale layout in China. According to the statistics of Beijing Business Daily, by the end of 2019, the number of Pandora's stores in China reached 240; in the first quarter of 2017, Pandora's 58 new stores around the world were located in 19 locations in China.
For a brand that officially entered China in 2015, this rate of expansion is enough to show that Pandora attaches great importance to the Chinese market. Correspondingly, consumers in the Chinese market have also made a "return" on Pandora's investment.
Pandora's first quarter of fiscal 2019 financial report shows that Turnover in China organically increased by 15% to DKK 548 million, becoming the only region in the world's top seven markets to maintain positive growth, accounting for 16% of sales.
But online, Pandora suffered a crisis, with the decline in Sales at Tmall's flagship store leading to a 4% drop in overall sales growth in the first quarter of fiscal 2019. Although Pandora did not disclose the proportion of e-commerce business in sales, it is not difficult to see from this data that e-commerce channels are of great significance to its development in the Chinese market.
Therefore, when Pandora announced the reform plan in 2019, she stressed the need to strengthen cooperation with Tmall, promote the transformation of brand image through the upgrading of new product launches, membership systems and community marketing, and announced Guan Xiaotong as a spokesperson, using the star effect to increase its social media momentum.
At the same time, Pandora's store expansion began to slow down. In the first quarter of 2019, the number of new stores opened worldwide has been reduced to 9, and the layout of the Chinese market has also begun to shift to second-tier cities.
The size of the beaded category that made Pandora popular has also been appropriately compressed to reduce the decisive role of its brand development. Recently, Pandora also announced that she will increase investment in the artificial jewelry business, saying that she will gradually replace natural diamonds with artificial diamonds.
"Pandora has now expanded to more than 100 countries around the world, so there are not many opportunities left for us," Kenneth Madsen, president of Pandora Asia Pacific, said in a previous interview with Interface Fashion, "China is undoubtedly our biggest opportunity, perhaps our most important market." ”