Pandora, the world’s third largest jewelry brand in terms of sales, after Cartier and Tiffany&Co, known for its customizable charm bracelets, suddenly began to have a hard time in China. Its sale growth unexpectedly declined from 62% in the final quarter of last year to 16% in the first quarter 2018.
Pandora’s CEO blamed on the gray market-those unauthorized resellers who are importing Pandora products from markets where they’re much cheaper, such as Australia, and then reselling them. Because in China Pandora’s official stores often set silver product on a par with the gold price.
But the problem might run deeper.
Since 2016, Pandora has added over 59 concept stores, established a distribution center, strengthened its digital marketing and e-commerce presence while even planned to increase its store count by 200 this year. It is also trying to improve its designs and step up the pace of product launches.
Pandora seemed to do everything right. But,
-the competition in premium fashion jewelry is getting very intense in China, especially from local high end yet new cut-price jewelry rivals, such as Chow Tai Fook.
-Chinese consumers’ interests in its product concept are quickly fading away. The novelty of its fashion jewelry triggered the boom, but Chinese consumers are gradually returning to their fundamental appreciation of “fine jewelry”, diamond and gold which can last an eternity and hold investment value. This explains why Pandora has never been able to fully conquer the inland cities in China where it tried to open more stores but eventually ended up with more closures due to intrinsically traditional jewelry purchasing behaviors in these regions. Even though Panora can keep focusing its strategy on 1st or 2nd tier cities, the change of taste is probably happening, which reflected in its sales records.
Author: Cecilia wu