Despite a 14 percent global organic growth year on year, Pandora reported a disappointing 35 percent drop in sales across China in its Q3 2021 report.
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As Pandora’s global market reboots driven by the United States, the Danish jewellery brand is set to invest in marketing to push further into the Chinese market. Pandora will take the first steps to reposition the brand in Q4 2021 by among others increasing media investments.
The performance in the China market in Q3 2021 was significantly impacted by typhoons in July and a COVID-19 outbreak later in the quarter. Traffic in the physical stores was down approximately -50 percent vs 2020 and -70 percent vs 2019. Pandora’s physical stores in China were open during Q3, but more than 80 percent of the stores saw a significant decline in traffic due to COVID-19 restrictions. The negative impact was not recouped online.
In Q3, the second quarter in a row, Pandora was ranked the number 1 brand in fashion jewellery on Tmall, ahead of both local and global brands. The first significant steps in the repositioning of the brand was planned for H2 2021. However following the negative traffic development seen in Q3 due to COVID19, Pandora has decided to postpone a part of the planned DKK 0.2 billion (US$31.08 million) media investment into 2022, investing in media with the purpose of among others driving traffic to the stores makes little sense as long as street traffic is impacted by COVID-19. Pandora now expects to invest approximately DKK 0.1 billion (US$15.54 million) in 2021.
Last September, Pandora introduced a number of initiatives to drive a more seamless
and personalised customer experience. These include roll-out of omni-channel capabilities and a new store concept. In Q4 2021, Pandora will open the first three stores based on its new concept in China, Italy and UK. The stores are intended as pilots before a potential global roll out in 2022.
Pandora entered the Chinese market in 2010. It is particularly famous for its silver charm bracelets products. Dao Insights reported that this has caused Pandora issues, with this becoming their only product in a lot of Chinese consumers eyes, who have in turn neglected their larger product range, contributing to their poor sales performances.
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China is not expected to return to growth before next year. China accounted for 5 percent of revenue in Q3 2021.