There’s one phrase that’s been repeated more times than most of us can count: Within months, COVID accelerated trends that would otherwise have taken years to develop. Pandora, the Danish jeweler known for affordable, high-quality jewelry that enables self-expression and collection, and one of the world’s leading jewelry brands, illustrates this phrase.
The company was undergoing a digital transformation when it launched its digital hub in early 2020, just before COVID started. At the time, the jewelry business, including Pandora, was still primarily a brick and mortar business. For example, Pandora jewelry is sold on six continents, in more than 100 countries, through more than 6,700 points of sale, including more than 2,600 concept stores. “When it came to our stores, we focused on serving the consumer, who would walk away happy with our product in hand,” said Mariane Heidingsfelder, vice president of supply chain technology and innovation for Pandora Jewelry. “The stores were our mark. We had a website and brand pages, but we weren’t focused on the online consumer experience.
She adds: “It was before COVID.”
It’s a strategy that has served Pandora well for years. The network included two manufacturing plants in Thailand and distribution centers such as a European distribution center in Hamburg, Germany, to restock stores and ship to wholesale partners. The 3PLs operated an e-commerce channel that accounted for a small portion of sales.
But, of course, COVID changed everything when Pandora had to close most of its stores while meeting customer demand for its products. The response has been to switch to a digital hub the company launched just before the pandemic, including inventory and order management solutions from IBM Sterling.
A charmed story
The pivot to a digital supply chain was not Pandora’s first pivot. According to the company’s history, Pandora was founded in 1982 in a small jewelry store in Copenhagen by Danish goldsmith Per Enevoldsen and his wife Winnie. The couple traveled to Thailand in search of unique jewelry that they could import. In 1987, they had closed the store to focus on distribution to wholesale customers. That year, they also hired their first in-house designer to create unique jewelry. They started making the company’s designs in Thailand in 1989.
Pandora launched its most famous product, the collectible and very personal charm bracelet, in 2000. By 2004, Pandora was not only operating in Denmark, but had expanded to the American, German and Australian markets. To meet the demand for its popular products, Pandora opened three more manufacturing plants in Thailand between 2005 and 2010. Today, it is one of the top three jewelry brands in the world, the charm bracelet of collection being the cornerstone of the product portfolio.
For most of its history, the company has focused its sales efforts on the personalized, high-quality customer service that accompanies in-person purchases. The website was more informative than an omnichannel hub. “I joined Pandora after working in the footwear and clothing industry, which is very different from selling jewelry,” Heidingsfelder explains. “Before COVID, the share of e-commerce in the jewelry market was low. For Pandora, an important part of the sales process was helping a consumer choose the right charms for her bracelet. “It’s hard to replicate this experience online,” Heidingsfelder notes.
At the same time, as the business shifted from a small retailer to a wholesale distributor, and then from the Scandinavian market to the global market, Pandora realized that consumers felt more comfortable buying online. line of other highly tactile items, such as furniture and cars. A digital hub was on the horizon for the jewelry industry. “Our CEO and CTO were visionaries who wanted to be the pioneers in selling jewelry offline and online,” Heidingsfelder says.
Pandora started working on this new strategy the year before COVID. Part of this was implementing technology that would create the foundation on which to build the digital hub. Salesforce.com, for example, is the customer-centric app while the company has implemented part of IBM Sterling’s order and inventory management apps to allocate the right inventory to stores and distribution centers. The idea was to roll it all out in 2020, with the digital hub coming to life right at the start of COVID, and then build from there over time. Suddenly, that lapse of time accelerated.
Spin the wheels
With the closure of stores around the world, Pandora has been faced with the same question that other retailers have been asking: How do we continue to serve our customers with our jewelry? And, given the exponential increase in the demand for e-commerce orders, how do we develop e-fulfillment capabilities. It was like the proverbial change of a flat tire while driving on the highway.
Part of the strategy was to replicate the traditional online customer experience. To do this, Pandora kept its sales staff employed throughout the pandemic, even though they were now working from home. In key markets, they activated remote shopping assistance which allowed salespeople to help customers select jewelry as they would in the store. AR technology has allowed customers to virtually try on items such as rings. In geographies where this was permitted, sales staff worked in stores to fulfill click and collect orders for in-store pickup and curbside pickup. “Sterling helped us divide the inventory between click and collect locations,” Heidingsfelder says. “We don’t have true distributed order management yet, but Sterling has also helped us orchestrate where it did most to fulfill an order for the customer. ”
The company did not have the staff or the capabilities to efficiently ship from the store. Pandora therefore worked more closely with 3PL partners who were already performing e-fulfillment. This presented another allocation challenge. “In the past, most of the allocation went to brick and mortar stores,” Heidingsfelder notes. “We had to work closely with our production site in Thailand and make better use of our data to improve our forecasts. And we’ve increased our allocation cycles to our 3PL partners from once a week to three times a week to provide them with new inventory. It was a big effort. ”
Finally, Pandora opened new facilities, including a site in Las Vegas solely for e-fulfillment in the United States and, in a few months, added B2C capabilities to the European distribution center in Hamburg which serves Germany, Austria and Belgium.
If you read Gartner’s 20 Best Supply Chains for 2021, you can’t help but notice how often a new metric pops up in articles on Best Supply Chains: CX, which stands for Customer Experience. In these supply chains, cost is still one of the top five supply chain drivers, but led by Jeff Bezos and Amazon delivering a customer experience is now number 1.
Going forward, Pandora has set out a three-year strategy with digital investments that will strengthen its CX skills. “Growth is important, but we put personalization, the omnichannel experience and the consumer at the center of our business,” says Heidingsfelder. “We strive to break down the silos between our retail, wholesale and e-commerce channels to deliver a world-class customer experience. ”
This strategy consists of approximately five elements:
Product availability is king. This will require continued investment in planning and forecasting technology and capabilities. DOM will be part of this strategy.
Focus on speed for the consumer. This includes last mile capacity building in markets where the customer is looking for same day / next day delivery. To this end, Pandora is investing in a new TMS and carrier integration solutions.
Robust fulfillment is important. This goes hand in hand with speed for the consumer. “We are creating a multi-node network strategy, where we use our partners, our own facilities and our stores,” Heidingsfelder said. “We have worked with 3PLs on e-fulfillment, but we want to bring B2C capabilities internally and work from pooled inventory stock wherever possible. ”
Personalization is the key for many customers. Pandora is looking for better ways to track the status of deliveries, but also to communicate messages from a donor to the recipient of the gift. “We just lived in Italy with an app to provide this online,” Heidingsfelder explains.
Durability must be at the center of the supply chain given its importance to consumers.
Consistency. Pandora will deliver what it promises to the customer at the time of ordering.
Going forward, Heidingsfelder says Pandora needs to do two things to execute this strategy. “We have to build on the foundations that we have put in place, and do so without losing innovation,” she says. “One of our core values is to dare and the other is to deliver. In omnichannel, we want to do both.
Want to learn more about Pandora’s digital transformation? Then register to attend the NextGen Supply Chain Conference, where Mariane Heidingsfelder will be the keynote speaker on Wednesday 3 November. NextGen is a virtual event from November 2-4, 2021.
About the Author
Bob Trebilcock Bob Trebilcock, Editorial Director, has covered materials handling, technology, logistics and supply chain topics for almost 30 years. In addition to Supply Chain Management Review, he is also editor-in-chief of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.