Reporting 11% organic sales growth is the sparkle that markets need in late 2023. Adding that sparkle was jewellery business Pandora, which beat expectations in its third quarter. Ahead of its results, Pandora had announced in October that its Phoenix strategy would continue as it modernized brand, design, personalization and key markets. Pandora CIO Sunil Srivastava sat down with diginomica at the Gartner Symposium to discuss how the ongoing digital transformation is central to the now extended Phoenix strategy.
Initially announced in 2021, the Phoenix strategy included investment into the brand, stores and the Pandora business operations. The strategy is leading to like-for-like growth of 9%, which was a 4% increase in Europe and 5% in the US. Pandora President and CEO Alexander Lacik said in a statement:
We have fundamentally changed how we work, and the organization is much stronger. It's clear that Pandora is a very different company today. This solid foundation, combined with a proven strategy, now allows us to lift our growth target to 7-9% organic revenue CAGR. It's time to take Phoenix to the next level, and our new financial targets reflect our confidence in the future.
Unlike most in the jewellery sector, Pandora is a vertically integrated business, manufacturing its products and operating the supply chain, as well as both the physical and digital retail outlets. CIO Srivastava says of the business:
It allows us to have a feedback loop between all of our capabilities: manufacturing through to distribution, order to cash and retail.
But it's not without its challenges for a business technology leader. The CIO says there are very few windows for introducing change to the business and its technology estate. While the fourth quarter is the most hectic and important for most retailers, for Pandora, quarter two is the beginning of peak activity as the business prepares its products for that vital fourth quarter.
Digital transformation is not stated as one of the growth pillars of the Phoenix strategy, but as CIO Srivastava says, it underpins the four ambitions: brand, design, personalization and core markets:
There are two priorities for the digital transformation; the first covers being able to deliver personalized customer experiences with products that the customer wants, where they want it and when they want it.
The second priority is our people and providing them with the tools to do their best work in a digital environment. So we have introduced capabilities and tooling that will allow them to operate at full speed in a digital environment.
As a vertically integrated business, Pandora has, in both physical and online retail, a direct-to-consumer (D2C) business model, something the CIO says many other jewellery businesses are striving to catch up on. Its e-commerce business delivered DKK5.612 million in revenue, the 2022 annual report shows. A new e-commerce platform has been rolled out throughout 2022 to 2023. On this, the CIO says:
Our new e-commerce system has expanded our reach and understanding of what our consumers want. But there is more we can do here to leverage the data, especially in terms of production, by increasing the breadth of data that we collect.
It is a trade-off in terms of the customer being willing to share their data and us demonstrating the value that we are able to provide.
Integration and interoperability
As a result, data is seen by Srivastava as the foundation for the four growth pillars the business is pursuing. He says:
They have to hang together; they don't operate independently of one another. The underlying platforms and cloud infrastructure are the capabilities that interoperate with one another, be it in manufacturing or the supply chain.
Which also shapes the CIO role at Pandora; he says:
It is really important to have the oversight and governance of all these different areas.
He adds that building good data foundations is helping the business run at the speed of a pure online business, whether it's making, marketing, selling in-store or online:
One of the most important factors is being able to provide our business with the data and analytics that they need to run the business at digital speed, so we are getting to be more real-time in our understanding of shifts in the market. So, if we need to make merchandising and retail decisions, it is important that we are trying to make those at digital speed.
The other aspect is that we are bringing technology closer to our different functions. That allows us to grow and innovate faster.
However, the CIO is aware that there is more to business technology leadership than implementing technology. Since becoming Pandora's CIO in June 2021, he has ensured there is time for Pandora's staff to learn technology skills. He says:
Time is one of the most valuable commodities of our people, so creating the space to learn is one of the first things that we have done. We have set up academies to learn the technological ways of working that we want to shift to. We also have no meeting days. We ask people to set aside that time for learning.
The latest technology that workers at Pandora will need to educate themselves on is artificial intelligence (AI). Pandora has announced it will be using the o9 Solutions Digital Brain platform for business planning.
The cost of living and rising inflation have dominated headlines and the consciousness of consumers for the last two years. High-end luxury firms LVMH and Cartier have recently announced a slowdown in sales. However, market research firm Bain & Company is more buoyant about the global luxury market and forecasts it to reach €1.5 trillion in 2023, a growth of 10% over 2022.
Bain & Company cite personalized luxury goods as the area most set for growth, which will please Pandora and its focus on personalization. But the forecast does warn of macroeconomic challenges to the sector. CIO Srivastava pins his trust on the reasons people buy jewellery:
Jewellery retail and wearing jewellery is an emotional expression.