Pandora, a Retail Success Story Bucking the Trend
One of the brightest rays of light in today's long suffering retail market may be the launching in the United States of franchise concept stores carrying Pandora brand jewelry and accessories. The Real Deal recently met with John Jackson, Vice President of Operations for the Albert S. Smyth Co., the nearly 100 year old jewelry store business based in Timonium, Maryland, regarding Smyth's experience as a Pandora franchisee in several states. Mr. Jackson, a veteran of 22 years in the jewelry business, the last ten with Smyth and 12 before that with Sterling Jewelers, has been leading Smyth's efforts to expand from a locally operated full service jewelry store into a national mall retailer. The experience has been exciting, especially in these times when the retail industry outlook continues to be very cautious.
John talked to us about the timeline of major events in the history of Pandora. The company began in 1982 when a Danish goldsmith opened a jewelry store in Copenhagen. A couple of years later a jewelry designer was hired and the focus of the company quickly evolved from a retail business to a wholesale dealer within a few short years. A little over ten years later in 2000, the popular Pandora charm bracelet was launched, allowing customers to select from hundreds of unique charms made of sterling silver, 14K gold and Murano glass. It was not until 2003 that Pandora jewelry was sold in the United States and Canada, where it was distributed mainly in gift shops and later in jewelry stores. Today there are over 2000 jewelry and gift stores carrying Pandora bracelets, rings, necklaces, and earrings.
The next step was the formation of Pandora "concept" stores, selling exclusively Pandora jewelry and accessories, the first of which opened in Charlotte, North Carolina, in 2007. Today there are nearly 100 Pandora concept stores throughout the nation operated by several different franchisees, one of which is Smyth Enterprises, LLC, an affiliate of the Albert S. Smyth Co. The North American headquarters of the franchisor, Pandora, LLC, is located in Columbia, Maryland.
Smyth was a natural candidate to pursue a Pandora concept store franchisee opportunity since its Smyth jewelry store carried the popular merchandise for some years. According to John, among the factors Smyth considered in becoming a Pandora franchise included the benefits of relatively low start up costs and the fact that the line is "price protected," meaning that all retailers have to sell the merchandise for the same price. As of December 2010, Smyth operates nine Pandora concept stores in five states--Maryland, Texas, Virginia, Missouri and New Jersey. Smyth will open two additional stores --one each in Virginia and Texas -- in the spring of 2011, with another three stores to open later that year. Smyth, with input from the franchisor, selects on average 900 square foot sized stores in "A" malls, such as Towson Town Center, Tysons Corner, and Galleria Dallas. The target customer is a 35-50 year old woman who enjoys being her own jewelry designer. While the average price point is $30, at the upper end, individual items can range from $600 to $6,000.
The design of the concept stores projects a clean, simple, "Euro" look and feel, with substantially all glass or open storefronts. The average cost to build a store is $175,000, which includes the sleek fixtures that were originally made only in Denmark but now (thankfully, according to John) are manufactured in Florida as well.
We asked John what the biggest challenges are for his company in becoming a national mall retailer. Not surprisingly, the biggest challenge involves change. Among the biggest changes are the logistical adjustments required to the parent company's systems to absorb many new stores in many different states in a short period of time. Even more complex are the cultural changes that are necessary to adapt long-term Smyth-only employees to the new dimensions inherent in being a multi-unit retailer.
In addition to the internal challenges, there are always the risks associated with signing leases in what continues to be a below par climate for many retailers, a risk that can cause John a few (but not many) sleepless nights, since nearly all of the Pandora concept stores are exceeding sales' projections. The Pandora story gives us all reason to believe that the retail market is turning the corner.