PANDORA Annual Report 2017

P A N D O R A A N N U A L R E P O R T 2 0 1 7 O U R B U S I N E S S 1 5 C O N T E N T S Necklaces Earrings Rings Bracelets Other Source: Euromonitor 2017 1 8 % 1 7 % 3 % 3 2 % 3 1 % % VA LUE SHAR E OF F I NE J EWE L L E RY CAT EGOR I E S ( GLOBA L ) P A N D O R A I N T H E J E W E L L E R Y I N D U S T R Y THE GLOBA L J EWE L L E RY I NDUS T RY AT A GL ANC E As of 2017, the total value of the jewellery industry exceeded around DKK 2,100 billion (EUR 282 billion) 1 . However, the market remains fragmented, with the top five players only hav- ing a single-digit global market share when combined. These players are, however, growing above market average. In addition to market frag- mentation, a few large players focus on specific regions rather than global presence. As a result, there are some brands that are widely known and well positioned in one part of the world, but have no or few points of sale in other regions. China represents more than 30% of the global market value, making it the single largest market, followed by India and the US. Together, China and India are driving growth in the Asia Pacific region, and this region is expected to remain the main growth driver for jewellery worldwide over the next five years 1 . Growth is also expected to continue in the EMEA region as well as in coun- tries in Latin America, such as Argentina and Mexico. The slow growth in the US is predicted to continue as a result of low consumer confi- dence, a decrease in tourism, and changes in consumer behaviour 2 . The various distribution channels that are most frequently used for purchasing jewellery can vary significantly from market to market. In the US, specialty stores and mass merchandisers are the main sales channels; however, online retail- ing has almost doubled in five years, resulting in online sales generating more than 20% of total US jewellery sales. In China, sales are generated by department and specialty stores, whereas in India sales are almost exclusively generated through specialty stores. In Australia, jewellery sales are primarily generated through jewellery specialty retail stores, whereas in the US, distri- bution channels, such as the US jewellery chain Jared® - The Galleria of Jewelry, are more com- mon. With regard to product categories, the demand for a specific category can differ slightly depend- ing on the country. With the exclusion of bridal 1 Euromonitor 2017. 2 Changes in consumer behaviour: the younger generation prefers to spend money on experiences and is showing less interest in jewellery as luxury items, preferring to buy technology instead. Consumers do not mind buying jewellery at fast fashion retailers. F I NE AND COS TUME J EWE L L E RY Fine jewellery is made from high-qual- ity metals, such as gold and silver. With a global value share of 87%, it is pro- duced in smaller numbers with high price points compared with costume jewellery. Costume jewellery is made from in-expensive components such as non-pre- cious metals and beads. With a global value share of 13%, it is produced in larger quantities and has lower price points. occasions, necklaces are generally the most pop- ular type of fine jewellery, followed by rings as the second-largest category within fine jewellery. Earrings and bracelets make up a similar share, depending on the market, while charms is a small sub-category of bracelets. There are two main jewellery categories, fine jewellery and costume jewellery. Fine jewellery generates around 87% of the total value of the global jewellery industry. Both categories have grown in recent years and are expected to main- tain a single-digit growth rate. PANDORA oper- ates in the fine jewellery segment.