Pandora in Australia is taking a hard line with retailers who wish to stock their brand of gold and silver charms. Retailers have been warned that they may not stock charms made by US company “Alex and Ani” and distributed by Karen Adcock whilst being an authorised Pandora retailer.
A ‘private and confidential’ email went out from Pandora to their stockists on the 14th of December 2015 stating “Under the terms of your Pandora Authorised Retailer Agreement you must not sell any products that could reasonably be regarded as Competing Products of Pandora Jewelry unless of course Pandora has previously given you written approval to do so.”
Other similar brands of charms to those produced by Pandora, such as “Thomas Sabo” and “Endless” are often seen together in jewellery stores, so is there another reason that Pandora has taken this stand against “Alex and Ani?”
Brian Winther, the (current) president of Pandora Australia was asked to comment about the above point, and said “every situation is different.”
Karen Adcock
Ms. Adcock brought Pandora jewellery to Australia over 10 years ago. She built the business that turns over $200M before selling out to a private equity ahead of it being listed on the stock exchange in 2010.
Her latest venture is to bring “Alex and Ani” online in December and already has 9 retailers on-board.
Interestingly, “Alex and Ani” is made from recycled brass, and so would not be considered anything other than costume jewellery.
So why is Pandora regarding this new line as a competing product? Pandora sells sterling silver and gold charms, clearly these are ‘precious metals’ and not classed as costume jewellery.
The designs I have seen are dissimilar between the two ranges, so it seems Pandora is trying to compare apples and oranges in their bid to stifle competition from stocking “Alex and Ani” alongside their own range.
In my experience the group of people who buy costume jewellery, be it for environmental or financial reasons are unlikely to purchase “high end” precious metal jewellery of a similar design. So is this really a case of Pandora protecting itself from “competing products?”
It is interesting that Brian Winther said that “Ms. Adcock had made similar decisions” when she was president of Pandora.
The ACCC
At least one retailer has referred this matter to the ACCC for investigation as to whether it breaches the Consumer and Competition Act 2010.
“Exclusive Dealing” is where one person trading with another attempts to restrict the second parties ability to deal with other third parties. Section 47 of the Act says these types of restrictions are against the law when they substantially reduce competition. A form of this is “full line forcing” where a supplier decides not to supply services or goods to a purchaser unless they agree not to also buy from a competitor of the supplier.
The nuances of the law are complex and to a degree subject to interpretation.
So what are the motives?
Clearly, Pandora is threatening it’s authorised retailers that they will not allow them to continue to be stockists if they choose to bring in products from “Alex and Ani.”
Is Pandora really worried that costume jewellery made from recycled brass is in direct competition to their precious metal jewellery? Could a jewellery store customer be lured away from a beautiful silver or gold charm and decide instead to ‘lash out’ and buy a base metal charm?
Could it be if “Alex and Ani” or another similar product was imported and distributed by someone other than Ms. Adcock, that the stance may be different?
My own opinion is that competition should be encouraged and market share will fall to those with the better products, not those with better contracts between the suppliers and the retailers.
I wonder how many jewellers can’t sell (for example) Seiko watches because Timex have “competing product agreements” in place? Most jeweller stock many brands of watches and many have very similar designs, features and materials.
Think about this
Although Pandora has closed a number of outlets, it’s annual revenue (wholesale) at one point was $130M, this represented at least $300M at the retail level. (source www.jewellermagazine.com) With those sorts of figures, how large a threat could recycled brass costume jewellery represent to their continuing success?
Pandora"s Motives? Referred to the ACCC
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