Magic Markets #157: Pandora and Swatch

This episode of Magic Markets is brought to you by data and process automation specialists B2IT. The company makes robots so that people don’t have to be robots. If you hate it, automate it by visiting the B2IT website. To kick off 2024, we take a look at two businesses that sit adjacent to each other in the speciality retail space. Pandora sells jewellery and Swatch sells watches at various price points. That brings us neatly to Moe’s first point, which is that Swatch is more than just the colourful and playful watches that you know and possibly love. The group is a hybrid of affluent and luxury brands, like Omega. Of course, this creates a real risk of brand dilution in the luxury space as Swatch attempts to improve the competitiveness of its core affluent offering. At Pandora, there is no such confusion. The strategy is tight and the core product range of bracelets and accessories is still growing. So are the other lines like necklaces and earrings, contributing to a fantastic share price performance this year that looks completely different to what Swatch went through. The biggest risk to Swatch is arguably smart watches, with a recent legal dispute with Samsung showing just how “interchangeable” they really are for the average consumer. At Pandora, the risk sits more in the valuation than anything else at the moment, although the share price has had a highly volatile history over the past decade. If you enjoy learning about the strategies used by global companies, then you’ll love Magic Markets Premium with a library of over 100 reports and podcasts with even more detail and depth. You can get access to all our work for just R99/month at this link.