VIDEO TRANSCRIPT:

So David, good morning.

Morning.

Absolute pleasure to be with you and thank you for taking the time out of your super busy schedule to talk about digital transformation and all the amazing changes you've been making all the way back to 2019 for the Pandora business. So I think starting at the beginning. is a good place to start. And thinking back to your arrival at Pandora, which was 2019, you were setting direction for the team, setting direction for the company and establishing those foundations for the digital transformation to come. Can you share with us where you started from? So the starting position and how you went about making the change?

Early 2019, I was brought into the business to quote, sort out e-commerce. It's very regionalized so we have three global regions who all saw their job as well lovely to have you but we're here to run e-commerce a small development team in Baltimore and e-commerce was really only By that point three or four years old in Pandora because Pandora had made so much growth and so much money from store expansion globally franchise expansion So e-commerce was seen as a bit of an IT project So we had a pretty low base to start with and a lot to do in a very short space of time now 2019 to 2020 Thank goodness we did get a lot of stuff done. So we rebuilt the websites, started the code consolidation and we've been on a journey with Sapen ever since on that journey. We rebuilt, thank goodness we rebuilt the backend operations and customer service piece and we deployed Service Cloud I think also with Sapen back in the day in early 2020 just before the pandemic hit. So we had no lights on through peak 2019. We had all kinds of customer issues. I was answering customer queries on Facebook UK on Christmas Day because we had no back end. We had a selling engine, but we had no service engine with no ability to deliver on our promise. And we partnered super strongly with our supply chain team and built out very rapidly, built out a good operator model and then COVID hit. So we've given ourselves a chance to success at that point. That was where we were.

Brilliant, that's fantastic to hear and kind of interesting timing and fortuitous timing that you've been able to create the foundations before the pandemic hit. Now during the pandemic and we're all familiar now with the implications of the pandemic you were able to accelerate this quest to sort of really enhance the digital capabilities and the customer experience and some of those improvements included and virtual queuing,

Yeah.

click and collect,

Yeah.

virtual assistants, I think endless aisles. I mean, it was a substantial set of features that you implemented in a really short space of time.

Yeah.

The thing that I'm super interested to learn is, you know, how did those experiences perform sort of post-pandemic? What stores had reopened and consumers started to get back to maybe more normal shopping patterns?

It's a really, really good question. And I'll give. To answer, so the first piece about how we accelerated through that phase through 2020, we're building out. The digital capability, the digital team, we were actually having people relocate through the pandemic into Copenhagen, hiring in Copenhagen. We opened the digital hub, which is five minutes down the waterfront from our main office here in Copenhagen. But then critically, if you take someone like our fantastic general manager in Italy, Massimo. The e-commerce standpoint was three people in the corner of his office. He didn't quite understand what they did, but he was a brilliant stores guy. He suddenly found himself boss of a pure play business. So the cultural change in the business was fantastic. That was the pivot. That's what helped us commercially accelerate through that time. But then also the guys were turning up with like, I must have curbside collection, I must have this. And we were getting peppered with good ideas. So we took a grip on that and said, look, we're going to create a rapid agile development process. And that also helps educate people in the business about what is agile by doing it, not just doing presentations about them. Let's tell you why Agile is good. So we were able to take a different approach to building things and rapidly develop stuff in parallel. we deployed so many different propositions like saying very rapidly into different markets through the middle of 2020

That's fascinating. And just to double click on that, how good do you think you were at predicting with the business leaders, with Massimo and the other teams, which features or which capabilities would land?

oh we were pretty terrible i think it's kind of like it's you know but that's the point yeah because um um the gms were saying i must have this thing and it's all coming from a good place but um you know so say a lot in life must is a strong word you know and so i think getting to that rapid test and learn process uh that's been the that's been the accelerator that's been the multiplier long term so now all function of we have eight clusters around the world eight eight selling clusters around the world grouped together the countries and my digital team work with those clusters every week every month on the test and learn schedule what things we're going to put into the hopper making sure the test is statistically valid so we can then feed those into into the main platform and now we do have one main platform platform because we spent the past 18 months modernizing the Salesforce platform getting to latest SFRA version so now we can really push global function and feature but it's all driven by test rather than that old phrase the hippo the highest paid person's opinion you know just avoiding that

I'm

yeah

familiar with that.

yeah I get told it a lot by my team it's like yeah but uh but you know I think there's that that's the accelerator for us is that

It's very cool. And I also take away from that. is the pace you've been working at and using those approaches have also helped bring the whole business on a cultural change to kind of understand what agile can mean the value it can bring and really to sort of change the business as well as the sort of outward looking

customers Oh, absolutely. Yeah. And being customer centric at the heart of that. So at the end of. In 2020, my boss Alexander said, do you guys do things a bit differently? I said, yeah. And so he made the decision to combine together what was at that point IT with my digital function with data and analytics and BI. So we brought this all together in January 21, we announced digital and technology as a new function. And so I personally went on a very steep learning curve because I didn't even know what an ERP was three years ago, you know, so because I'm a digital guy, but we've applied the same mentality to that broader canvas now. of all of the technology in the business whether it's your planning systems or logistics or whatever it is so that's the real scale up for us now that's really the exciting piece that we're in the middle of

Very, very interesting. So thinking back to Pandora's customers and the customers shopping habits, how have they, so we've talked a little bit about the pandemic, but how have those customer shopping habits changed post pandemic? Now the stores are open and we're kind of well into a year. deal a year or so of kind of post-pandemic

Sure.

shopping. What are you seeing in terms of the behaviour?

So over 80% of all of our transactional journeys start online. but 80 percent of them are completed in a store so

Yeah.

we have to have this working well and you know we're all shoppers you know i love shopping you know um but we don't think about channel which channel am i going to choose you just engage with the brand hopefully and you know so usually it's about how you align internally how you align kpis and how you get that working but customers move fluidly between our channels and our product is a it's a can be a complex sale because you're selling you know for a gift you're selling the bracelet you're talking about charms you're explaining how the clips work and so on so it's not just retail operations in a store it's selling journey you know what's important to you what's important to the person you're buying for

Thinking about sort of the conversation we've had so far. It definitely seems to me that you've made a lot of the right choices. So I think what has been maybe fortuitous, but you were already on a journey, you were able to set up foundations and then accelerate through the pandemic,

Yep,

creating

yep.

that brilliant digital experience and then have been able to fuse online and offline post the pandemic to kind of drive volume in those more mature markets, all of which is such a fabulous story and has shown. shown fiscal results as well so obviously there's lots of things in there that I think super valuable so could you reflect on that and just share with us you know what your decision process looks like so how do you think about placing your bets sort of generally around how you set things up but also how you make make choices

Sure. Okay. Big question.

It is a big

I

question.

think, I think the, I mean the The first part to it for me is then our organisation, the way our P&L is set up, I've worked in organisations, I'm sure you have, where cost control is super important because you can be a hero by cutting a million euros out of the P&L in terms of cost. That's true here, we have a very cost centred culture, but our P&L we're biased towards driving the top line. Because the faster we drive the top line, just the more positive everything is. And so our choices in digital and technology are very simple, that first filter. It's about top line driving initiatives first, and then it's about improving the machine underneath the cover second. And so what's meant over the last two and a half years of the bigger digital transformation is we've started doubling down on MarTech. We again mentioned the modernization of the... the e-com stack which we made great progress on but we needed this big big update loyalty program we launched we launched the bloom reach customer data platform and customer orchestration platform getting all that integrated and working brilliantly i think it's really i think the guys the folks have worked on that have done an outstanding job and how that's really helping our business orient around understanding the customer at a completely different level of granularity now

Yeah.

So that's Tupa and then in the sort of recent time last year or so then really moving our focus to the back end and kind of turning the lights on at the back end of our business so we have 16,000 amazing people in Thailand making all our jewelry digitizing the shop floor execution there what everyone's working on every day we've built new warehouse management system we're building integrated planning platform with o9 and then we obviously the big beast is compass which is our transformational special global ERP program. So that back end, that becomes super interesting as well because you think about all the tunes we can play on the front end and this might the thought processes build the platforms but then what are the tunes we can play. So the predictive analytics around customer, but then at the back end predictive analytics about what should we make in six months time? Who do we need to hire in six months time? Building that machine, that's been my thought process and the sequential thought process about okay, how does this fit together? The decision making and sequencing that me and my senior team do is a lot of that. It's a sequencing about not just what is the right thing for our stakeholders or we must have this platform to improve how we do merchandising, but how does that fit into the bigger sequence? And I think the big unlock here is that we need to figure out how we're going to do that. lock here and the empowerment I've got from my boss and my colleagues on the management board is well you tell us how the tech fits together and what the prioritization is rather than it trying to be prioritized by committee at the top table and I think that's been a big unlock for us really big

Okay that's fascinating so it's the it's the it's the thinking through the whole it's almost think through the matrix how it can all fit together and I also hear is an under under sort of with a sort of underlying current how do you how do you create these these almost different systems with different capabilities and then use that data use

Yeah exactly.

that data use that insight to not just act you know operationally but also be thoughtful about predicting

On day one when we announced the integration of the teams I talked about engineering at the heart of our business and hiring engineers and having engineers in leadership positions because a lot of IT functions have have contract managers in leadership positions so people can actually read code buying code from companies is a pretty good idea but alongside that we talked about integration and actually modernizing genuinely modernizing the integration so as these big slabs of system come together the dark matter that holds them together and the thing that's going to liberate the data is the integration layer we've done a had a lot of focus on that so focused on events-driven architecture and the the kafka platform and so on to really liberate use phrase liberate and federate the data so it's all available within the organization but within guide rails that people can't do silly things with the data and that's been a big part again of the acceleration

It would be great to hear from you if you had one piece of advice for someone who's in a similar position to where you were on the same journey, what would your advice be around setting up? setting up this kind of digital capability.

When we decided to get serious about digital in 2019, built out an org design that had 100 roles on there, we had a physical issue, we didn't have space for them. So we had to find somewhere else. But that was the starting point. But then more importantly, as soon as we got to that point, and we're lucky enough to find a space like just five minutes down the waterfront, okay, we end up with a cultural challenge, which is, we've got to be credible as a technology. Hub for Talent And we are super proud of being a part of Pandora.

There's really a nice vibe in that community, really nice vibe.

I love the energy in the digital hub. We just announced yesterday actually we're expanding the digital hub further. So now all of the tech folks in Copenhagen are all going to be consolidated into that building. So we've got I think about 120 folks in the building at the moment, but we'd be going up to 300 in the next few months in that building.

So moving moving to a slightly different topic and talking about the future Yeah, the

the future.

future. So one of the things we all talk about in the industry is how do you combine online and offline? We call it omnichannel, we call it multichannel, we call it digital. That's my least favorite, by the way, we're not going to call it digital today or unified commerce. So if you think about the future Pandora omnichannel experience.

Yeah.

online offline you know how do you how do you envisage that that sort of developing what do you think the future will be for that

I think in the channels, we've evolved our thinking a lot in the last year actually, and part of this was about sequencing. So now we're through the modernization of the e-commerce stack with you guys getting to the reference version, we're now focused on componentization there so breaking that apart understanding different components getting them out operating discreetly and the next move for us will be unified commerce really understanding how we can take this and go to the next level of integration on omni-channel omni-store and so on now that's that's a vision at the moment how we do that We've got some thoughts, but that's really the big step forward because obviously we then get integration not just around the customer experience and really having all of the customer experience in one system in one place, but then supply chain, one version of stock, one version of integration between colleague and customer. So when I took on the broader. The IT challenge is like we'll use the same methods or put together the team called the colleague experience team to holistically map the colleague experience because for most of us, we're all employees, our experience of technology is an accidental outcome from six or seven teams, the people who give you the hardware and the people who put the software on that. So actually understanding that holistically and applying some of that e-commerce mindset to how do we understand our stakeholder. I think that's something we did a bit differently.

So lots of companies are sort of following the kind of the changes in the DNI landscape sort

Yes.

of almost a year ago now, are starting to not just starting to but are well on the journey to thinking about how to implement DNI into the business into ways of working. Can you share how you think about it and how your team is approaching generative

AI? Sure, yeah. And the first thing to say is we've been... working in the AI and predictive space in the machine learning space for about four years now so we started it with the pulling customer data together thinking about how we're going to drive digital experience driving media through customer segmentation so that's all machine learning driven engine our segmentation itself learning and it develops all the time and so we've been in that journey and then generative AI the first thing to say is we we're in a very good space because we're a very in the way in a way very simple business we buy silver we make it turn into jewelry we sell it to amazing customers around the world and 86 of sales happen in channels we either own or control so we from a data point of view we have lights on and we're a very tight data set because we have about 1900 products so we're not a department store with 400 000 scooters on so from a data point of view we're in quite a good space second we're in a good space because we're partnered with the right people you know whether it's Whether it's folks at Sapien or whether it's Microsoft or Salesforce or Bloomreach, you know, we've got a great set of partnerships, which means that we're benefiting from what. our partners are doing every every day and we've put ourselves in the right place to be part of the trials and betas and so on so that's a big part of what we're doing and then lastly we're taking our time in terms of okay how do we exploit in the business but the way I want to tackle that the way we are tackling that is I want to enable people to use gen AI so I don't want to be I don't want the tech team to be the blocker oh you've got to come through us so the first piece is off reservation you know design team playing around with mid journey or whatever we're aware of it it comes to us in terms like this is what we're sort of playing around with so we're aware of it from a safety point of view um but they're enabled then power to get on with it on reservation core data customer data sales data anything that plays around with the engine the machine that comes to our data science team primarily based out of london now And so that's an important split because we don't want to be the kind of data and tech function goes, whoa, whoa, hang on a minute, we do Gen AI, you know, so that'd be really boring, you know, so we want to empower and enable all of our colleagues to think about what it could do for them. Because also we don't think we've got the best ideas, they've got the best ideas. So empowerment and enablement is a really important part, but with a key focus around safety and guide rails and framework at the centre. So that's how we're tackling it.

Okay, brilliant. Well, I look forward separately to continuing that conversation. conversation because I think there's much more to come so continuing the theme of looking ahead what do you what do you see and what do you think are the key trends or technologies that you think will shape the future of you know the retail industry but also obviously be you know be key for Pandora's digital future

Really big question. I think the... prosaically at the front end it is about unified commerce it's about linking the point system point systems together it's about playing these different tunes with the data as well understanding how we can how we can liberate data in the organization to wrap the experience around each customer you know we'll talk about the in-store experience being so personal you know digital is always just playing catch up in that space i do think ai has got a big role in that space ultimately um but i think overall it's it's it is about this machine how we how the whole machine comes together the different platforms get linked together and the only way they get linked together is through integration understanding how you want to move data around the organization and for what purpose what are the use cases you're driving towards in terms of what you want to achieve now to do that We need to bring our stakeholders with us. We need our stakeholders to be thinking through and us challenging them about, okay, what's the business we want to build here? What are the specific things we want to be able to do? And then having that. We've got the platforms, we're building the data layers and integration layers, and we're building the predictive capabilities. So for me, that looks like acceleration. That looks like we've got our stakeholders lined up around. Where we want to take the business next and really understanding what the machine can do, the power of the machine that we're building, I think that's the exciting piece for me next.

I mean, I'm excited to stay tuned. I think for me there's this, what you just said. Privacy is pretty exciting because it is about having this machine Yeah, where

mm

we have, you know, we have the systems of record and the data that we need to kind of anchor the business, but also increasingly we've got data that we can use to understand the consumer, but also understand employees, colleagues, pandorians, I think we call them, and to be able to really deliver that next generation consumer experience and colleague experience, sort of unleashing data and AI. So I think that's super exciting. exciting and for me in everything you talk about there's this anchor of building culture sustainable culture and capability and doing that in a really authentic way to the brand but there's also a piece for me you know and that's and that's super important but there's also a piece about being anchored in value you know growth finding finding growth finding value and being really precise with with what you focus on and you've also said and it comes it's come out in a few of the few of the few of our sort of conversation themes you know being prepared to fail and stopping things because I think you've done that across the across the journey as well haven't you

yeah we have yeah i mean goodness me we could talk another two hours about things we've screwed up or whatever you know but but it's important it's important to carry that lightly but it's also important to recognize when like you said when something's not moving the way you thought it would, you know, just. shutting it down moving on it's not the end of the world you know let's try something else let's get the let's get the folks working in that space to work on something else and i think you know equally you know being committed to something because it is part of a longer term strategic play then now we're going to keep we're going to keep failing forwards i think that's a really important part of this as well

Brilliant. Brilliant. So we've got the machine, we've got the data, we're anchoring in value. We're staying obsessed around experience for our. for our pandorians and our customers

Yeah.

and we're failing fast where we need to so we can learn. Thank you, David, for the time today. It's been an absolute delight. Love the conversation. Appreciate the time and look forward to staying in touch.

Fantastic.

Thank you.

Thanks very much. Cheers.