Editorial

Looking forward after the downturn of 2005

The great, the good and I turned up to the Birmingham Assay Office to hear the Assay Master's analysis of the debacle that was 2005 from the jewellery trade's point of view.

Michael Allchin, the Birmingham Assay Master opened by putting the figures in perspective, ‘From the record-breaking total of 35.2 million in 2003, and 34.7 million in 2004, the total number of articles hallmarked at the four Assay Offices of Great Britain saw a dramatic fall in 2005,' he said.

Nearly 28.8 million articles were marked in 2005 a drop of almost 6 million against 2004, a decrease of 17.2%. Gold totalling 19.4 million articles was 17.7% down with a similar (-16.2%) drop for silver items. Interestingly, platinum although 10.9% down at 323,447 items showed an increase in weight per item.

Michael continued, ‘Most sectors of the retail trade have experienced a downturn. This started in November 2004 and resulted in significant de-stocking in the first half of 2005 which has clearly affected the hallmarking figures. But then you must remember that 2005 figures are being compared with two record-breaking years in the jewellery trade.'
The chickens came home to roost in December and January with bankruptcies and redundancies amongst manufacturers and retailers alike. One senior executive of a large importing company, with a factory in Thailand explained to me, ‘There is a general retail downturn, clothing, electrical; everyone is down.' At his company plainer, basic goods were selling less well, while simple diamond jewellery was holding up. He finished by saying that despite trying to pass on the large gold and silver price rises to the consumer, both he and the consumer looked at the new price points and felt they were wrong.

I then spoke to Mike Joiner of Bucks Goldsmiths a high-end retailer in Gerrards Cross, Buckinghamshire. In a recent survey the average house price in that area was the highest in Britain at a staggering £550,000. He explained, ‘Gold is not selling at all. Silver is popular, as is platinum. Wendy, the shop manager, dusts the gold cabinet now and again, but that's it.' Despite considering that eating his bacon roll was more important than talking to me on the phone, he continued: ‘Diamond sales are not bad, but it's mainly bought-in product. When we do get diamond bespoke work it is generally set in platinum. Coloured stone jewellery, sapphire, ruby and emerald is not really happening for us at the moment', he added. Mike finished by commenting that branded silver jewellery sales were flying out of the door, citing Paul Kennedy, Old Florence, Balagan, Ice Diamonds, Cool Crystals and Liquid Silver as examples. Customers were coming into the shop and asking for the brands by name.

Chris Sanders of Bien, the Wedding Ring Company, explained that they were 8% down in turnover and 9% down in the number of pieces made in 2005. Chris explained: ‘Bien customers were trading up to 18ct, platinum and greater diamond content. The number of 9ct pieces we now produce has greatly fallen.'
Chris considers that the years spent explaining to people that an engagement and wedding ring purchase is a once in a lifetime purchase is starting to pay off. ‘They should aspire to the best possible,' he says. In consequence people are moving up to 18ct and platinum, which is the metal of the moment for Bien.

Looking ahead to 2006 Chris explained that Bien orders had started at far higher levels than had been anticipated. ‘We are 15% ahead of January 2005 with one of our representatives breaking all previous records.'

I then spoke to Barry Bennett of Gecko, a large distributor of silver and gold jewellery. Having just come back from a trade show in Phoenix Barry's first comment was ‘diamonds, diamonds, diamonds.'

For Gecko the market has moved away from gold, ‘The fashion has been for non-precious jewellery. Retailers are down unless they are in young, cheap fashion. Average price points are down, which means that the middle market has been hit worst. Silver is being challenged by costume jewellery.' Commenting on the Gecko ‘Basics' range Barry explained: ‘We are selling a lot of goods with a high coloured-stone content, which does not need to be assayed.' Barry commented that at Gecko sales are down but profits are stable. He expects 9ct to make something of a comeback: ‘Everyone is looking to cut costs. Diamonds are still going to be good in 2006. Plain 9ct will still suffer, but if there are colour combinations the jewellery will sell well – it's all about colour.'
The final word goes to Michael Allchin who I managed to catch in a reflective mood after five days at the NEC fair, ‘It's all about perceived value. A customer stands in front of a shop window with fifty or one hundred pounds to spend. Looking at 9ct jewellery nowadays they get very little for their money. But with silver, or high quality costume jewellery there is far greater perceived value. A silver piece of jewellery has become a very acceptable gift. Tiffany have a whole floor of silver in their New York Store.'

Congratulations to Ray Walton, winner of the Jacques Cartier Memorial Prize at the 2006 Goldsmiths' Craft and Design Council Awards