As the price rises British jewellers get creative with platinum.
The price of platinum is set to rise again and demand to fall so British jewellers are getting creative. From melting and remodelling old designs to mixing platinum with 18ct gold, Rachael Taylor discovers how you can make a commodity competitive.
The price of platinum is set to rise in the coming months and global demand to decline, but it seems that Britain’s love affair with the precious metal is set to endure, albeit with a few tweaks here and there.
Johnson Matthey is expecting the price of platinum to increase to an average of US$1,750 per ounce over the next six months and expects demand for platinum jewellery to fall 14 percent globally to 2.42 million ounces.
Bridal jewellery is the biggest market for platinum jewellery, but even this softened in 2010. At an update in May, Johnson Matthey said that while platinum demand in the UK bridal market had “held up well in the circumstances” it had slipped in line with general conditions in the market.
However, at its update in November it painted a brighter picture for the sector. While it forecasts that demand in Europe for platinum jewellery will soften by a modest 10,000 ounces, it says the platinum bridal jewellery sector in the UK is “expected to remain resilient”.
Platinum Guild International (PGI) UK manager Ruth Donaldson says that while pricing might fluctuate, platinum is always a strong contender in the bridal market. “Bridal jewellery is something they wear every day and people are willing to spend,” she says. “It seems to be really constant. It’s the first choice if they want white metal.”
Hatton Garden contemporary jewellery retailer Nicholas James does not create a bridal offer in gold, only selling platinum bands. Owner Nick Fitch believes that an increase in price “is never going to affect bridal”.
However, he does say that platinum sales of men’s wedding bands have been affected by the increasing popularity of palladium. “Palladium has shot up in the market,” says Fitch. “We don’t promote that we do palladium, as we’re a fine jeweller, but when couples come into the store we suggest it to them and educate them about it.”
Another precious metal that has affected platinum is gold. The rising price of gold has been well documented in the press and has turned some customers looking to get maximum return on their investment onto platinum.“
Platinum prices have risen, although not as sharply as gold, but gold’s increase has received a lot more publicity,” says Johnson Matthey’s Neill Swan. “Traditionally some consumers have had the perception that platinum is outside of their budget, so with all the news of gold being at record highs they may now have changed that perception and consider platinum. It is interesting to see that platinum hallmarking figures have held up whilst gold’s continue to drop quite considerably.”
At the top end of the market, price matters little and while increasing metals prices may sway the purchasing decisions of the mass and middle markets, luxury shoppers pay no heed. Diamond jeweller to the rich and famous Graff only sets its jewellery in platinum, and says that regardless of price fluctuations this will never change.
“We always use the best materials and the best diamonds,” says Graff’s Katharine Roach. “Platinum may fluctuate in price just like diamonds have but we will never compromise as Graff is first for quality and design.”
Leeds-based fine jeweller Andrew Geoghegan believes that the increase in price will actually make platinum jewellery more attractive to shoppers, not less. “When a metal goes up in price, especially the elite of precious metals that is platinum, it becomes more desirable,” he says. “Naturally there are those who are unable to purchase it because it pushes too much on their budget, but for those who budget it is not their first concern and they appreciate the durability of platinum. The price hikes will not discourage their spending. In fact, I would go as far as to say that it could even increase the consumer’s spending on platinum.”
Unfortunately, not every jewellery shopper has an infinite budget. For most, the rising costs of the metal will affect buying decisions, just as it has done with gold, and some jewellers are getting creative to offer more accessible options.
Jeweller James Newman won the PGI’s Platinum Trail award for best platinum bridal tri-set at IJL in September for his Omega collection of rings. With a fluid contemporary shape, the rings are visually stunning but the innovation takes place inside the rink shank. To compensate for rising platinum prices, Newman has hollowed out the inside of the ring shank but has done so in a way that makes it a beautiful design feature.
Nest Creates, a jewellery brand set up by award-winning designers Kate Thorley and Zoe Youngman, is tackling the challenge of lowering platinum jewellery price points in a different way. Like Newman, Nest Creates is using less platinum in its designs but rather than making rings thinner, it is mixing platinum with 18ct unplated white gold.
“It is really subtle but as platinum wears you notice the difference in colour between the two metals,” explains Thorley. “The way we sell it to customers is that the ring is growing with your relationship.”
By mixing the two metals the price point for platinum jewellery can drop, and Nest Creates is so pleased with the aesthetic outcome of the mixture that Youngman has created a mixed gold and platinum ring for her own wedding band.
While bridal platinum jewellery might be relatively stable, it is the fashion market that will suffer as prices rise. “Platinum’s relatively high price and heavier weight have restricted its use in fashion jewellery and the increasing price during 2010 has reinforced this situation,” says Swan. “If the price remains at current levels, or increases, we would not see this situation changing.”
The Lonmin Design Innovation Awards celebrate innovative designs in platinum, promoting the use of the metal outside of the traditional bridal market. This year the award was handed out to a number of inspiring designers that had created larger pieces, but the accolades came at a cost.
Designers that have won the competition are given a sum from the awards body towards the cost of creating the pieces but it is in the region of a few hundred pounds. One winner this year spent £10,000 on creating their piece and is now struggling to sell it on after the buzz around the competition has died down.“
There are still those show-stopping big pieces, but for the general consumer jewellery is getting smaller,” says Donaldson. “That’s something that we’re seeing a lot, a move towards wearability.”
CW Sellors is creating statement fashion-led designs in platinum and is managing to do so and remain commercially viable by mixing in less expensive materials to make up the bulk of the jewellery. Its Shooting Stars collection, created by in-house designer Jenny Travis, mixes platinum and diamonds with Whitby Jet.
While reducing the amount of platinum used in designs will help to make platinum jewellery more accessible, it is nearly impossible for jewellers to pitch against each other with discounting as platinum is a commodity and comes with a set value.
At Nest Creates, Thorley is starting to think more creatively about offering savvy platinum shoppers maximum value for money.
“Most bespoke customers choose us because they are looking for an experience and it’s such a competitive market that we don’t want to enter into a pricing war,” she says. “One guy did a price recce recently against another bespoke jeweller and they offered him the stone at cost price. People are more savvy so we have to be different.”
Johnson & Matthey estimates that recycling of old platinum jewellery is set to increase 30 percent worldwide and Swan says that this is something that UK jewellers should consider doing to refresh their platinum offer at a low cost.
“With prices as high as they are it’s important to manage stock to ensure it is all working for you,” he advises. “When prices were high in the first half of 2008 Chinese retailers recycled product that hadn’t sold, sending them to manufacturers to be melted down and turned into new, fresh designs. Retailers here could learn from this dynamic approach. How many old pieces have they got that have been sitting in the vault for years? It’s never going to sell and the price they paid for it is probably a lot less than the metal price now so it’s worth taking a hit on the refining and fashion charge to convert them into new designs that will fly out of the window and display case.”
As the most precious of precious metals, there will almost certainly always be demand for platinum jewellery, even if it is just as a safe-haven investment. But for retailers outwith the upper echelons of luxury goods, there are now smarter approaches to selling platinum.
Be it melting down unpopular stock for remodelling, picking designs made with less volume of platinum or offering jewellery that mixes the metal with other precious metals or materials, there are innovative ways to manage the raised eyebrows that will undoubtedly come with the raised prices, even in the bridal sphere.