According to the most-recently-published World Silver Survey, physical silver demand has reached an all-time high. The report, conducted in 2014 by Thomson Reuters on behalf of The Silver Institute, found that total global demand for the metal had increased 13 per cent to 1.08 billion ounces and that a “sturdy recovery” in silver jewellery and silverware fabrication were key contributing factors.
The 2015 edition of the annual report had not been released at the time of publication; however, Michael Barlerin, director of The Silver Institute’s Silver Promotion Service, cites a 4.4 per cent decline in jewellery demand in the Interim Silver Market Report released by Thomson Reuters in November 2014.
Barlerin is not discouraged and says the result is a reflection of the previous record-breaking year as opposed to any indication that consumers are moving away from silver jewellery purchases.
It’s certainly a sentiment that rings true for the local market as the silver category maintains its importance in stores across Australia and New Zealand.
Showcase Jewellers general manager Carson Webb says there’s no doubt sales in silver have increased for the buying group’s approximately 270 member stores.
Webb notes that silver product excluding Pandora makes up for 16 per cent of the group’s overall sales while gold sales have dropped consistently over the last five years to around 9 per cent. Webb adds that the decrease in gold does seem to have settled.
Nationwide Jewellers managing director Colin Pocklington also confirms that silver is a “very strong” category for Nationwide’s 500 member stores across Australia and New Zealand.
“The question is at what point will gold make a resurgence,” he says, predicting, “With the lower gold price, this cannot be too far away.”
Pocklington isn’t necessarily stating that the cost of gold has a direct impact on the popularity of silver jewellery but one has to wonder whether any effect will be felt as prices for gold remain well below the peak prices the metal experienced following the global financial crisis.
Barlerin believes the relationship between the gold price and demand for silver jewellery is complex. “My top-line opinion is, at least in the developed world’s adornment markets, that it would take a dramatic decline in the gold price – 20–30 per cent – to reduce consumer purchases of silver,” he explains. “Fabrication ‘demand’ of gold jewellery could grow based on a more modest decline but consumer demand for silver jewellery is driven by many more variables than the price of gold.”
Michael Granshaw is the director of Butterfly Silver, a 23-store retail business specialising in silver jewellery. He says, in his experience, price-point no longer plays such an important role in a consumer’s motivation to purchase silver. “When we first started in 2002, there were two very distinct consumer groups: it was either ‘I wear gold’ or ‘I wear silver’. That idea has definitely morphed over the last 10 years with people choosing to now wear both,” he says, adding, “I don’t think falling gold prices are going to impact on us at all.”
Uberkate founder Kate Sutton offers a similar sentiment: “I don’t believe the change in gold prices will see customers switch from silver to gold, I believe that customers will still buy both.”
Sutton says the “old rule” of someone opting to wear silver or gold jewellery but never both together is long gone.
“Mixing the metals is very on-trend,” she adds, “and we are seeing more and more of our customers loving the creativity of being able to wear a combination of silver, yellow gold and rose gold.
“There is always going to be a very special place for a gold purchase but I believe fashion and trends and what we as designers are providing the marketplace will direct a customer’s decision-making more so than comparing the price between silver and gold.”
Andrew Cochineas is managing director of Pallion, the parent company for a number of precious metal businesses, including Palloys, AGS/PJW and ABC Bullion. He offers a slightly different view.
“We believe that the gold and silver jewellery markets are very different. People who are looking for gold jewellery are generally not the same people who are looking for silver jewellery,” Cochineas explains. “We feel that the rise in silver jewellery sales over the last few years is more closely correlated to the rise in the power of fast-fashion. Traditionally fashion jewellery was made out of base metal but, as part of a general worldwide trend to ‘masstige’, we have witnessed that fashion labels are moving that production to sterling silver.”
Masstige, a portmanteau of the words ‘mass’ and ‘prestige’, was coined in the early 2000s to describe prestige for the masses and Cochineas says, “We don’t expect that trend to stop. If anything, we are witnessing a further masstige movement to quality as evidenced by the rise in Argentium silver sales.”
Argentium, which was introduced to the local market in mid-2014, has a minimum silver content of 93.5 per cent compared to the 92.5 per cent found in sterling silver.
Style file
Local suppliers specialising in the fair-coloured metal are unanimous in the idea that the consumer group favouring silver jewellery are a fashion-conscious breed, increasingly drawn to branded product.
With that in mind, it’s worth taking note of some of the trends and styles set to take centre-stage this year.
According to Daniel Bentley, co-founder and designer of his namesake business, pieces in the 2015 ranges will maintain the brand’s signature clean lines and sculptural forms but also incorporate a newfound pop of colour.
“Geometric shapes and forms of the metal will feature strongest with coloured gemstones adding a bright focus point,” he explains, adding that silver is a “wonderful metal to form and has an amazing natural warmth to it”.
Najo managing director Jo Tory, who has been working with silver jewellery for more than 25 years, says the current focus for her is on creating “classic, high-polished designs that are both sophisticated and fashionable”.
Although yellow and rose gold-plated silver jewellery has been making headlines both internationally and locally for a while, is it a trend that is translating into sales?
“Rose gold-plated silver jewellery has grown in popularity but it is still only a very small proportion of our sales and of our seasonal collections,” Tory explains.
“High-polished silver, oxidised silver and two-tone – that is, silver with elements of gold – are still by far the most popular.”
Meanwhile, Cheryl Roberts of Stones & Silver states the trend is definitely something that the supplier is planning to capitalise on.
“We are continuing to introduce a touch of gold into many of our Stones & Silver designs, which is proving to be very popular, in particular the rose gold,” she says.
Rather than ‘following’ the plating trend, Julie Sandlau Australia brand and sales manager Helen Hagerty explains that the brand has “always been about” this type of finish.
“In contrast to most other brands, the majority of the Julie Sandlau collection is ‘satin finished’ 22-carat gold-plated sterling silver,” she explains, adding, “Sterling silver and gold-plated designs are now of a quality that has allowed a new and respected segment of jewellery to be well and truly established in its own right. Customers now know they are not having to compromise on quality and design when looking for fashion-forward styles at affordable prices.”
Be that as it may, Webb has a word of caution for retailers considering their silver jewellery strategy. He says that while silver continues to perform well, other elements need to be considered such as “the time and number of staff required to make enough sales in order to pay bills”.
What’s more, Webb states that the margin on silver has continued to drop over the last four years according to figures for Showcase members and that aged-stock in silver has increased to more than double the percentage of aged-stock holding from four years ago.
To control these issues, Webb highlights the importance of managing fast-selling stock and also for jewellers to not only choose a well-fitting brand but to “do it” well.
“Own it and be great with it,” he urges. “Do not just throw it in the store to stop another jeweller getting the brand. That strategy doesn’t work for anyone, including suppliers.
“Also be mindful that what’s hot today in fashion isn’t necessarily going to be hot tomorrow. Fashion stores have very different KPI metrics to jewellery stores so this needs to be carefully managed within the jeweller’s own store.”
Jewellers should also bear in mind this difference when developing merchandising displays. There’s undoubtedly a delicate balance to be found when marketing silver jewellery as both a fashion-focused product as well as one that deserves pride of place – and a price tag to match – in a jewellery store.
Bentley says one mustn’t forget to place a few stunning pieces in a window display: “You may not sell them every day but never underestimate their pulling power and their ability to sell the supporting pieces around them.”
Hagerty also points to window displays as being a powerful tool for increasing sales and promoting silver as a high-end product.
“A beautiful, clean and uncluttered window display will always be the strongest tool to convey luxury and quality to a potential customer,” she explains.
Tory’s top piece of advice is to include higher-priced items in displays, followed by ensuring that jewellery is always clean and polished.
Roberts on the other hand believes that increasing sales comes down to ensuring the right information is conveyed to consumers via point-of-sale material and staff product knowledge: “It needs to be highlighted that it is 925 sterling silver, so as not to confuse it with much cheaper costume jewellery.”
Homage Personalised Jewellery director Adam Young believes jewellers can make a difference with photography and presentation.
“Highly polished pieces of silver are notoriously difficult to photograph and pictures often need a lot of touch-up work to make them look appealing,” he says. “Manufacturers and jewellers need to spend the time and money to get the presentation right.”
Looking ahead, Sutton has high hopes for the metal’s future: “Silver will always be a popular choice. As long as designers are providing quality, originality and not just same, same pieces then the consumers will hold it in the regard that it deserves.”
By all accounts, it seems the silver jewellery sector will continue to surge without even really batting an eyelid at its gold counterpart.