The magic of Christmas in Edinburgh’s George Street never seems to fade.
The gift-wrapped Dome, with its fragrant spices and lilies, is now a festive landmark, and the coloured lights and glittering windows stretch along to No 87 and beyond.
While Edinburgh has lost many of its home-grown traders – overtaken by the national retail chains – a treasure remains at No 87.
The emporium of Hamilton & Inches first opened in Princes Street in 1866.
The purple-framed windows are filled with expensive watches and glistening diamond and emerald jewellery and a model steam train set with precious stones weaved around the shelves on a circuit.
Stepping inside, the carpeted showroom is an array of glass and oak cabinets and recently-fitted stands for big-name time pieces.
It has an ambience of expensive style and hushed reverence.
Stephen Paterson was a callow 18-year-old youth from Helensburgh when he first stepped across the threshold in August 1979.
Today he is the managing director of a Scottish business that has navigated its way through tricky times and changes, and he has strong ambitions for the jewellers which still holds its Appointment to the Queen as silversmiths and clock specialists.
Firstly, he’s keen to dispel the myth about Hamilton & Inches being too posh for most folks.
“There is a perception that we only sell watches and jewellery with a multi-thousand pound price tag,” says Paterson.
“That’s not really true. I get huge satisfaction when a 21-year-old comes into the shop looking to buy a gift for a friend. They may have a budget of £70 and might be a bit daunted by the place, but we can make sure they walk out with a lovely gift of about £50 in an H&I bag, wrapped the same way as a gift for £100,000.
“In the run-up to Christmas, Hamilton & Inches does get busier and we do a lot of events. We are very proactive in different launches, including a 19-year-old product designer called Kathrine Pelosi at Edinburgh College of Art, whose silverware has been made by our workshop silversmiths. David Ramsay, our silversmith apprentice, has been involved with this project.
“One of my big frustrations with the showroom is that it is filled with wonderful products. Then I meet someone who tells me they’ve often looked in the window, but have been too intimated to step inside. We’re working hard to entice all kinds of people in just to have a look – and perhaps buy.” Stephen Paterson has spent his whole career in the jewellery business.
“I was at school in Helensburgh and into geography, art and rugby – and sport in general,” he says.
“Academically, I didn’t really apply myself as well as I should have done.” He considered joining a graphics company in Glasgow, designing whisky labels, but he was sociable and enjoyed meeting people.
His parents had gone into Hamilton & Inches to see a silversmithing presentation and his father suggested he should write and try and get a traineeship.
“I wrote to Ian Inches, who was the third generation owner at the time,” he says, sitting in his office which doubles as a private viewing room.
“His reply was that there was no room in the workshops, but a career in the retail side offers young people great opportunity.
“I was offered a job and I started work on August 20 1979.” And here I must declare an interest, because my uncle, Howden Steel, who was one of the clock specialists and worked for more than 40 years in the workshop and showroom, took Paterson under his wing in his formative years.
“There were a lot of characters in Hamilton & Inches at the time,” he says.
“There was the manufacturing side to the business upstairs, although we were doing more repairs than manufacturing. That’s changed as we have been building up our Scottish silversmithing business. I started in the basement, assisting with the silver repairs administration. We were kept in the basement for a long time.
“Howden Steel was fantastic. He taught me a lot and was a gentle man. He was very patient because in my rugby-playing days I was always asking to look at his Scotsman to see if there were any match reports.” Stephen joined Heriot’s FP Rugby Club, playing on the wing.
“It was a time when Heriot’s had gone 10% non-former pupils and I was introduced to Fraser Dall, the director of rugby. Heriot’s had won the championship, and the FPs were running six teams, plus the reserves. I was in the fives, the fours, then after a few years I was regular in the seconds and got about 30 games in the first XV.” Playing rugby and having a job in retail wasn’t always easy.
But Hamilton & Inches closed at 12:30 on a Saturday and the team bus could pick Paterson up from George Street.
“I used to get picked up outside the shop in my work suit on a Saturday and taken to places such as Mansfield Park,” he recalls.
Hamilton & Inches’ involvement in sport also extended to the repair of the Calcutta Cup in 1988 when it was damaged after a particularly rowdy Scottish victory celebration and, more recently, the creation of the silverware for the Barclay Scottish Open golf tournament.
Paterson learned his trade, checking on the completed work, ensuring the engraving detail was correct, and testing teapots to see they didn’t leak. There were plenty of repairs, considering most upper-crust Edinburgh hotels still used silver-service for afternoon teas.
He was eventually “allowed” onto the shop floor at the repairs desk at the back of the showroom.
The shop was run by Ian and Betty Inches with the help of Ian Kinnear.
But somehow it wasn’t keeping up with the times in retailing.
Although founded by Robert Kirk and James Hamilton in the 1860s, Hamilton retired after two years, leaving the company to Robert Inches, and the business remained in the Inches family.
They took over No 87 George Street from Brook & Sons, the silversmiths who originally repaired the famous Traprain Law Roman treasure trove found in 1919.
Now replicas are crafted by H&I.
“It was a fantastic place because it was so diverse; you could be taking in an emerald and diamond ring from a lady and then a silver salver for repair next,” says Paterson.
“The customer base was old-school Edinburgh at the time.
“In those days, the majority of watches were mechanical and you had to wind them all by hand.
Our watchmakers went out and wound the clocks of Edinburgh, including the famous North British Hotel clock, which serves those rushing to Waverley Station. We took all kinds of watches and clocks for repair and we didn’t have a vast selection of new pieces to sell at that time.” Paterson undertook a series of courses in gems and retail jewellery, and eventually became an assistant in the showroom, looking after repairs and helping with sales.
“What I learned was that retail is about attention to detail,” he says. Deidre Inches came into the business with Malcolm Carr and Stephen Paterson was made assistant manager to Archie King in 1985.
“Deidre and Malcolm became joint managing director, with Ian Inches moving to chairman,” he recalls. At the end of 1991, Paterson was appointed a director, but with no shareholding position.
“At the time, we thought of our service as being the bees’ knees in Edinburgh, but when you went further afield down to London it opened your eyes that Hamilton & Inches still had a fair way to go. In many respects, the business was tired and dated.” There was a shock ahead for the new director.
“Then, in 1992, at my first official board meeting, we were introduced to an insolvency specialist at Dundas & Wilson. I knew nothing about this. It was basically the economic downturn and, with respect, the board weren’t that commercially-minded and there was a problem at the helm. So the company was in trouble and faced the possibility of being taking into administration.
I got married to Alice in May 1992 and it was a rather uncertain time in my business career.” Paterson spoke to his father-in-law-to-be, a pragmatic Northern Irish businessman in the roof-tile manufacturing business and he got his accountant to look at the jewellers’ books.
“Alice’s father has a great business mind and saw through all the rubbish,” he says. “He was phenomenal in his support in many ways. The damage that might have been done to the goodwill of the business if it had gone into administration is hard to think about.” Then a white knight, Asprey’s of London, came along and purchased the business.
The Inches family still owned the George Street building and the turnover was around £1.2m, with debts of £1.5m.
A jeweller has to outlay money for stock and at Hamilton & Inches, this can be 95% purchased and ready for sale.
“It was very tricky until Asprey came in and made a transformational difference,” says Paterson.
“Asprey put Julia Ogilvy in charge and she added fantastic quality to the whole business. The showroom was refurbished – at a cost of £600,000 – with solid oak cases that were properly done. Julia had been in the marketing department at Garrard, the crown jewellers. Asprey were buying up various luxury businesses, including Garrard, Watches of Switzerland, Mappin & Webb.
“Julia came up and she had fantastic contacts. She had a great sense of style, and worked with the interior designer to really create part of what we have today. Things are always changing in the shop.
“It was an exciting time; there was investment in the place. We thought we were good watch suppliers, but we didn’t have Rolex, and we managed to secure that agency, then Patek Philippe.Then Cartier. This all took us to a different level.”
The Sultan of Brunei’s brother, Prince Jeffrey, bought Asprey in 1996 and soon after the Sultan discovered that his brother had been funding his overseas investment with state funds and this gave Stephen Paterson the opportunity to become involved in a management buy-out.
In 1998, Julia Ogilvy and Stephen Paterson with Malcolm Gillan and Denzil Skinner created the management buy-out.
Private individuals helped with the funding, plus Bank of Scotland with a term loan.
Paterson says: “It was fantastic. I remember Julia and Denzil were on holiday and there were conference calls and we were in London at the Asprey lawyers. We bought the business and the building for £3.5m. We had a flight booked for 6pm thinking this would be a doddle, but the legal deal took much longer. It was a Friday and it went past and Malcolm and I had to get back up to open the shop for business on the Saturday morning.
“We had to get the sleeper back up with our advisers; Ewan Gilchrist and Colin MacNeill from Dickson Minto and others from Bank of Scotland and PwC. We were all having a small celebration in the sleeper bar and I had to be ready to open the doors at 9.30 on the Saturday morning.
“We had a clear business plan at the time to build up the quality and standards of a Scottish business. We then bought the London office in 52 Beauchamp Place, which was Annabel Jones. It has added a London side to the business and a location. It’s a great place to have and we’re trying to add some impetus to help it grow – it’s a case of marketing it properly.
Our manager in London is Jacquie Drayton, who is exceptional.” Over the years, Julia Ogilvy, Malcolm Gillan and then Denzil Skinner all left the business, so the shareholding group has become smaller.
Gavin Reed, who was deputy chairman of Scottish & Newcastle, became H&I chairman and guided the business for 12-and-a-half years.
He resigned as chairman in April and Peter Lederer, who has run Gleneagles for 28 years, has taken the reins as chairman.
Stephen Paterson was rather perturbed about a recent Sunday newspaper article that suggested there had been “blood on the carpet” as the board changes were announced.
“Nothing could be further from the truth,” he says. “I was a bit put out by the reporting of this. We’ve always been very well-mannered in our dealings with people. We’ve steadily built the business up and, personally, I’ve made a lot of close friends amoung our customers.” H&I has brought in Ross Haston, an accountant from Capital Solutions, as finance and commercial director.
“He has been phenomenal and has a wealth of experience through working with Texas Instruments, then Linn Hi-Fi. He’s got extensive luxury goods experience and importantly customer service delivery. He looks after the nuts-and-bolt of the finances together with marketing to develop the business.”
The board includes Paul Gregory, chairman of oil analysts Wood Mackenzie, and is advised by Max Floydd, of accountancy firm Saffery Champness. For such a prestigious business, the turnover is a modest £6.6m, with profits of £367,000.
“We had a very good year when the turnover hit nearly £10m, but that was with some exceptional sales,” he says.
“When you have expensive products, a few extra sales can impact of the turnover.” But his company is debt-free having paid off the bank for the buy-out loans. The one fear is the rising cost of gold, which makes everything more expensive. While Paterson wants to entice more young people to come into his shop, he is also dealing with the very top end of jewellery. For example, Hamilton & Inches are only one of two UK jewellers who are stocking Wellendorff gold “rope” jewellery, made in Germany.
“It’s like wearing silk against your skin,” says Paterson.
“In my view, with 32 years’ experience, I think Wellendorff is the best-made gold jewellery on the market today.
It’s artisan craft meeting German precision engineering.” It is expensive; the gold and enamel bracelet comes in at £9,260, while the Brilliance of the Sun bracelet has as a rather breathtaking tag of £16,520.
However, their rotating rings which are said to make all your dreams come true with three simple twirls start from a slightly more affordable £2,580.
“We stocked Wellendorff for quite a few years and then we gave it a rest,” says Paterson.
“We go to the Basel trade fair every year and we’ve been watching what they have been doing and we decided to strike up our relationship again. There are lots of shops that sell jewellery – but we are a jewellers. The reason for that is that we offer advice and we do things correctly. The biggest thing is trust. We are basically guaranteeing that trust.”
While the jewellery is stunning, watches are now approaching 50% of H&I’s turnover, with brands such as Patek Philippe, Omega, Cartier and Rolex.
“We’re very proud of our watch collections now and we’ve plans to give more room in the showroom for some of the displays. I think they make fantastic heirlooms for collectors.” Paterson is also pleased that Scottish silversmithing, under the direction of master silversmith Jon Hunt, has become a special aspect.
“It’s our unique selling point that we have ten craftsmen on the three floors above the shop,” he says.
“The order book for the silversmiths is very healthy with a number of special commissions.” The craftsmen are working in silver and crystalware for Johnnie Walker, on a special whisky casket to commemorate the Queen’s Diamond Jubilee in June 2012. Hamilton & Inches has adapted, survived and flourished – but it must continue to look at its market as the recession makes high-value discretionary spending much harder for retailers. Paterson has said he understands the credit crunch has changed people’s view of jewellery.
“In 2008, people who owned businesses were letting people go, and they felt that they shouldn’t be coming in and spending money. We’ve worked hard to show that it is about value and quality. I believe jewellery is made to be worn and not locked away and only brought out for red-letter days. We never forget that people are bringing their emotions through our door; it’s about love, joy, excitement and hope.
“Our job is to respect this and make sure the customer gets the best advice as well as the best quality.”
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