Retailers polish jewelry strategies

Discount Store News, June 7, 1999

Diamonds may be a girl's best friend, but what sparkles at mass is mostly gold.

Mass retailers use its versatility to show value and variety in assortments ranging from $9.99 earrings to $800 rope chain necklaces--with charms, pendants, bracelets and rings filling price tiers along the way.

Each item plays a role in this complex category, as 18 jewelry showcases are common at chains such as Ames and ShopKo, and Wal-Mart carries as many as 4,000 different skus, including a well developed bridal business. That's not all gold, of course.

At Ames stores, for instance, which will reach 450 in number once it converts all the acquired Hills units, jewelry offerings include 10K and 14K gold, sterling silver, watches, precious and semiprecious gemstones, diamonds and bridal. "We watch our sku count very carefully because this is a business that can easily get overassorted," says Sandy Sansavera, senior vice president and general merchandise manager, soft lines at Ames.

Items range from an opening price point of $5.99 for a silver pendant to a sale-priced $299.99 diamond solitaire ring. Gemstone rings are always 10K, and Ames' highest priced gold chain is $199.99.

That brings value to consumers and meaningful profits to the chain. "Jewelry margins exceed the chain average by five to six points; transactions are higher, and turns are slightly better than some of the apparel areas," Sansavera adds.

Jewelry gets strategic front-of-store placement because "customers fall in love with it; it helps the store's traffic pattern, and it shows how new and up-to-date we are on accessories," he says.

The full-service jewelry area is the first merchandise that customers see when entering an Ames. (ShopKo also positions jewelry front and center.) "We're very specific on planograms. Ninety-five percent of our assortments are the same in every store; shoppers know what to expect, and trained back-up staff is familiar with it all. As a chain, we're where we need to be, although we might stretch the price range in an exclusive group of stores for the holidays," Sansavera says.

"Jewelry satisfies a true ego [need] of the consumer. People give each other a lot of credit for jewelry purchases, and they're very vocal when they feel they got a great bargain," he observes.

To keep consumer confidence high in jewelry, Ames introduced a new showcase presentation that's whiter and brighter and continues to display prices to help people self-edit their selections. Sansavera says his diamond and bridal businesses have been very strong the past two years. "As people get used to more mass product, they'll accept there's quality to it," he says. As a result, he feels Ames will be ready to test a bridal registry in the year 2000.

By contrast, the 158-store ShopKo has no any bridal business. It focuses instead on 10K and 14K gold, sterling silver, watches, gemstones and diamonds up to a half-carat in total weight. The chain committed this past fall to diamonds as a chainwide fashion business, emphasizing cocktail rings and pendants, after testing in 30 stores last Mother's Day. "We'd need a lot more expertise behind the counter to sell bridal," says Kathy Steirly, divisional vice president, women's accessories, fine jewelry, watches, cosmetics and fragrances for ShopKo. "Diamonds are new for us, and we're extremely excited about it."

She anticipates that diamonds will generate 10 percent to 15 percent of total dollar volume in 1999; Black Hills 10K gold about 33 percent; 14K gold percent; and gemstones and sterling silver the rest. "We're running double-digit growth in our core gold jewelry business for five straight years, driving strong departmental gains during the same period," she adds, citing overall jewelry margins in the high 30s.

Like many in the business, ShopKo is a high/low operator, selling percent of its jewelry at sale prices that are percent to percent off of everyday tickets, and advertising the department at least once a month. Circulars give jewelry front covers during peak seasons, and TV and radio campaigns run three times per year.

The chain's highest price item is an $800 gold rope chain at regular price. For all the promotional excitement, however, people want quality and value, Steirly says.

"We exited costume jewelry, and sterling silver is tremendously strong for us, starting at $5.99 for opening price point pendants. In diamonds, our customers don't accept the flashy glitter pieces.

"Not everybody knows a lot about jewelry, but our customers know we'll stand behind what we sell. People can return for any reason. We offer ring-sizing and special orders at no charge." The chain also has brochures to teach about its specialty products, such as Black Hills Gold, a novel tri-color line of 10K gold bonded with other metals in rose, bronze and greenish tint.

"It's unique to our part of the country and comes from the Black Hills of South Dakota," she explains.

ShopKo certainly sees jewelry as accessories to apparel but isn't setting up secondary displays within ladies' wear. "It's a maintenance issue of getting it done correctly in the stores," observes Steirly, who spent 14 years at Target before coming to ShopKo nearly seven years ago.