Silver Gains Top Spot In Jewelry/Watches Department

Discount Store News, August 10, 1998

                  JEWELRY/WATCHES PRODUCTIVITY

Dept. Size (Sq. Ft.)     600

Sales Per Sq. Ft.    $593.33

Turns                   1.85

Initial Margin        59.43%

Gross Margin          37.32%

Source: DSN Research

A diamond may be a girl's best friend, but silver earrings may do more for discounters in the long run.

Inexpensive silver jewelry has become hot in many local discount stores, meaning retailers can offer inexpensive yet profitable items that can compete with costume product. And discounters are pressing home their material advantage by moving jewelry counters into distinctly more prominent locations in the store, making the area more obvious to shoppers.

Although some chains continue to bury their jewelry department at the rear of the store away from the front door and incoming traffic, Kmart, Bradlees and others have marched them out front and center. Still, retailers with long-established jewelry operations report that, looking back through the beginning of this year and into 1997, sales are all right but nothing to get too excited about, especially since some growth areas seem to have reached a plateau.

Anyone who has walked the streets of New York during the summertime learns what the sidewalk hawkers have long known: A lot of people can't resist a jewelry bargain. And New York is certainly not the only U.S. sight for an inexpensive jewelry bazaar. In Key West, peddlers sell laminated parrot earrings from streetside stands. The Venice, Calif., boardwalk is lined with booths offering New Age designs. And throughout the country, carnies traffic their wearable trinkets to the fair-going multitudes.

No matter who's offering, a lot of people are receptive to jewelry bargains. Multiple piercings are hot, and something has to fill up those newlybored holes, so the inexpensive earrings are bound to he in big demand. And, because men and women both wear any number of embellishments in any number of locations, earrings are an automatic draw. While the success of other inexpensive kinds of jewelry is determined by any number of personal, ethnic and regional factors, consumers are demonstrating that they consider inexpensive silver items as a way to help them express their identity.

Many discounters have recognized the potential. They have moved and expanded their jewelry departments to get maximum recognition. The visibility of items such as inexpensive earrings helps boost impulse sales, but the higher profile also encourages shoppers to consider discounters as convenient destinations for finer jewelry and related accessories.

That holds true in areas such as chains and charm bracelets, too. Although tastes regarding specific charms and pendants change, the segment itself continues going strong.

Identity also is an issue when it comes to watch sales, often in a still more whimsical way. Licensing has had an enormous impact on the watch business in general. Today, even expensive gold and platinum watches may be embossed by a favorite character or team logo.

Of course, licensing is even more important to the sales of inexpensive watches. On the character side, the perennials remain strong as the top licenses, including standards in the Looney Tunes and Disney stables. While certain specific items continue to be directed at kids, licensers have done their homework and have developed an understanding of which characters have as much or more appeal to adults. Thus, the Mickey Mouse watch has grown up, and Tweety, Taz and Marvin the Martian are set to snare adult purchasers.

Naturally, vendors are adding more bells and whistles to their already busy products. Singing and slogan-spouting watches are making the novelty part of the business even more novel. Yet the fact that established brand names such as Armitron and Timex have gotten into the licensing act has helped reassure shoppers that they can have their cartoon character and a watch that works, too.

Despite the fact that licensed goods remain strong, retailers note that many items have peaked, including some classics including Mickey and Bugs, while others, such as Pooh, remain strong. At the same time the traditional brands have been demonstrating their durability, as both licensed and unlicensed items under well-known banners have gained strength.

Despite the fact that fashion accessories are well established discount store businesses, their future growth may be on a more ethereal level. Both jewelry and watches have become significant categories on Wal-Mart's Web site. Sports watches are a case in point. Of course, a store selling licensed watches wants to have the local team well represented. But what happens if work and family has separated a person from his favorite football team or hockey club-or his favorite NASCAR driver, for that matter? The solution is simple: just click on Wal-Mart's Web site and purchase a watch that sports the logo of that favorite team.

It must be noted that Wal-Mart isn't only interested in luring sports fans with its Web site. Included on the site are some relatively high-end items, including a pair of one-carat diamond earrings going for $4,100.