Costume, children's jewelry find silver lining - Discount Industry Annual Report, part 2

Discount Store News, July 20, 1992

Prospects for sales of jewelry at full-line discounters during 1992 are promising, but all that glitters is not gold.

The jewelry business is still fluctuating as different retail formats vie for a share of the market, or struggle to maintain current volume levels.

In a difficult economic year, luxury items such as jewelry are often the first to suffer. However, during 1991, gold jewelry and name brand watches were still on plan for many mass merchandisers Costume jewelry also sold well - mirroring the accessory market - at a time when apparel was soft.

However, because of the wider range of accessory items now available at the mass market, jewelry found itself competing for those extra disposable dollars with merchandise such as caps, hats, scarves and other items.

The trend in jewelry offerings were in two directions for 1991.

Traditional gold-toned jewelry made use of pears and demure button shapes.

The trendier side of the story included opaque gold colorations in everything from earrings, necklaces and pins. Silver continue to do well, mostly attracting a younger consumer.

An expected resurgence of denim may help sales of silver jewelry in the coming year.

For 1992, pins may be making a comeback. There were already large collage pins in the market, reminiscent of art deco styling. These began flooding accessory and specialty stores in 1991 and are now edging their way into discount department stores.

Two other areas of growth, both intertwined are children's jewelry and licensed jewelry.

"Beverly Hills 90210" necklaces were a hit with young girls. A spinoff show beginning soon may make way for "Melrose Place" necklaces for back-to-school.

Licenses are also prevalent in the watch category, where they transcend age. Mickey Mouse watches and Muppet watches only scratch the surface of available watch licenses.

One general watch trend has been in sport watches. Functional watches with timers and less complicated versions that still maintain that sportswatch look should continue to do well.

One challenge for the jewelry industry will be managing the increasing number of retail outlets, especially those that sell fine jewelry.

Mass merchandisers are well established as sellers of moderately priced 14-karat gold jewelry and brand name watches. Catalog showrooms, a leader in fine jewelry sales, are expected to maintain dominance in this category, despite the decline in the number of catalog showroom companies over the past several years.

Off-pricer offer some of the same brands alongside more expensive items ($1,000 Rolex watches, for instance). Membership warehouse outlets (which also don't shy away from $1,000 and above price points on such items as diamond pendants and watches) are also growing furiously, and they will be snaring a larger piece of the jewelry pie.

     Jewelry(1)
     $5.9 Billion
Full-Line Discounters        $2.0B
Catalog Showrooms            $2.2B
Membership Warehouse         $0.7B
Specialty Discounters        $1.0B
     Full-Line Discount
     Store Productivity
Sales                        $2.0B
Sales Per Store             $250,000
Dept. Size                 1,000 Sq. Ft.
Sales Per Sq. Ft.           $250.00
Turns                          1.8
Initial Markup                50.9%
Gross Margin                  40.2%
(1) Includes costume and fine jewelry
Source: DSN research