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Fred Meyer's stake in the jewelry business accelerated recently with the proposed acquisition of 44-store Fox Jewelry, strengthening its position as the fourth largest purveyor of fine jewelry in the country.

Discounters moved to capitalize on jewelry as an item business. Sterling silver charms and rings were big volume gainers. A standout example: the birthstone kid, a sterling silver or 10K gold charm conducive to multiple sales at an attractive $14.99 price point.

More so than in the past two years, discount chains jockeyed energetically for advantage by juggling fine jewelry promotions, with sale events based on 40%, 50%, 70% or 80% discounts.

The watch business in general began to plateau, but vendors responded with more innovation in sports and outdoors models, in some cases tying into retailers' private label lines or sporting goods brands including Wilson. Another strong direction was classic, dressy styles with metal bands and analog models with Roman numerals.

Licensed watches continued as one of the hottest growth categories with Mickey Mouse by Lorus, Winnie the Pooh by Timex and Looney Tunes by Armitron, which provided very pleasing sell-throughs in both adult and children's models. The expanding Pooh phenomenon, in particular, ties in with hot items across categories ranging from fashion hair accessories to backpacks.

Watches aimed at demographic groups multiplied. Lorus rolled out Urge, a line for teens and Gen Xers. Discounters also filled shelves with juvenile models featuring wild colors and cute or mod labels.

Jewelry/Watches: Productivity

Jewelry/Watches     $3.10 billion
Department size       608 sq. ft.
Sales per sq. ft.         $509.86
Turns                        1.90
Initial markup             60.25%
Gross margin               37.01%

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