Drug chains are seeing watch sales grow as timepieces make the transition from utilitarian items to fashion accessories.

Watches have been very hot for about the past three years,” says Marilyn Phelps, the jewelry and cosmetics buyer at Keltsch Bros., which is based in Fort Wayne, Ind. “Tons of articles that have been written about watches in fashion magazines have really helped sales.”

Price is another factor that drives the watch business in drug chains. “It’s an impulse category,” says Ruben Johnson, merchandise manager at Crown Drug, a 19-unit drug chain based in Advance, N.C. “Jewelry stores don’t get into the low-end watches.”

Price plays a crucial role in generating sales of watches at Keltsch’s 19 stores. “Impulse drives the sales, especially at gift-giving times,” says Phelps. “People see them in the cases and buy them.”

Keltsch switched to carrying primarily Lorus watches last August, in part because of the eye-catching appearance of the line from Mahwah, N.J.-based Seiko Corp. of America. About 20% of the chain’s sales are in fashion watches, which are merchandised as jewelry. “They’re too fancy to be used strictly to keep time,” Phelps says.

Crown’s customers also perceive watches as fashion items. “There is definitely a pickup in interest when there’s a new style,” says Johnson.

As an example, he cites the IndiGlo watch brought to market last November by Timex Corp., Middleburry, Conn. “We could have sold a lot more of them if we could have obtained them,” he says.

Horton & Converse Pharmacies, a 20-store chain based in Newport Beach, Calif., also had trouble meeting consumer demand for IndiGlo watches. “Watches absolutely are fashion items,” says merchandising manager Robin Koon. “We’ve pretty much stuck with Timex, because it has good styles and merchandising displays.”

The chain also offers watches from Swatch Watch USA, New York. However, sales of that line have declined lately. “I’m not sure if that’s because the fad has faded or because Swatches are available in so many other stores,” says Koon.

She adds that women (who account for the bulk of her chain’s watch sales) are especially interested in the products’ appearance, while men are more concerned with brand names.

Brand loyalty is more of a matter of social standing than gender among customers at lawton’s Drugs Stores, which is based in Nova Scotia, Canada. “Young professionals look for brand names and guarantees,” says merchandise manager Michael Knowlan. “Lower grades of watches are likely to be gifts and inspire little brand loyalty.”

Lawton’s offers watches in only seven of its 70 stores because of theft, a problem mentioned by other retailers. “As a general rule, watches are not sold in most of our stores because you’d have to bolt them to the counters,” says Knowlan. “A common problem is theft of the entire display.

“We put watches in high-profile stores in communities with larger populations that can support expanded merchandise offerings.”

In those outlets, lawton’s merchandises watches in show cases affixed to cosmetics counters.

Horton & Converse also keeps its watches locked in display cases. “They would walk out the door if we didn’t,” Koon says. “They are small and most cost from $20 to $60.”

Floor cases with approximately 100 watches apiece are used in many Horton & Converse stores. Others have 2.5-foot display cases near their cash registers.

Keltsch homes its watches in 5-foot cases and countertop displays in its jewelry department, which is staffed full-time to handle customer inquiries about the small, high-price merchandise.

Crown merchandises its watches in floor stands. “They only take up a couple of square feet of floor space, but they do really well for the amount of space they get,” Johnson says.