How to Improve Your Profitability with Signage
Recent studies have measured the dramatic effect that on-premise signs have on site profitability. North American Signs can help you identify opportunities to increase sales and improve your profitability through a customized site enhancement program.
Today’s competitive retail environment makes it mandatory to focus on signage designed to attain maximum exposure. Large retailers have often achieved significant sales increases by improving their visual signage. We have assembled data highlighting the percent of sales increases that result from additional signage. This data is graphic proof that increased signage has a dramatic effect on site profitability.
Avoiding a Bad Site Before It Becomes a Liability
Be careful not to purchase or lease a site where either the landlord or local permitting office present obstacles that deny the opportunity for proper signage and profitability. Both the landlord and the local officials are more receptive to negotiations before a lease is signed. In today’s competitive market, chains cannot afford the error or the expense of signing a lease for a location and then finding out too late that they cannot get proper signage.
An Underperforming Site That Needs Improvement
Underperforming sites exist for many different reasons. One major reason can be the lack of adequate signage to attract the attention of the general public. North American Signs can be of assistance in identifying those sites that are underperforming because of the lack of visibility. In some cases, a client will specify a number of underperforming sites that require further analysis. The North American Signs site enhancement program helps determine the role that inadequate signage plays in poor performance. We meet with the city, or if indicated, with the landlord to negotiate an improved sign package. When signage is the problem, we are able to bring about a substantial improvement in 90% of the cases. The visibility and profitability of these sites are, thereby, significantly improved.
By The Numbers
The following is an example of how you can improve your profitability with more effective signage:
- Approximate # of sites: 300
- 15% that may be under performing due to inadequate signage (.15 x Line 1): 45
- Average sales $ of site: $400,000
- The % by which these sites underperform: 7%*
- Lost sales potential (line 4 x line 3 x line 2): $1,260,000
- Sales recaptured with proper site visibility: 70%*
- Total sales $ recaptured (line 6 x line 5): $882,000
- Gross profit on sales: 30%
- Additional margin that would drop to the profit line (line 7 x line 8): $264,600
- Average remaining life of a site in years: 7
- Total 7 years additional profits (line 9 x line 10): $1,852,200
- One time cost of site enhancement study, variances and new signage per site (line 2 x $15,000): $675,000
- Total additional profits over 7 years upgrading the number of sites in line 2 using site enhancement and variance procurement program (line 11 – line 12): $1,177,200