THE SIGNAGE FOUNDATION FOR COMMUNICATION EXCELLENCE, INC.

A major, multipart study, "Research on Signage Performance," conducted between 1995 and 1997 by the University of San Diego looked at the effects of on-premise signage on the financial performance of retail sites.^[40] The conclusion of the study was that "on-premise signage has a statistically significant and financially substantive impact on the revenues of a site". (CESA/ISA 1997, 20).

Part 1 of the study was a multiple regression analysis of a group of variables, including signage, on sales at 162 Southern California locations of a major fast-food chain. Signage variables included the total number of signs on a site, the cumulative square footage of all signs, the height of signs, and the presence of specific types of signs, including monument signs, directional signs, pole signs, building (e.g., wall or fascia) signs, and drive-thru menu boards. Other variables included the value of owner-occupied housing within 1.5 miles, median rents within 0.5 miles, building size, hours of operation, and other local geographic characteristics. Although wide variations in data are important in a regression analysis to be able to determine the individualized effects of a group of variables, the summary of results did not indicate much data variation concerning the amount, type, and placement of signage from one site to another. This is so because sound business decisions preclude a national fast-food chain from building a store on a site that, for whatever reason, would not be allowed some minimum level of signage. Therefore, the researchers had to "tease out" the effects of each signage variable using data that was fairly uniform from one site to another.^[41]

Each variable was tested at every location to predict the effect on (1) annual sales dollar revenues; (2) the annual number of transactions at a site; and (3) the average dollar amount spent per transaction. The results indicate that the number of signs at a particular site has a significant positive impact on both the annual sales revenue and the number of annual customer transactions. For example:

• The model predicted that, on average, one additional sign installed on a site would result in an increase in annual sales in dollars of 4.75 percent at that site. This translates to a $23,750 increase for one additional sign at a typical store with annual sales revenue of $500,000.
• One additional sign installed at a site is projected to increase the annual number of transactions by 3.93 percent. This translates into more than 3,900 additional transactions for a store with an annual average of 100,000 transactions.
• The impact on the average dollar amount spent per transaction as the result of additional signs ranged from $0.06 per transaction where one additional 36-square-foot wall sign was added up to $0.78 per transaction where one additional 144-square-foot pole sign was added.

The second part of the study combined a multiple regression analysis and a time series analysis of seven years of weekly sales data for Pier 1 Imports home furnishing stores to measure the effects of modifications, additions, or removal of on-premise signage on sales performance over time. For the multiple regression analysis, data from 100 stores was used; for the time series analysis, data from 50 stores was used. Researchers attempted to find sites that were not subject to other major events that could affect sales performance, such as building remodeling, shopping center remodeling, severe weather, or road construction.

The results were grouped according to the effects on sales performance of: (1) a change to building signage; (2) a change in pole or plaza identity signs; or (3) the addition of new directional signage. The result bore out a strong correlation between new signage and increased sales.

• Changes to building signage (e.g., the addition or replacement of wall signs) resulted in an increase in weekly sales per store of approximately 5 percent. The building signage change variables included the replacement of aging signage, the addition of new signage to previously unsigned building faces, and the replacement of existing signage with larger signage. The increases to weekly sales at the 21 sites that experienced changes to building signage ranged from 0.3 percent to 23.7 percent. The store that experienced a less than 1 percent increase was noted to have atypically high sales for the chain, and, therefore, a large increase was not expected as a result of the signage change. The store that experienced the 23.7 percent increase was noted to have atypically low sales, resulting in a large percentage increase, although the increase in terms of dollars was comparable to other sites. Of the 21 sites that experienced a change to building signage, increases in weekly sales were generally in the 1 percent to 5 percent range.
• The addition of pole signs and plaza identity signs (e.g., a multitenant sign with Pier 1 Imports identified as a tenant) resulted in a 4 percent to 12 percent increase in weekly sales at the nine sites on which those two types of signs were added. Researchers attribute the increase to the advertising impact on passing traffic.
• The addition of small directional signs indicating ingress and egress routes resulted in weekly sales increases ranging from 4 percent to 12 percent. Researchers attribute the increase in these cases to the "signs' ability to guide a site-bound shopper more than any specific advertising effect" (CESA 1997, 35).

The Pier 1 Imports signage study concludes that "on-premise signage is a significant constituent of the factors causing the success of a retail endeavor" (CESA 1997, 36). It noted that the "advertising effect" of additional building, pole, or multitenant sign can be credited with a 5 to 10 percent increase in a site's revenues. The ability of directional signs to guide customers to a site can be credited with approximately a 10 percent addition to site revenues. The noted increases in revenues as a result of signage can have a dramatic effect on profitability at a specific site given that normal profits in the retail industry are approximately 1 to 2 percent.

In sum, research on the impact of additions or changes to signage at fast-food and home furnishing stores indicate that increases in the total amount of signage or the number of signs on a site can have a significant positive impact on the annual revenues at a site. The studies did not measure the impact on annual revenues of relatively small additions to the total amount of signage on a site.