THE SIGNAGE FOUNDATION FOR COMMUNICATION EXCELLENCE, INC.

1. Commercial Activities

In the North American retail economy, on-premise business signs symbolize the most ubiquitous and varied of all commercial communication systems, including television, radio, print and direct mail, and off-premise or outdoor advertising (commonly, but mistakenly labeled "billboards"). And to reiterate...they also serve to reinforce all other forms of media communication, and are capable of performing many communication functions simultaneously. It is impossible, therefore, to look at any one built environment scenario and say this is how signage works. If nothing else, the complex morphology of American retailing prevents such sweeping generalization.

The myriad types of American retail operations and sites range from the small independent freestanding store (under 10,000 square feet) to mass merchandisers, complete category stores, strip malls, regional shopping centers and retail "clusters" which are neither shopping center or strip mall. Such diversity requires sophisticated analysis of signage requirements for both the business and its customer or client, if the business is to succeed. Thus, any comprehensive business strategy must include an effective signage program in addition to site location and development considerations. The signage program may by relatively simple -- a free standing sign...or more complex, reflecting the full range of communication devices, e.g., a traditional sign, plus product dispensers and displays, and signature building and landscaping.

Sign programs and regulations should take into account not only the particular message needs of both sender and receiver, but also the site and ownership specifics of the individual commercial establishment. For example, the on-premise commercial communication needs of a local "mom and pop" operation will be greater than those of a nationally recognized retailer. Because signage needs expand or contract, depending upon nearly countless variables, broad stroke regulatory treatment is contraindicated.

The signage needs of various businesses should not be viewed on a continuum, with downtown businesses at one end and major freeway businesses at the other. Instead the needs should be viewed in a rotating circularity which recognizes that at any given time the needs of one business may reach the apex and require special attention or consideration.

For example, a service-oriented business (such as a dentist's office) that has been in the same location for many years and has an established clientele may function economically with only a sign on the door; longstanding patients (or customers) find their way to the right spot without the visual cues provided by a sign easily seen and read from the street. However, if an economic downturn occurs in the area, causing residents to move away, the need to attract out-of-area passersby in order to stay in business may become acute. On the other hand, if the economic environment remains stable, many residents will move anyway. Should the area economy improve, the increased job opportunities will bring new residents.^[9] In both of these latter instances, "replacement" and "new or additional" clientele will be difficult to attract absent the street visibility afforded by an on-premise sign. Although area newcomers might become aware of the business through alternate forms of advertising, such as the yellow pages or newspaper advertisements, substitution communication devices are much less likely to increase the clientele pool than an on-premise sign visible to the newcomer passerby.^[10]

For many small businesses, such as barbershops, specialty stores or local restaurants, signage and word of mouth may be the sole means of reaching new customers. Further, in many communities, small businesses offer a primary source of employment and an important point of entry into the workforce for women, minorities, and new immigrants; thus, sign regulations which help small businesses succeed serve both an economic and public policy purpose.

Long established or not, there are businesses which rely entirely on their sign to connect with their segment of the market and stay in business. The clearest example is the highway-oriented business, such as gasoline stations, fast-food restaurants, and economy motels, whose customers are sometimes completely dependent on signs visible to the highway to indicate where to get desired goods or services. As the automobile has come to dominate the urban, and especially the suburban, landscape, the increase in signage needs of the "highway" (or "point of distribution") business has been dramatic -- causing a material impact on retail site selection and development theories.

2. Site Selection and Development Factors

Generally, two basic site selection and development strategies are at work in North America: (1) fixed points of origin; and (2) mobile points of distribution. The "fixed points" location strategy is essentially trade area oriented. The consumer moves from a fixed and defined base within the area to a specific retail site; the origin of the trip may be the home, office, school, possibly a local hotel or airport. Traditionally, a trade area business enjoyed a high repeat customer percentage and based on this percentage, market size or share could be reasonably established. On the other hand, the "mobile points" locational strategy is based on mobility or "traffic". Point of origin, is almost meaningless, and signage -- the "visibility" component of the site -- becomes all-important. Consumers stop, consume, and then move on. Repeat business is primarily generated through major media corporate or brand identification programs, which enhance recognition of the on-premise sign and often prompt a stop.^[11]

The "fixed points" and "mobile points" strategies are compounded by two sub-strategies: (1) impulse stop purchase and (2) shopping trip. The "impulse stop purchase" strategy involves finding an opportunistic retail location along the consumer's pathway. Clearly, the better the site communicates commercial messages to the passerby, the more competitive the site will be. Conversely, the "shopping trip" strategy presupposes that the consumer's intended destination is the site itself, which may somewhat reduce the need to communicate more than locational/directional information via on-premise signage. The mass merchandiser, "big box" retailer, and the shopping center/mall with its anchor tenant(s) are primary examples of shopping trip or destination-oriented retailing. (In fact, shopping centers and malls utilize both locational strategies -- the anchor tenant may be the intended destination, but to reach it, the consumer must pass smaller specialty stores that are designed - and signed - to capture the impulse trade.)

On a larger local scale, power centers (e.g., commercial districts that contain several mass merchandisers), regional shopping centers, entertainment districts, and festival marketplaces all serve as primary destinations. "Satellite" businesses within the area serve as points of distribution, seeking to attract, through on-premise signage, customers whose chief purpose was to visit the primary destination. This is also the case for specific geographic locations that function as major tourist destinations on a national scale (e.g., Disney World, Times Square). Destination cities, such as Las Vegas or Santa Fe/Taos, must strive to meet the signage requirements of not only the thousands who visit annually, but also local residents and local businesses not tied to primary destination activities.^[12] Generally these cities satisfy most signage needs and expectations by emphasizing theme design in their sign codes.

Some businesses have adopted a "hybrid" retail strategy -- both destination and impulse oriented. The gasoline industry provides one example. Because gasoline sale profit margins for many stations may be low (1%, or less), to stay in business a station will add other on-site retail services, with generally high profit margins. For example, many stations now offer on-site car wash, convenience shopping and/or auto repair and maintenance services. The ancillary or subordinate services provided interact in a synergistic manner with the primary service so as to encourage "cross over" shopping, i.e., a consumer will stop for gas and then enter the on-site convenience store to buy a soft drink. The combination of a primary use generating predictable, but low profits, with a secondary use capable of generating high, though less consistent profits, maximizes the site's economic value and rate of return.

3. Shifts in "Trade Area" Dynamics

Especially impacted by the increasing mobility of the consumer public is the "trade area" theory of site selection and development. Traditionally, trade areas were geographically defined areas encompassing a 5-10 mile radius and containing a fairly immutable mix of residential, commercial, government, recreational, and manufacturing/industrial land uses. Site selection and development decisions by retailers were based on the trade area's boundaries, population, and consumer income levels and spending patterns (Jones and Simmons 1990, 318). The volume of business revenue available within a trade area was presumed to relate to the population and the existence of competitors within the trade area boundary, as well as revenue from transient customers from outside the immediate trade area who might patronize a business only one time or infrequently.

Since World War II, the combination of the interstate highway system and increasing mobility of the consumer public has significantly changed the notion of trade area for many types of businesses. Most notably, consumer mobility has made trade areas much larger overall. Today, it is estimated that 35 to 50 percent of the consumer population shops outside the local area (Signage Foundation 1998). In this scenario, large segments of the retail and service industry now serve as a "points of distribution," where many customers at any given point on any given day are visiting the location for the first and sometimes the only time. Applying a point-of-distribution approach to the site selection process relies more on quantitative analysis of travel patterns within an area and less on traditional trade area measures, such as population and household income. In terms of signage, retailers that function as points of distribution must capture consumers who are traveling between destinations in order to stay in business; such retailers are generally more reliant on signage than the local merchant or service-provider with whom consumers have regular visual contact.

In today's commercial environment, however, even the local shopkeeper or practitioner requires legible, conspicuous on-premise signage visible to the street. If this is lacking, a large segment of the market -- the out-of-area and newcomer consumer -- will be lost to local trade. On any given day, the potential "unfamiliar" customer loss may be as high as 50% of the total motoring customer pool.^[13] Additionally, local potential consumers may be lost because many of them, possibly as many as 85%, daily travel outside the trade area and consume elsewhere; if the local merchant's sign lacks visibility, the local consumer may forget the business is there.... or worse, never notice it in the first place.^[14]

Because everyone who lives or works in a trade area routinely does not consume there, it is nearly impossible, statistically, to predict business volume for a single site or for the trade area in total. The variables created by consumer mobility also have made on-premise business signage increasingly important to businesses across the board. Often, without adequate on-premise signage, a business will cease to be a factor in the marketplace...and ultimately will fail.

Simply, trade areas are no longer static; they are, instead, dynamic and fluid with constantly changing borders and population.^[15] As a result, the task of crafting an effective signage program requires a rethinking of historic perspectives of the communication needs of both the community and the its business districts.