Increased occupancy of commercial space will support demand for manufactured signs
Los Angeles, CA (PRWEB) March 08, 2013
While revenue for the Sign and Banner Manufacturing Franchises industry has grown at an estimated annualized rate of 6.8% over the past five years, this period did not come without challenges for the industry. According to IBISWorld industry analyst Josh McBee, “Downstream demand for signs, billboards and banners is generally dependent on the level of commercial business activity.” When the recession hit in 2008, the value of nonresidential construction plummeted 21.1% in 2009 and total advertising expenditure plunged 17.5%. The resulting drop in demand for signage caused industry revenue to contract a moderate 3.9% in 2009.
Since 2010, however, revenue has grown consistently and is projected to jump 8.7% in 2013 to $379.5 million. As nonresidential construction activity improves and corporate profit continues rebounding, businesses will be more willing to invest more in advertising. This, in turn, will increase demand for customized products and services offered by the Sign and Banner Manufacturing Franchises industry.
The resources that the industry's franchisors provide their franchisees with helped many industry establishments weather the recession. These resources include ongoing training and consulting services as well as marketing assistance, usually in the form of nationwide advertising campaigns. However, “because the recession caused many downstream businesses to go out of business, the number of customers available to industry firms in certain areas declined,” says McBee. This increased competition, putting downward pressure on pricing and forcing some franchises out of the industry, which increased market share concentration. As a result, the number of industry establishments has declined steadily over the five years, leading to increased market share concentration for the industry’s leaders, such as Sign-A-Rama and Fast Signs. As firms struggling to turn a profit have exited the industry, average industry profit has slowly increased.
Over the five years to 2018, revenue is forecast to continue growing. As corporate profit continues improving, businesses will increase their advertising budgets, supporting demand for manufactured signs and banners. Similarly, as the value of private nonresidential construction rises, businesses occupying new commercial spaces will demand signs and banners, aiding industry revenue growth. Franchises that offer the latest in digital signage will benefit the most from heightened demand. For more information, visit IBISWorld’s Sign & Banner Manufacturing in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
Establishments in this industry primarily produce signs and displays, billboards, traffic signs and more for general advertising, traffic control and point-of-sale advertising. Reports in IBISWorld’s Business Franchise collection focus solely on the operation of franchised outlets and exclude nonfranchise data (i.e. franchise fees). They show the number of franchise outlets, franchise revenue and the average profit margin earned by franchisees.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.