Walgreens makeover... or takeover?

Walgreens utilizes signs to remarket themselves. Look out CVS!
~Amy Donahue
Signage Consultant

Bigger signs, expanded beauty aisles among changes coming to next test market

Walgreen Co. is about to get a new look as the drugstore chain expands a test to make the stores more open, more colorful and easier to shop.

The Deerfield-based company is adding more food and wine, expanding its beauty aisles and preparing this summer to bolster electronics. The retailer is also lowering the heights of shelves and installing bigger and more colorful signs to help shoppers navigate the aisles.

The new format, called customer-centric retailing, is slated to roll out to 2,500 to 3,000 stores by this fall from 700 now, said Walgreens CEO and President Gregory Wasson in an earnings conference call Tuesday.

The company's first test was concentrated in Houston and Dallas. Wasson declined to reveal where the next test market will be.

"As we've said before, this is an ongoing process with many checkpoints along the way to allow us the opportunity to tweak and refine as needed," said Wasson. "As we move into the next phase, we'll continue to build sales, take work out of stores, lower inventory and, most importantly, improve our customers' overall shopping experience."

As part of the makeover, Walgreens eliminated about 3,500 products from stores to focus on fewer, better-selling items. The move culled $500 million of inventory and lowered labor costs as restocking was reduced.

Almost 40 percent of Walgreens sales come from the front end of the store, the industry term for everything that doesn't come from the pharmacy.

Sales at the 31 pilot stores are up 2 percent, outperforming a control group of stores and suggesting that the makeover will spur revenue growth, Wasson said. Market share in Houston and Dallas remained unchanged to up slightly as the stores changed over, a result the company said was encouraging. Stores were converted for about $40,000 to $50,000 each.

While only 30 percent to 40 percent of Walgreens stores will make the change to the new format this year, all of the 7,180 drugstores nationwide will dedicate more space to skin care and vitamins. And 5,000 stores are on track to carry beer and wine by the end of the year.

"We believe initiatives to improve both shopping experience and inventory management remain on track," said Standard & Poor's equity analyst Joseph Agnese in a Tuesday report, rating Walgreens shares a "buy."

Details of the store makeovers came as Walgreens reported net income for its second fiscal quarter, which ended Feb. 28, rose 4.6 percent, to $669 million, or 68 cents a share, from $640 million, or 65 cents, a year ago. The latest quarter included restructuring charges of 2 cents a share.

Sales rose 3.1 percent, to $17 billion.

Sales at stores open at least one year, a key retail metric, fell 0.2 percent from the year-ago quarter. Front-end same-store sales fell 1.6 percent, dragged down by the weak demand for discretionary goods and by lower demand for cough, cold and flu products, the company said.

Pharmacy sales rose 3.2 percent as the company sold more 90-day prescriptions in stores, an offering previously available only by mail. Pharmacy same-store sales rose 0.6 percent.

Walgreens closed at $35.91 a share, up 1.6 percent, in New York Stock Exchange composite trading.

By Sandra M. Jones, Chicago Tribune reporter. March 24, 2010

Signs: The Bottom Line

A classic article from the International Sign Association on signs as advertising and the importance of changing signs to increase notability as well as increase foot traffic into your business.
~Amy Donahue
Signage Consultant


Signs as Advertising
A few years ago, a sign manufacturer performed a study of its clients to find out whether their signs were bringing in customers. The businesses surveyed were a year or less old and the surveys were conducted within 30 to 45 days after the installation of a new sign. Thousands of shoppers were asked, "How did you learn about us?"

The results, shown in Table 1, clearly demonstrate that the signs attracted half of the start-up businesses’ new customers – more than any other form of advertising the businesses used and even more than their word-of-mouth referrals.

Table 1: How did you learn about us?
Number of Customer Responses
On-Premise Sign	Word of Mouth	Newspaper	Yellow Pages	TV	Radio
1,234	820	212	139	32	38
Percentage by Category
50%	33%	9%	6%	1%	1%

Naturally, as your business becomes more established, more of your sales will come from repeat customers and fewer will be directly due to your sign. But that does not mean the sign has become unimportant. On the contrary, you must constantly remind your regular

customers that you are there. Even more importantly, studies show that on any given day, as many as 35% of the people passing your business have never seen it before and could become first-time customers because of your sign.

Increasing Profits

The University of San Diego conducted a study to determine the economic value of on-premise signage. Table 2 shows the average increase in sales revenue that resulted from signage improvements. [1]

TABLE 2 - Average Increase in Sales Revenue
Signage Change	Fast Food	Pier One Imports
Add one monument sign	9.3%
Add large pole sign (144 sq. ft.)	15.6%	8.6%
Add chain identity to plaza identity sign		7.7%
Addition of two new directional signs		8.9%
Replaced storefront wall sign with larger sign		7.7%

Let's assume you own a typical family clothing store and add a new, better-designed sign to the business. Here's how it could impact your bottom line:

Your annual sales	$1,757,486
Cost of goods sold	61.8%
Gross Profit Margin	38.2%
Operating expenses (includes other expenses of 1.5%)	36%
Income taxes (estimated at 35%)	0.8%
Income after taxes	1.4%
After tax profit ($1,757,486 x 1.4% or)	$24,604

A 7% increase in sales created by the addition of a needed sign, without increasing operating expenses, would cause the following change in profit:

New sales at 7% ($1,757,486 x .07)	$123,024
Gross Profit from new sales ($123,024 x 38.2% Margin Contribution)	$46,995
Net Profit (Assumes 35% taxes)	$30,547
Total Profit (Original Profit $24,604 plus New Profit $30,547)	$55,151

With a small, 7% bump in sales your profit could jump from $24,604 to $55,151. That's an increase of over 124%! Increasing profits is one way that signs improve your bottom line. Another way is by decreasing expenses.

Cutting Costs

A number of surveys have been conducted before and after installing signage to determine effectiveness. One of these, from late 1996, involved a Los Angeles auto dealership. Three previous auto dealers had failed at the location. The new owner, Aztec Motors, spent much time, energy and money improving the building and lot.

Once renovations were complete, the new owner invested $7,400 in replacement signage that entailed one wall and one double-faced pole sign.

A survey found the new signage, not the renovations or other advertising, was responsible for a minimum of ten new walk-in customers per week, resulting in at least six additional sales per week.

It took less than a month for the new signs to pay for themselves, and the owner was able to reduce his advertising budget from $16,000 to $4,000 per month an annual savings of $144,000.

As part of your advertising you're probably considering one or more of the following: TV, radio, newspapers, Internet, direct mail, etc. The most basic way to evaluate the cost effectiveness of these or any marketing method is the cost per 1,000 exposures. Here's how business signs measure up to other media.

The price and life expectancy of signage varies widely depending upon the type, but let's assume you invested in signage costing $16,500 that should last seven years. If your business is located on a street with 60,000 people passing each day, the cost per 1,000 exposures would be only 11 cents.

The same $16,500 spent on outdoor advertising (i.e., any sign that is not appurtenant to the use of the property, a product sold, or the sale or lease of the property on which it is displayed) for 1,000 exposures would cost $0.83. A similar expenditure in newspaper advertising would cost you $1.57, while television advertising for 1,000 exposures would cost $6.60.

If you'll remember from Table 1, only 1% of first-time customers come in because of your television ad. But 50% come in because of your sign. If you're spending only 11 cents per 1,000 exposures to get that 50%, that's a good use of your money.

[1] Figures from The Economic Value of On-Premise Signage, a study conducted by the University of San Diego School of Business Administration.

Industry Resources. www.signs.org.

Proving the Value of Signs... since 1913

Great article on the value of signs and what they can do for your business.
~Amy Donahue
Signage Consultant

Proving the Value of Signs
By Wade Swormstedt

I recently came across an article in which a sign salesperson responded to a customer’s very pointed question: “How do you know that an electric sign will bring people into my store?” The salesperson’s extended answer bears repeating, so I’ll paraphrase and quote from it. If I quote verbatim, I’ll put it in italics.

First, the salesman, Mr. Smith, asked the owner of the clothing store, Mr. Jones, how many people came into his store each day. Jones figured 100. Next, Smith asked Jones how many people he thought walked past his store (located on a busy downtown street) each day, between 6 a.m. and midnight. Jones figured maybe 1,000.

Smith doubted the figure was that low, but he accepted it, and then calculated that might mean 6,000 per week. Smith even conceded that many of these people probably walked past more than once, so he reduced the number to 3,000.

Next, Smith took some statistics from the latest government census and said the average household income in that community was $50,000. Smith then asked Jones for an estimate as to what percentage of that money would be spent on the type of clothes his store offered. He figured 5%, which would mean $2,500 a year, or roughly $50 a week.

So, 3,000 people a week times $50 per week would mean $150,000 a week would be spent annually by townspeople for the style of clothes Jones sells.

How much of this business are you getting? Smith asked.

Smith reiterated the figures Jones had provided: 100 people a day equals 600 per week, times $50 would mean Jones’ weekly gross would average $30,000. That subsequently means Jones’ $30,000 is approximately 20% of the $150,000 people are spending on his type of clothing.

Why are you not getting more of it? Won’t your store accommodate more customers? Can’t your clerks wait on at least twice as many more? Smith queried. The trouble seems to be that your store doesn’t offer the strongest possible invitation to the crowds to come in and do business with you. People pass by before they have made up their minds whether they want to buy from you or not. You need to tell them who you are, where you are, and what you have to offer.

You need to make the invitation so pressing, to make the suggestion so strong, that they will be impelled to come. What better way is there of carrying your message to these prospective customers than by an electric sign? Projecting over the sidewalk, its suggestive force is working when your customer is still a block away – before he reaches your entrance he has decided that he wants to buy; he comes in and the sale is made. Day and night, the sign is telling its story and extending your invitation to hundreds of buyers.

To be conservative in his estimate, Smith said perhaps the $150,000 figure was high. He was willing to cut it in half to $75,000.

This is surely much less than the actual amount of business you might get each week. But even at that, as your sales today average $30,000, there is left just $45,000 worth going after. Again, taking a safe course in our estimate, we’ll say by the use of progressive advertising, quality goods and splendid store service, you can pull in one-third of this $45,000. $15,000 worth of new business created every week!

What does it cost to get it? Practically nothing. Your rent is the same; taxes and insurance have not increased, and your clerk can sell 50% more goods without over-working. Except for one item, there is clean-cut profit on all the additional sales.

Smith calculated a 25% profit on the added sales, which would bring in $3,750 more per week and $195,000 for the year.

And to get this business and this additional income, you need only an electric sign, which we agree to furnish installed, complete, ready to turn the switch, for $7,000. Doesn’t a net profit of $188,000 justify that?

“How soon can you have it up?” asked Mr. Jones.

Truth is, this article appeared in the December 15, 1913 issue of ST (for a brief time, the magazine was published twice a month). So I multiplied the numbers by 10. And yes, today’s selling environment is much different. In 1913, there was no radio, TV or Internet. Window displays and on-premise signs dominated. And, traffic was decidedly more pedestrian, and the few automobiles moved much more slowly.

However, perhaps the value of the on-premise sign is even more important now because of the recession. Online shopping aside, all the advertising in the world is worthless if people can’t find the retail store. And yes, much more documentation exists today to prove the value of the on-premise sign, but none of it contradicts Smith’s rhetoric. The value of the on-premise sign remains timeless.

Posted on http://signweb.com/content/proving-value-signs Mon Aug 24, 2009 4:28pm EDT By Wade Swormstedt

U.S. Sign Industry Recovering Confidence

Great news today from the U.S. Sign Industry business confidence index. 2010 is going to be a great year for everyone!
~Amy Donahue
Signage Consultant

U.S. Sign Industry Recovering Confidence

The U.S. sign industry is coming back from its economic doldrums, according to the latest business confidence index report from the Sign Analytics research program co-sponsored by Sign & Digital Graphics, and The Visual Information Group LLC, of Cincinnati, Ohio.

The research collaboration, now beginning its third year, measures business confidence among U.S. sign companies twice-yearly. The business confidence index shown in the two accompanying charts (see Business Confidence Index, and Business Confidence Index by Segment) is based on surveys completed by more than 600 sign companies in January.

“We are right back where we started in June 2008 with our first survey,” says Mary Tohill, publisher of Sign & Digital Graphics. “With all that has happened with the economy, it’s exciting to see our sign companies regaining confidence in their outlook. Everyone profits from these improved index numbers.”

The January survey asked sign companies to look ahead to the first six months of 2010, comparing their expectations of sales then with 2009 year-end. Available replies were: Much Better, Better, About the Same, Worse, and Much Worse. More than 45 percent of respondents said they expected business conditions to be either Better or Much Better. Only 17.5 percent of respondents expected business conditions in six months to be Worse, or Much Worse.

By contrastⁱ, the Sign Analytics survey results from a year earlier (January 2009)—when the full brunt of the economic downturn was in evidence—show marked differences. At that time only 29.5% of respondents expected Better, or Much Better, business conditions while 38.7 percent expected conditions to be either Worse or Much Worse.

“These results represent great news not just for sign companies but for the manufacturers and distributors that support them, says David Williamson, principal of The Visual Information Group LLC. “While the 2009 market sizingⁱ data that we will be releasing is troubling due to the economy, 2010 appears to be starting with increased confidence among all of our sign industry segments.”

Because the exact same questions have been asked in each of the four Sign Analytics surveys, research results canⁱ be expressed as an index number. The numerical averages of replies from the June 2008 are expressed as a base of 100. An index number below 100 would indicate a worsening of business confidence, while any number above 100 would indicate improved confidence relative to the June 2008 timeframe.

Sign & Digital Graphics. Wed, 03/03/2010 - 8:07am | by KenM

Signs would connect the spots

An idea for revitalizing downtown Rockford? Signs like the prototype shown here would be part of a system to help direct visitors to downtown attractions in Omaha, Nebraska.
~Amy Donahue
Signage Consultant




Signs would connect the spots

If you’re feeling lost in downtown Omaha, city planners and tourism officials want to help you find your way.

Instead of relying on an office worker’s directions to get you from the state wrestling tournament to an Old Market restaurant, the City Planning Department is working on a new system of street signs to point out major downtown attractions.

The idea is for color-coded signs to work almost like a trail of bread crumbs, using arrows to give people directions one or two blocks at a time.

If the plan moves forward, signs to route foot traffic would go in about 50 locations around downtown, while signs for vehicle traffic would go at about 20 key intersections.

The concept is still being refined, and the City Council will vote Tuesday on whether to spend $61,300 in tourism funding on the project. The city’s Urban Design Review Board signed off on the design concepts Thursday.

“It’s high time to think about how we’re helping people maneuver,” Dana Markel, executive director of the Omaha Convention and Visitors Bureau, said in an interview.

The system being developed, she said, would make downtown more visitor-friendly.

Markel pointed to First National Bank’s pioneer sculptures as an example of something visitors may need to have pointed out to them. She said people may come upon one of the sculptures, but to fully appreciate a “tremendous story,” people need signs to connect all the pieces.

Officials have had a cohesive “wayfinding” plan in mind since 2005, when the city signed a deal with Philadelphia-based Joel Katz Design Associates to design the signs. But the design firm’s early work has sat on a shelf.

The council’s approval would keep the design work moving forward on a project that ultimately could cost $500,000.

If the council approves funds for continued design, the Convention and Visitors Bureau then would seek private funds to support the project.

Councilman Franklin Thompson said he sees the city’s funding as a further investment in downtown, the Old Market and the riverfront. Businesses as well as downtown visitors would benefit, he said.

It’s a case, Thompson said, where the city should “spend a little bit of money to make a whole lot more.”

Cathy Madison, who was in town from Kearney, Neb., on Thursday for the state wrestling tournament, said the directional signs would be useful. Madison and her companions said they took the Embassy Suites shuttle to get where they need to go while downtown.

But sometimes when you get dropped off, she said, “It’s like, where am I at? Which way do I go?”

The Eggleston family of Gothenburg, Neb., made it downtown without any problems thanks to a GPS system. And the trip from the Doubletree Hotel to the Qwest Center Omaha was an easy walk down Capitol Avenue.

The family planned to have dinner in the Old Market. Cody Eggleston said his plan was to “just start walking.”

“Based upon the map in our room, we need to go south and east,” he said. “That’s all I know.”

Jed Moulton, who is coordinating the sign project for the City Planning Department, said signs are meant to be easily recognizable and get people to downtown’s major destinations.

“You can have this kind of cacophony of competing signs,” he said. “You can create mayhem out there.”

By Jeffrey Robb WORLD-HERALD STAFF WRITER

Copyright ©2010 Omaha World-Herald®. All rights reserved. This material may not be published, broadcast, rewritten, displayed or redistributed for any purpose without permission from the Omaha World-Herald.

Making Your Advertising Stick

A GREAT idea for clients looking for something a bit different for trade shows. I've thought about backdrops, table tops, and but why not something that passerbys would like to sit down on! A perfect example of a highly visible object in a high traffic area! You can purchase this chair and we can design and print the custom graphics for it!
~Amy Donahue
Signage Consultant

Making Your Advertising Stick
Graphic printers are constantly on the lookout for new products that will make potential clients stop and engage in a brand or logo for longer than a perfunctory glance. It’s why one company recently jumped at the chance to be one of the only known suppliers for a promotional graphics chair in the United States.

Popular in parts of Europe and Asia, vinyl-wrapped chairs encourage consumers to rest and take a longer look at a particular advertisement. The US supplier’s principal said he spent a good 20 minutes examining a digitally printed chair the first time he saw it in Europe.

The wrapped, promotional chairs are made of polypropylene and designed as smooth and bendable as a couch. The US distributor of the chairs notes that printing shops do not print directly onto the chairs. Instead, they print on vinyl, over-laminate the vinyl and stick it on the chair as they would with a vehicle.

Areas well-suited for the chairs include:

* Trade-show booths
* Conventions/seminars
* Corporate lobby/waiting areas
* Retail point-of-purchase
* Special events (such as promoting an upcoming exhibit at a museum)
* Daycare centers/play areas

The biggest market to latch onto the chairs has been the trade-show industry, suppliers say. Digitally printed chairs have been a hit for trade show booths, both as seats for people working in the booths and reinforcements of a particular brand or logo.

For companies that want to change out their advertising, suppliers advise them to use removable vinyl or apply graphics on portions of the chair.

A blank, large chair at 81 cm (32 inches) high with the carrying case costs roughly $190 (the chairs also come in small and medium). The US supplier plans to soon release a starter kit that includes a set of chairs, table and child’s chair, giving customers all the staples they would need to set up a promotional sitting area.

Additionally, the chairs feature a couch kit accessory that can help turn several chairs into a long couch or tower. And while there is no official weight capacity, suppliers say the chairs can comfortably handle up to 350 pounds without collapsing. With posters and signs becoming normal fare in the advertising world, chairs serve as a new venue for marketers to promote their message.

All else 'wrappable'...

Many of my clients are looking for new creative ways to market themselves. Check out this unique advertisement that was painted on a silo for a beer company. (The steel bands in particular prevented a true wrap.) Think of anything that is highly visible and in a high traffic area and you may have the next wrappable item!
~Amy Donahue
Signage Consultant

Beer...CAN!

Colorado brewery’s sign captures unique product

Consider this your crash course in Colorado culture: mountains and local hand-crafted beers. Yes, the Rocky Mountain lifestyle treats you well, and, as it turns out, Colorado’s love of area microbreweries has offered a unique opportunity to the signage industry. Oskar Blues Brewery, a popular beer manufacturer in Lyons, Colo., was opening its second restaurant, Oskar Blues Homemade Liquids &; Solids, in Longmont, Colo., and needed just the right eye-catching sign that captures its uniquely packaged ales.

BEER CAN SIGN REFLECTS BREWERY’S IMAGE
With kegs as water fountains and beer cans as menu holders, Oskar Blues Homemade Liquids & Solids shows off a distinctive, targeted décor that demands similar outdoor signage, and standing in front of the building was a 68-year-old grain silo. To some, this silo appeared to be just that: a beaten storage tower. But turning that old, worn silo into a towering beer can sign felt instinctive, says Chad Melis of Oskar Blues.

This was no ordinary paint job. The bands added a challenge. Though beer snobs may sneer at the thought of canned brews, Melis says Oskar Blues Brewery has challenged that notion by branding itself on premium ales delivered in a can. In fact, Oskar Blues Brewery established itself in 2002 as the first U.S. craft brewer to can its own beers, and has won multiple awards, proving that canned ales achieve the same quality as other packaging methods.
The lofty sign takes on the look of Oskar Blues’ popular Dale’s Pale Ale, a beer that, Melis adds, is the driving force in transforming the public perception about what’s possible from canned beer. Oskar Blues Brewery’s image is based on that irony, and Melis believes this sign was just the right medium to deliver the message.

“When I look at the silo, it’s the only thing I ‘can’ see. The can has been a vehicle for our complex beers to rattle public perception and challenge the status quo; and that fires us up,” Melis says. Although local sign codes prohibited the silo from listing Dale’s Pale Ale by name, the color scheme imitated the model beer, and “Oskar Blues Brewery” replaced the original logo while still projecting the look of that distinctive canned brew.

Article Author: Amanda McGrory

Publication Name: Sign & Digital Graphics