1995 P-O-P Trends Report

If the U.S. economic picture is truly improving, then better times are ahead for America's consumer-product marketers. And that should mean better times for the the providers of point-of-purchase materials -- signs, displays, fixtures and collateral materials.The product marketers and P-O-P company executives who recently answered a survey from P-O-P Times have painted a rather rosy picture for 1995. Spending on point-of-purchase advertising will rise. Use and retailer acceptance of P-O-P continue to increase.The 1995 P-O-P Trends surveys also looked at the many factors affecting the decision to use P-O-P. Many of the key findings of the surveys are contained in the charts that accompany this article. But there is much more data than can be contained in these charts.Super C-stores: Where P-O-P RulesNot surprisingly, supermarkets or mass merchants are listed as the single most important retail channel by 18 percent (in both cases) of product marketers. But 13 percent of those marketers who specify a single retail channel as most important say home centers/hardware stores are most important. This seems to reinforce the notion that home centers are quickly losing their stacked-case warehouse look. Convenience stores are listed by only 5 percent of all those responding as the primary selling arena.Those numbers turn a bit sideways, however, when annual P-O-P budgets are considered. When companies with annual P-O-P budgets of more than $1 million are asked which is their most critical venue, mass merchants (at 11 percent) and supermarkets (at 14 percent) remain important. But a full fifth of all big-spending marketers put their greatest P-O-P emphasis on convenience stores.Big Budgets for Big CompaniesThe product marketers who participated in the survey produce a wide range of goods. Not too surprisingly, they also operate in a wide range when it comes to annual budgets for P-O-P. While the survey notes that 56 percent of all product marketers work with annual P-O-P budgets of less than $100,000, slightly more than 10 percent of the companies have P-O-P budgets in excess of $1 million. Beer/wine/spirits marketers seem to have the deepest pockets. Half of the respondents who market beer, wine or spirits have annual P-O-P spending of more than $1 million. But 25 percent of the respondents in that category are working with annual P-O-P budgets of less than $100,000.Of food product marketers, 80 percent must produce P-O-P with less than $100,000 a year, while only 3 percent of those companies have P-O-P war chests of $1 million or more. Marketers of tobacco products also seem to have deep pockets for P-O-P. Of those responding, 57 percent have annual budgets of more than $1 million while another 29 percent produce their P-O-P with $500,000 to $1 million every year.Nearly 74 percent of all of the product marketers surveyed report that they will increase their P-O-P spending in 1995. Of those who intend to increase their P-O-P spending, 46 percent say they will expand their spending by up to 10 percent, while 17 percent plan to spend 10 percent or more on P-O-P than they spent this year.Only 10 percent of product marketers say they will spend less on P-O-P in 1995, with only 2 percent of those saying they will cut spending on P-O-P materials by more than 10 percent.Pay for Play: Cash for SpaceWhile 74 percent of product marketers say they do not pay for placement of their displays, that number tends to change based on the specific product being sold. For example, 52 percent of cosmetics/toiletries marketers say they have to pay for display placement and half of the marketers of prerecorded music and films say they must pay for placement of their P-O-P displays. Approximately 65 percent of the marketers of food products and 53 percent of nonalcoholic beverage makers say they do not pay for placement of their displays.Of those marketers who say they pay for display placement, 44 percent report that the practice is increasing, while 48 percent claim that it has remained the same. Only 8 percent report a decrease in payment of allowances for displays.Designing the Future of P-O-P SuppliersWhen the surveys answered by P-O-P producers began to come back, one of the more interesting findings was the number of companies that do not have in-house design capabilities. Among all respondents, 30 percent of the P-O-P companies do not have design departments. The number changes slightly, depending on whether the company's primary focus is temporary, semipermanent or permanent P-O-P. Only 25 percent of the makers of temporary P-O-P do not have design capabilities, while that number begins to creep up for makers of semipermanent P-O-P (29 percent) and permanent displays (32 percent).Annual sales revenue has some impact on the size of design staffs. Among companies with annual sales of more than $10 million, 13 percent have staffs of 10 or more people. Thirty-eight percent of the largest P-O-P companies have design staffs of five to nine people and 50 percent of those same companies have staffs of one to four people. In smaller companies -- annual sales of $5 million to $10 million -- only 3 percent have design staffs of more than 10, while 15 percent have staffs of five to nine people. Of those companies, 82 percent have design staffs of one to four people. For those P-O-P companies with annual sales of $1 million to $5 million, more than 92 percent have design staffs of one to four people. Oddly enough, the smallest of the companies surveyed (annual sales of less than $1 million) have more medium-sized design departments. Among those companies, 84 percent have staffs of four or fewer, while 10 percent have staffs of five to nine designers.Manufacturing Means P-O-P PowerOf the P-O-P companies surveyed, 78 percent operate their own manufacturing facility. The number is slightly lower for companies that focus on temporary P-O-P (76 percent) and semipermanent units (77 percent), but a little higher for makers of permanent displays (81 percent). The manufacturing question is also affected by the size of the company based on annual sales. More than 88 percent of the P-O-P companies with annual sales in excess of $10 million have their own manufacturing facilities. Only 67 percent of those companies with less than $1 million in annual sales have their own manufacturing operations. Perhaps not so unusual is the finding that 85 percent of those companies that maintain their own design staff also manufacture their own P-O-P.When P-O-P Spells C-A-S-HIf anyone should ever doubt that designing and manufacturing point-of-purchase displays, signs and fixtures is big business, they would just have to look at some of the returns from the surveys. More than a third of the P-O-P companies surveyed report annual sales of more than $10 million, while another 14 percent have annual sales between $5 million and $10 million. However, there seems to be plenty of business in the lower ranges. Thirty percent of those P-O-P companies responding have annual sales of $1 million to $5 million and 18 percent have sales of less than $1 million.Among the companies that operate their own manufacturing operations, 38 percent have annual sales of more than $10 million. And among the companies that have their own design staff, 44 percent are in the $10 million annual sales club.Employees: By the NumbersThe number of employees it takes to produce P-O-P displays is closely related to what kind of P-O-P is produced. Among those companies that primarily produce temporary P-O-P, 38 percent have more than 100 employees, while 23 percent have 10 or fewer workers.Among makers of semipermanent displays, 29 percent have more than 100 employees and 21 percent have 10 or fewer people.Companies with more than 100 employees that manufacture permanent P-O-P represent 35 percent of that subset, while 25 percent of the permanent display makers have 10 or fewer employees.Not too surprising was the figure that among P-O-P companies with sales of more than $10 million annually, 86 percent have 100 or more employees. Among companies with annual sales of $5 million to $10 million, only 24 percent have more than 100 workers. In the range of sales of $1 million to $5 million, 25 percent of the companies have 11 to 25 employees, and 26 percent of the companies have 26 to 50 workers. In that same sales range, 30 percent of the companies have 10 or fewer employees.P-O-P companies with annual sales of less than $1 million are, of course, staffed with fewer people. Seventy-one percent of those companies have 10 or fewer employees, while more than half of those same smaller firms have employee counts between 10 and 50.What a P-O-P company produces also has a lot to do with how many employees it has on the payroll. Among manufacturers of metal/wire displays, 33 percent have staffs of more than 100. Thirty-eight percent of the surveyed producers of paper/corrugated P-O-P have employee counts of more than 100; and 34 percent of the producers of electric signs have more than 100 employees.1994: A Very Good YearAlmost 80 percent of the P-O-P companies that responded report sales increases for 1994, while only 10 percent report a decrease in sales. Eleven percent report that sales remained essentially the same in 1994 as in 1993. The builders of permanent displays seem to have fared better this year. Some 81 percent of those companies saw their sales increase, while increases were seen by only 76 percent of those companies that produce temporary P-O-P. The big boys -- companies with P-O-P sales of $10 million or more -- have done well in 1994. Eighty-four percent report sales increases this year, while only 7 percent say their sales have slipped. Among the smallest producers of P-O-P (sales of $1 million or less), 71 percent saw sales increases, while 14 percent saw sales slide in 1994.1995 May be Even BetterGood times seem to be ahead, if the survey is correct: 85 percent of the P-O-P companies surveyed expect to see a sales increase in 1995, while only 3 percent expect business to slide. Twelve percent of the P-O-P companies expect sales to hold steady in 1995. By a margin of almost two-to-one, makers of (primarily) temporary displays see sales increasing in 1995, when compared with companies that produce semipermanent and permanent displays.Only 10 percent of all P-O-P companies surveyed (who expect sales increases) think those increases will be less than 10 percent. Most companies are much more optimistic. Almost 30 percent of the companies who expect sales to climb think those increases will be between 5 and 9 percent; while nearly 32 percent of the P-O-P companies who expect to see sales increase expect those increases to range between 10 and 19 percent.

1995 P-O-P Trends Report

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