Variable message signage displays favourable market conditions

by all | 1 October 2014 10:30 am

[1]Variable message signs (VMSs) for roads, highways and airports have earned a ‘buyer power score’ of 3.8 out of five, according to market research organization IBISWorld, reflecting favourable market conditions, including a high level of competition.

Factors cited by the company for increasing buyer power include slow recent price growth, low market share concentration, a wide variety of substitutes, little product specialization, low switching costs and very little price volatility. Competition remains high because sign shops and other buyers can source light-emitting-diode-based (LED-based) variable message signs directly from manufacturers, wholesalers, distributors or online resellers, with major suppliers including Daktronics (Canadian example pictured), EBSCO Signs & Displays and Swarco. There is also the option of renting portable signs for temporary use, rather than buying permanent models.

“Thanks to these factors, the market is in great condition for buyers looking to negotiate low prices,” says Michelle Hovanetz, research analyst for IBISWorld. “Competition is further increased because the products are fairly standardized and thus comparable across most brands. And switching costs to move between suppliers are low.”

The costs of electronic components used in variable message signs have dropped, while static signs that historically served the same purpose along roads and highways have remained a viable substitute for many applications. As a result, IBISWorld reports market prices for variable message signs have risen only very slightly over the past three years.

The only significant detractor from buyer power, the company says, is moderate supply chain risk, stemming primarily from a relatively small number of upstream suppliers of light-emitting diodes (LEDs) to the variable message signage market. A manufacturer’s loss of an LED provider could translate into higher supplier costs, which would be passed on to sign shops and other customers.

Source URL: https://www.signmedia.ca/variable-message-signage-displays-favourable-market-conditions/

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