Business Makeover Case Study : Michael Jones & Jeff Rexhausen

1. Business Makeover Case Study:Michael Jones & Jeff Rexhausen The Economic Impact of Exterior LED Message Boards

2. Why is this topic important? • LED Message Boards are increasingly used by businesses as exterior on-premise signage.  • Are these signs, which allow businesses to communicate more information at a lower cost, associated with better store performance? • This research provides new insights into the benefits of investing in LED Message Boards, based on the latest performance metrics from a major retailer.

3. Retailer’s Previous Research • Shopper perceptions of message boards (exit surveys) • MB detracts from community attractiveness – yes:7%, no:81% • MB shows store cares about community – yes:55%, no:10% • MB should have community messages – yes:67%, no:11% • Preference for monument signs in suburban settings • Want info on convenience and household items • Want info about sale items “when I need them”

4. Retailer’s Previous Research (cont.) • Shopper awareness • Overall, 30% of exiting shoppers read the sign Comparison LED Manual Gain • Read the sign 41% 28% +13% • Remember the message 21% 10% +11% • Demographic characteristics • More likely to be noticed by parents, blacks, frequent shoppers • Adding sales price moved 55% more of on-sale products

5. Our Own Previous Research • Digital electronic sign cases: effective messaging • Value Place • Better branding • Better financial performance • Anderson Ford • More customers and service department revenue • More “goodwill” through community service messages

6. Key Points of Previous Research • Shopper perceptions • Messages are appreciated • LED messages are more noticeable and memorable • Other retailer research • Sales price info increases product sales • Economics Center research • Increases in business performance • Enhanced business image

7. What is this project? • A set of case studies of LED use by a major retailer.  • Each case study compared a store with changes to its on-premise manual message board to three other stores on the basis of market area demographics and store performance prior to the change.  • Typical case: replacement of manual board with an LED message board of the same size and location.

8. Test Store Comparisons • Urban South stores had some variation in changes. • ID # Before After • 760 None LED • 424 Manual LED • 605 Manual LED • 854 Manual LED on shared pylon • 449 LED 87% larger LED • Midwest test stores all involved conversions from Manual to LED message boards.

9. LED Readerboard Use

10. What did we do? • We worked with the retailer to identify stores with new LED message boards: • South and Midwest regions • Between July 2010 and June 2012 • For each store with a message board change, we identified 3 control stores, based on: • Market characteristics (median household income, demographic peer group) • Store performance (sales, customers)

11. Composition of Test Store Demographics • Median Household Income • Broad range of income areas • White Population • Most market areas are relatively homogeneous

12. One Example of Store Matching • Market characteristics • Peer group covers race/ethnicity, geographic region • Some comparisons for one test store: • Store performance • Control stores averaged 6.9% larger, 6.8% more customers, and 15.9% more sales in FY 2009.

13. Total Store Sales 1 week before sign change vs. 1 week after sign change

14. Total Store Transactions1 week before sign change vs. 1 week after sign change

15. Comparison of Test to Control Stores:Week After vs. Week Before Sign Change • Over 100 data points – a lot of noise • Need to simplify

16. Comparison of Test to Control Stores:Week After vs. Week Before Sign Change • Use of control stores eliminates some significant causes of variability, but much still remains. • Focus on “difference in difference” statistics. • Difference of 2 weeks in test store compared to difference in 2 weeks of control stores • Averages from multiple cases … Sales: +2.55% Transactions: +2.60%

17. Impacts Beyond the First Week • Investigate whether these gains can be sustained or disappear over time. • More data increases the confidence in findings. • By looking at one month instead of one week, we can begin to address these points.

18. Total Store Sales 4 weeks before sign change vs. 4 weeks after sign change

19. Total Store Transactions4 weeks before sign change vs. 4 weeks after sign change

20. Comparing First Week to First Month • On average, results using four weeks of data show test stores only retained 40% of their initial gains. • What happens if we expand to compare the 52 weeks before the sign change to the 52 weeks after?

21. Total Store Sales 1 year before sign change vs. 1 year after sign change

22. Total Store Transactions 1 year before sign change vs. 1 year after sign change

23. Comparison of Test to Control Stores:Year After vs. Year Before Sign Change • Most showed gains, generally larger than losses Each pair of bars represents one test store.

24. Comparison of Test to Control Stores:Average Sales and Transactions Before and After Sign Change • Gains increased compared to first 4 weeks • Yearly figures showed larger gains for sales than for transactions

25. Latest Research Findings • Impact of expanding the data set to 20 stores • Impact of LEDs on convenience/impulse sales • Convenience & impulse items likely to be more affected than other items that tend to be more destination-type purchases) • Comparing investment in upgrading a sign to increases in sales: expected return on investment

26. Next Steps • Determine statistical significance of research findings • Prepare final research report • To be completed later this year • Will also be submitted to professional journal

27. Questions?