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

2.  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. Why is this topic important?

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 ComparisonLEDManual 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 #BeforeAfter –760NoneLED –424ManualLED –605ManualLED –854ManualLED on shared pylon –449LED87% 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 < $33,000.3 $42,000-$49,000.3 $56,000-$65,000.5 $69,000-$81,000.3 $94,000-$138,000.3 < 12%2 70%-75%5 82%-91%4 93%-97%6

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. Median Age Median Income White Population Test Store34$48,32691.3% Control Store Avg.36$50,52787.4%

13. Total Store Sales 1 week before sign change vs. 1 week after sign change Test StoreControl Stores (Avg.)Test StoreDifference 2798.4%3.0%-5.3% 314-7.2%-0.3%6.9% 741-5.1%-3.0%2.1% 760-7.1%-5.2%1.9% 159-17.8%5.8%23.6% 424-2.2%-0.4%1.8% 60520.7%42.7%22.0% 194-0.2%-8.2%-8.0% 4314.3%-8.8%-13.1% 468-8.6%-6.5%2.1% 5508.1%7.8%-0.3% 4581.1%-2.9%-3.9% 508-16.4%7.3%23.7% 361-18.3%-15.6%2.7% 990-0.7%-5.0%-4.3% 449-1.2%4.9%6.1% 8542.3%-12.2%-14.5% Average-2.35%0.20%2.55%

14. Total Store Transactions 1 week before sign change vs. 1 week after sign change Test StoreControl Stores (Avg.)Test StoreDifference 2790.5%-3.6%-4.0% 3140.3%1.5%1.2% 741-0.5%4.5%5.0% 760-4.6%2.1%6.7% 159-19.9%-5.3%14.6% 424-5.2%-3.3%1.9% 6057.7%18.6%10.9% 194-4.1%-3.7%0.4% 4312.4%1.8%-0.6% 468-7.7%-7.0%0.7% 5502.9%1.7%-1.2% 4581.0%4.1%3.1% 508-8.7%-5.8%2.8% 361-19.7% 0.0% 9901.8%2.3%0.5% 449-1.5%5.1%6.6% 8544.0%-0.4%-4.4% Average-3.02%-0.42%2.60%

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 Test StoreControl Stores (Avg.)Test StoreDifference 2790.8%-4.5%-5.2% 314-1.9%0.4%2.2% 741-1.6%1.8%3.5% 760-4.9%-5.3%-0.3% 159-9.7%-0.7%9.1% 424-7.8%-4.8%2.9% 60511.0%10.6%-0.4% 194-0.5%-0.3%0.2% 4310.5%1.1%0.6% 468-3.3%-3.1%0.2% 5501.1%2.7%1.6% 458-1.1%-4.6%-3.5% 508-21.6%-20.2%1.4% 361-14.1%-15.7%-1.6% 9901.0%4.0%3.0% 4491.0%4.4%3.4% 8549.1% 0.1% Average-2.47%-1.48%0.99%

19. Total Store Transactions 4 weeks before sign change vs. 4 weeks after sign change Test StoreControl Stores (Avg.)Test StoreDifference 279-1.8%-2.9%-1.1% 314-1.0%0.4%1.4% 7413.1%4.0%0.9% 760-6.5%-2.4%4.1% 159-13.3%-8.8%4.5% 424-11.1%-9.2%1.9% 60510.8%11.6%0.8% 194-4.9%-5.5%-0.7% 4312.9%4.1%1.1% 468-2.4%-2.0%0.4% 550-0.4%2.0%2.4% 4581.5%1.9%0.4% 508-22.1%-21.9%0.1% 361-15.0%-14.0%0.9% 9908.3%9.9%1.6% 4490.3%8.0%7.7% 8549.5%8.2%-1.3% Average-2.48%-0.98%1.48%

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? SalesTransactions 1 Week2.55%2.60% 4 Weeks0.99%1.48%

21. Total Store Sales 1 year before sign change vs. 1 year after sign change Test StoreControl Stores (Avg.)Test StoreDifference 279-5.0%-9.1%-4.1% 314-6.7%-5.1%1.7% 741-15.6%-12.9%2.6% 7601.9%2.0%0.1% 159-26.1%-14.7%11.4% 4243.1%7.9%4.8% 6052.3%-2.3%-4.6% 1940.6%2.5%1.9% 431-13.2%-9.4%3.8% 468-2.3%0.9%3.2% 550-2.8%-5.9%-3.2% 458-10.9%-11.0%0.0% 508-3.1%-5.0%-1.9% 361-3.1%-4.6%-1.5% 990-4.1%2.1%6.2% 4491.7%4.1%2.4% 8544.1%20.0%15.9% Average-4.64%-1.96%2.68%

22. Total Store Transactions 1 year before sign change vs. 1 year after sign change Test StoreControl Stores (Avg.)Test StoreDifference 279-3.2%-5.2%-2.1% 314-4.9%-5.0%-0.1% 741-12.6%-7.6%5.0% 760-0.2%2.0%2.2% 159-21.1%-12.0%9.1% 424-2.5%0.0%2.4% 605-3.4%-4.0%-0.6% 194-1.0%1.0%2.0% 431-9.3%-7.2%2.1% 468-2.4%-1.0%1.3% 550-4.9%-3.7%1.2% 458-7.5%-8.7%-1.3% 508-3.4%-3.5%-0.1% 361-1.4%-2.3%-0.9% 990-3.2%2.7%5.8% 449-0.8%4.7%5.5% 8541.4%8.1%6.7% Average-4.83%-2.28%2.54%

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 SalesTransactions 1 Week2.55%2.60% 4 Weeks0.99%1.48% 1 Year2.68%2.54%

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?