Promotional Inventory Displays: An Empirical Analysis Using IoT Data

Abstract

Problem definition: Despite their widespread use, promotional inventory displays’ campaign execution is opaque. Brands (manufacturers) can only verify in-store display presence through manual, on-site audits, which are costly and limited in scope. This lack of visibility into execution makes it difficult for brands to quantify the sales impact of displays and properly evaluate campaign performance. Methodology/results: We use Internet-of-Things (IoT)-generated data on the real-time location of about 15,000 displays from 10 display campaigns in about 5,000 stores of a Fortune 500 retail chain, paired with the stores’ point-of-sale (POS) data between September 2017 and March 2018, to measure the operational execution and effectiveness of display campaigns. First, we find that campaigns are poorly executed: 29% of displays never made it to a store’s floor, and those that made it only spent 62% of the campaign there. Second, we find that poor execution deprives brands of substantial sales, especially during campaign weeks: placing a display on the floor during an arbitrary week increases the targeted products’ sales by 7.3%, and placing it on the floor during a campaign week boosts sales by another 2.3%. Managerial implications: Our results enable brands to optimize investments in promotional display campaigns and execution. We project that brands would suffer a 3.1% dollar sales decrease during campaign weeks by discontinuing current campaigns. However, they could achieve up to a 6.9% dollar sales increase during campaign weeks through improved execution. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0291 .