If I was inside the store I would assume that people seeing me would know that I have passed the smell test and am therefore not part of the problem. The person that put up the sign is hostile towards stinky people and assholes, they've shown no ill-intent towards anyone else by posting this.
What of the myriad of other, actually effective methods to combat the problem, over this, a completely ineffective way?
What of them? This is just doing the first step automatically. It's the same concept as a no trespassing sign. By having it there they have already been given notice of the rules, and if they ignore it have no recourse when you escalate to kicking them out.
I fear you're the one who is having trouble reading. The sign clearly delineates who is allowed and who is not. Wearing deodorant and showered within the last 24 hours =Welcome. No deodorant or has not showered =fuck off. How is this insulting ALL customers?