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Retail productivity and scale economies at the firm level: a DEA approach

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  • Keh, Hean Tat
  • Chu, Singfat

Abstract

We investigate the concept of productivity in retailing. In the literature, there are unresolved issues concerning the construct of retail output and measurement methodologies. In accordance with recently developed theory, we define the output of the retail firm as a set of explicitly priced market goods accompanied by distribution services that are implicitly priced. We operationalise these services, and measure productivity of a chain of grocery stores using data envelopment analysis. We also find evidence of increasing returns to scale. Managerial implications of the findings are provided.

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Bibliographic Info

Article provided by Elsevier in its journal Omega.

Volume (Year): 31 (2003)
Issue (Month): 2 (April)
Pages: 75-82

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Handle: RePEc:eee:jomega:v:31:y:2003:i:2:p:75-82

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Related research

Keywords: Productivity Retailing DEA Distribution services;

References

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  1. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
  2. Ofer, Gur, 1973. "Returns to Scale in Retail Trade," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 19(4), pages 363-84, December.
  3. Banker, Rajiv D. & Chang, Hsihui & Cooper, William W., 1996. "Equivalence and implementation of alternative methods for determining returns to scale in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 89(3), pages 473-481, March.
  4. Brian T. Ratchford & James R. Brown, 1985. "A Study of Productivity Changes in Food Retailing," Marketing Science, INFORMS, vol. 4(4), pages 292-311.
  5. Walter Y. Oi, 1992. "Productivity in the Distributive Trades: The Shopper and the Economies of Massed Reserves," NBER Chapters, in: Output Measurement in the Service Sectors, pages 161-193 National Bureau of Economic Research, Inc.
  6. Roger Betancourt & David Gautschi, 1990. "Demand Complementarities, Household Production, and Retail Assortments," Marketing Science, INFORMS, vol. 9(2), pages 146-161.
  7. Beckman, Theodore N. & Buzzell, Robert D., 1958. "Productivity: Facts and fiction," Business Horizons, Elsevier, vol. 1(1), pages 24-38.
  8. Banker, Rajiv D. & Thrall, R. M., 1992. "Estimation of returns to scale using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 62(1), pages 74-84, October.
  9. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
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Citations

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Cited by:
  1. Briec, Walter & Kerstens, Kristiaan, 2009. "Multi-horizon Markowitz portfolio performance appraisals: A general approach," Omega, Elsevier, vol. 37(1), pages 50-62, February.
  2. Francisco J. Más & Ricardo Sellers, 2006. "Technical Efficiency In The Retail Food Industry: The Influence Of Inventory Investment, Wage Levels, And Age Of The Firm," Working Papers. Serie EC 2006-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  3. Assaf, A. George & Barros, Carlos & Sellers-Rubio, Ricardo, 2011. "Efficiency determinants in retail stores: a Bayesian framework," Omega, Elsevier, vol. 39(3), pages 283-292, June.
  4. Boon Lee, 2013. "Productivity Performance of Singapore’s Retail Sector: A Two-Stage Non-Parametric Approach," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 43(1), pages 67-78, March.
  5. Lau, Kwok Hung, 2013. "Measuring distribution efficiency of a retail network through data envelopment analysis," International Journal of Production Economics, Elsevier, vol. 146(2), pages 598-611.
  6. Mónika-Anetta Alt, 2012. "Measuring Romanian do-it-yourself retail chain’s efficiency during the economic crisis," Tržište/Market, Faculty of Economics and Business, University of Zagreb, vol. 24(1), pages 85-102.
  7. Oh, Dong-Hyun & Lööf, Hans & Heshmati, Almas, 2009. "The Icelandic Economy: a victim of the financial crisis or simply inefficient?," Working Paper Series in Economics and Institutions of Innovation 199, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  8. Botti, Laurent & Briec, Walter & Cliquet, Gérard, 2009. "Plural forms versus franchise and company-owned systems: A DEA approach of hotel chain performance," Omega, Elsevier, vol. 37(3), pages 566-578, June.
  9. Ho, Dong-huyn & Lööf, Hans, 2009. "Creating Innovations, Productivity and Growth - the efficiency of Icelandic firms," Working Paper Series in Economics and Institutions of Innovation 162, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  10. Timothy Park & Robert King, 2007. "Evaluating food retailing efficiency: the role of information technology," Journal of Productivity Analysis, Springer, vol. 27(2), pages 101-113, April.
  11. Fu, Xiaolan & Helmers, Christian & Zhang, Jing, 2012. "The two faces of foreign management capabilities: FDI and productive efficiency in the UK retail sector," International Business Review, Elsevier, vol. 21(1), pages 71-88.

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