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Benchmarking Performance in Retail Chains: An Integrated Approach

Author

Listed:
  • Dinesh Kumar Gauri

    () (Whitman School of Management, Syracuse University, Syracuse, New York 13244)

  • Janos Gabor Pauler

    () (Department of Computer Applications, Pollack Mihaly Faculty of Engineering, University of Pécs, H-7622 Pécs, Hungary)

  • Minakshi Trivedi

    () (Department of Marketing, School of Management, State University of New York at Buffalo, Buffalo, New York 14260)

Abstract

Standardizing performance expectations across different outlets within a chain, differing in their individual features, their consumers, and the nature of competition they face, can be an onerous task. We develop an integrated, nonlinear, block group-level market share model of store expectations that draws upon the existing trade area as well as store performance literatures. By incorporating and normalizing a large number of external and internal factors impacting performance, we are able to offer a means for the retailer to determine equitable standards. The model is estimated using a variation of the maximum-likelihood estimation, on a data set fashioned from several sources and aggregated at the block group and store levels. Finally, we propose a set of indices that allows us to evaluate relative performances of stores and regions given the competitive environments they face. We find that a block group-level model offers a better fit, as well as significantly richer implications, than a traditional store-level model. Results show that a significant number of stores operate well below their expected levels, an insight not obvious from the raw numbers used to report store statistics to upper management.

Suggested Citation

  • Dinesh Kumar Gauri & Janos Gabor Pauler & Minakshi Trivedi, 2009. "Benchmarking Performance in Retail Chains: An Integrated Approach," Marketing Science, INFORMS, vol. 28(3), pages 502-515, 05-06.
  • Handle: RePEc:inm:ormksc:v:28:y:2009:i:3:p:502-515
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    File URL: http://dx.doi.org/10.1287/mksc.1080.0421
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    References listed on IDEAS

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    Cited by:

    1. Merino, María & Ramirez-Nafarrate, Adrian, 2016. "Estimation of retail sales under competitive location in Mexico," Journal of Business Research, Elsevier, vol. 69(2), pages 445-451.
    2. repec:eee:jouret:v:87:y:2011:i:1:p:18-30 is not listed on IDEAS
    3. repec:eee:jouret:v:89:y:2013:i:1:p:1-14 is not listed on IDEAS
    4. repec:eee:jouret:v:93:y:2017:i:4:p:401-419 is not listed on IDEAS
    5. M. De Beule & D. Van Den Poel & N. Van De Weghe, 2013. "An extended Huff-model for robustly benchmarking and predicting retail network performance," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 13/866, Ghent University, Faculty of Economics and Business Administration.

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