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Retail productivity


  • Rachel Griffith

    () (Institute for Fiscal Studies and IFS and Manchester)

  • Heike Harmgart

    () (Institute for Fiscal Studies)


Recent attention has focused on the UK's productivity gap in the retail sector. Figure 1 shows an estimate of labour productivity in retail across countries, using output per hour worked. The UK lies well behind the US, France and Germany. Reynolds at al (2005) contribute to this debate by providing a discussion of the literature, along side interviews with several UK and US retail firms. The conclusions of their paper are that, while there are many measurement issues, most of the evidence points to the fact that, on average, productivity in this sector in the UK is low and has grown slowly over recent years when compared to the US. They rightly point out that a more thorough understanding of what drives productivity in the retail sector requires a better understanding of the 'complex mix of urban characteristics, consumer preferences and competitive rivalries'. In this article we discuss some of the main issues involved in the measurement of productivity in retail, how these problems can be tackled, and we consider the interpretation of these statistics. We then discuss new work using microdata on the UK supermarket industry and conclude with a short discussion of where future research needs to look to answer the important policy questions around why the UK's productivity performance remains low in this important sector.

Suggested Citation

  • Rachel Griffith & Heike Harmgart, 2005. "Retail productivity," IFS Working Papers W05/07, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:ifsewp:05/07

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    References listed on IDEAS

    1. Howard Smith, 2004. "Supermarket Choice and Supermarket Competition in Market Equilibrium," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 235-263.
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    Cited by:

    1. Maican, Florin & Orth, Matilda, 2008. "Productivity Dynamics and the Role of “Big-Box” Entrants in Retailing," Working Papers in Economics 328, University of Gothenburg, Department of Economics.
    2. Maican, Florin & Orth, ´Matilda, 2013. "Entry Regulations, Product Differentiation and Determinants of Market Structure," Working Paper Series 984, Research Institute of Industrial Economics.
    3. Jonathan Haskel & Raffaella Sadun, 2012. "Regulation and UK Retailing Productivity: Evidence from Microdata," Economica, London School of Economics and Political Science, vol. 79(315), pages 425-448, July.
    4. Paul C. Cheshire & Christian A. L. Hilber & Ioannis Kaplanis, 2015. "Land use regulation and productivity—land matters: evidence from a UK supermarket chain," Journal of Economic Geography, Oxford University Press, vol. 15(1), pages 43-73.
    5. Raffaella Sadun, 2015. "Does Planning Regulation Protect Independent Retailers?," The Review of Economics and Statistics, MIT Press, vol. 97(5), pages 983-1001, December.
    6. Maican, Florin & Orth, Matilda, 2015. "A dynamic analysis of entry regulations and productivity in retail trade," International Journal of Industrial Organization, Elsevier, vol. 40(C), pages 67-80.
    7. 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.
    8. Pozzi, Andrea & Schivardi, Fabiano, 2015. "Entry Regulation in Retail Markets," CEPR Discussion Papers 10836, C.E.P.R. Discussion Papers.
    9. Håkansson, Johan & Li, Yujiao & Mihaescu, Oana & Rudholm, Niklas, 2016. "Big-box retail entry in urban and rural areas: Are there productivity spillovers to incumbent retailers?," HUI Working Papers 118, HUI Research.
    10. Alan Hughes, 2007. "Innovation Policy as cargo cult: Myth and Reality in knowledge-led Productivity Growth," Working Papers wp348, Centre for Business Research, University of Cambridge.

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