Hypermarket retail store efficiency in Portugal

Abstract

This paper analyses the efficiency of individual retail stores belonging to a Portuguese multi-market hypermarket retailing chain, employing data envelopment analysis (DEA). The use of DEA for the analysis of intra-chain comparative store efficiency can be of value in examining the competitiveness of the chain as a whole. Competitiveness should be based on benchmarking the retail outlets which compose the chain. We conclude from our research that some outlets are at the frontier of best practice, while others are inefficient. Managerial implications arising from the study are considered.

Efficiency Analysis of Retail Chain Stores in Korea

“…Keh and Chu [5] compared the efficiency of inputs, intermediate output, and final output for 13 outlets of a grocery store chain in the Unites States. Barros and Alves [1] measured the efficiency of 47 chain stores in Portuguese hypermarkets. There have been other efficiency studies for retailers in Spain, the US, and India [6][7][8][9].…”

“…Sales revenue was used as an output variable in all previous studies [1,[3][4][5][6][7][8][9][10][11][12][13][14][15] and is one of the most important KPIs in most companies. In this study, the daily average sales revenue was used.…”

“…This is because the global profitability of any chain enterprise depends on the profitability of its constituent parts [1]. To improve the efficiency of individual stores, we must first measure the efficiency of individual stores, and, if there are differences among stores, we need to figure out the cause.…”

“…There have been several studies on efficiency in the retail industry using DEA, which can be divided into two types. One is measuring efficiency using DEA and discussing the results [1,[3][4][5][6][7][8][9], and the other is measuring efficiency using DEA and then analyzing factors that affect the results [10][11][12][13][14][15]. Previous studies on intra-chain comparative store efficiency mostly follow the former case [1,3,[5][6][7][8][9] and only a few studies have analyzed the factors of efficiency [4,14].…”

Is profitability a good proxy for efficiency? Evidence from the subsector of tour operators

“…Output oriented models are selected. The reason for this is the fact that the firms aim to maximize their outputs and their behaviour is output-oriented although inputs are also under the control of the firms (Barros and Alves, 2003). Following the example of Barros and Mascarenhas (2005), Sellers-Rubio and Nicolau-Gonzálbez (2009) The fundamental principle of DEA models lies in estimating an efficient frontier based on the set of available decision-making units (DMUs).…”