Retail productivity assessment using data envelopment analysis

Abstract

Current approaches to retail productivity measurement have long been controversial because of difficulties in identifying the level of retail services. Data Envelopment Analysis, an operations research-based performance evaluation methodology, is introduced as one solution for resolving this problem and assessing managerially useful measure of store-level retail productivity. Data Envelopment Analysis measures relative-to-best performance efficiency of retail outlets characterized by multiple inputs and outputs. In an empirical illustration, using data collected over time from retail stores belonging to a restaurant chain, the potential applications and strengths of Data Envelopment Analysis in assessing retail productivity are highlighted.