Performance comparison of retailing stores using a Malmquist-type index

Abstract

This study develops a framework that combines different management science methods to provide insights concerning the performance of retailing stores. First, the framework enables to specify appropriate targets for stores of a retail network using data envelopment analysis. This involves comparing stores within homogenous groups, that is, supermarkets and hypermarkets. Second, the framework compares the overall performance of these two groups. This requires the combined use of a Malmquist-type index and statistical tests. This index is decomposed into sub-indices for comparing the differences between groups in terms of the efficiency spread in each group of stores and the productivity differences between the best-practice frontiers spanned by the benchmark stores from each group. The hypothesis tests are used to verify if the differences between groups captured by the sub-indices are statistically significant.