Performance comparison between retailing stores using a Malmquist-type index
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abstract
This study develops a framework that combines different methods
to provide insights regarding the performance of retailing stores.
Firstly, the framework enables to specify appropriate targets for
stores using DEA. This involves comparing stores within homogeneous
groups. Secondly, the framework compares the overall
performance of these groups. This requires the combined use of
Malmquist type index and statistical tests. This index is decomposed
into components for comparing the efficiency spread between
groups and the productivity differences between the best-practice
frontiers of the groups.
This study develops a methodology that combines different management science methods (Data Envelopment Analysis, Malmquist indices and statistical tests) to provide insights concerning the performance of stores. Firstly, the methodology enables to specificate appropriate targets for stores in a retail network, by using Data Envelopment Analysis. This is performed by comparing similar stores which belong to the same group, i.e., supermarkets and hypermarkets. Secondly, the methodology compares globally the performance between those groups by characterizing their productivity levels. For this, the methodology combines the use of a Malmquist-type index with statistical tests. This index is decomposed into sub-indices for comparing the differences between groups in terms of 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.
