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Efficiency and convergence analysis in a women’s clothing retail store chain: Evidence from Portugal

José Manuel Xavier (Institute of Information Sciences and Administration, Aveiro, Portugal)
Victor Manuel Moutinho (University of Aveiro, Aveiro, Portugal)
Antonio Carrizo Moreira (University of Aveiro, Aveiro, Portugal)

International Journal of Retail & Distribution Management

ISSN: 0959-0552

Article publication date: 14 September 2015

975

Abstract

Purpose

The purpose of this paper is to estimate retailing efficiency in a 26-store women clothing retail chain and to decompose it in several measures in order to contribute to the performance improvement of this retail service firm, as well as to compare the efficiency of the different decision making units.

Design/methodology/approach

This paper uses the following measures to estimate efficiency: sigma convergence analysis; efficiency analysis; technical efficiency (TE) analysis; pure technical efficiency (PTE) analysis and scale efficiency (SE) analysis for a set of 26 stores of a women retail service brand operating in Portugal. A cross-section input-oriented data envelopment analysis (DEA) is used to analyse quarterly data sets from 2010 to 2013.

Findings

The results show that costs with personnel are slightly increasing when analysed using the sigma convergence method, although there are some geographical differences. Moreover, it is possible to witness that the retail store chain’s TE diminishes as the operations outputs do not grow as fast as input savings. On the other hand, there are no SE problems as the levels of SE are larger than pure efficiency levels.

Research limitations/implications

The main limitation of the study stems from the fact that the analysis is based on a simple retail chain, which makes it a single case study. Therefore, the generalisation of the conclusions for other firms or for other periods of analysis should be made cautiously.

Practical implications

It is shown that some stores have a good TE and other stores have some SE advantage. As such, it is possible to select some stores as benchmarks to deploy internal efficiency throughout the retail chain.

Originality/value

The contribution of this paper is based on the application of the sigma conversion and DEA techniques to evaluate efficiency in retail service store.

Keywords

Citation

Xavier, J.M., Moutinho, V.M. and Moreira, A.C. (2015), "Efficiency and convergence analysis in a women’s clothing retail store chain: Evidence from Portugal", International Journal of Retail & Distribution Management, Vol. 43 No. 9, pp. 796-814. https://doi.org/10.1108/IJRDM-06-2014-0077

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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