Brian T. Ratchford
This chapter presents a review of issues associated with measuring productivity for different sectors of retailing, and reviews recent estimates of productivity changes in these sectors. In an attempt to explain the changes, the chapter reviews published evidence about the drivers of productivity changes in retailing, including scanning technology and other innovations in information technology. One finding is that these changes have created various types of scale economies that have led to the success of larger retailers, and have rendered smaller retailers less competitive. The emergence of Internet retailing and its impact on retail productivity is also discussed. In addition to understanding macro level changes in retail productivity, practitioners and others need to benchmark the performance of firms, sales territories, stores, departments and other entities against best practice. I review methods for accomplishing this, and discuss some published examples.
Brian Ratchford and Dinesh K. Gauri
Changes in retail productivity (i.e., the ratio of outputs to inputs) can have a substantial impact on the general performance of the economy. Also, since differences in productivity between retail firms can create important competitive effects, retail managers need to understand how their firm’s productivity compares to the productivity of their competitors, and they need to be able to pinpoint areas of strengths and weakness. For both of these reasons retail productivity has a long history of research. Since the Internet and information technology have triggered major changes in the nature of retailing, understanding retail productivity has become especially important in recent years. This chapter presents and compares different approaches to measuring productivity. Next, it discusses the drivers of productivity change, and highlights the trends in retail productivity over time. Finally, by summarizing previous empirical studies, it benchmarks productivity between different retail firms and stores.