MEASURING OPERATIONAL EFFICIENCY OF RETAIL STORES IN CHANDIGARH TRI-CITY USING DEA

Vandana Sharma Himanshu Choudhary

The purpose of this study is to measure the operational efficiency of retail stores in Chandigarh-Tricity and to investigate if any relationship can be established between the efficiency and the size of the stores. The data collected from retailers and customers across Chandigarh Tricity (Chandigarh, Panchkula and Mohali) during 2006 - 2008 was analyzed using an operations research - based method, Data Envelopment Analysis (DEA), as this method was appropriate to study efficiency of operations. The findings suggest that the percentage of the retail stores operating efficiently in Chandigarh tricity is very low. Also no significant relationship was demonstrated between the efficiency score and size of retail stores. The study has great significance for the retailers as it provides the important parameters to measure efficiency of retailers which in turn are of utmost importance to any retailer to make future strategies. The research study was conducted in 200 retail outlets in Chandigarh Tricity. This sample might not portray an accurate representation of the organized retail scenario in the Tricity. Input and output variables were carefully chosen for the study, but they may/ may not accurately reflect the retail firm's goals, objectives and sales situation. Variables such as profits and margins could also be very beneficial for analysis and may be considered for future research

INTRODUCTION

ndian retailing industry has experienced remarkable growth in the last few years. The contribution of organised retailing is significant in this growth. Organised retail is expected to contribute 10% of total retailing in India by the end of the year 2010. Also this sector will show a compounded annual growth rate of 49.53 per cent from the years 2006 to 2010 (RNCOS India Retail Sector Analysis, 2007). Major players currently operating in the Indian organised retail industry include Future Group, Trent Ltd, RPG Enterprise, Vishal Retail Ltd, Shoppers Stop Ltd, Bata India Ltd, Provogue India Ltd, Videocon Appliances Ltd., I.T.C. Ltd, Godrej Agrovert Ltd, and DCM - Hariyali Kisaan Bazaar etc. ( RNCOS India Retail Sector Analysis , 2007).
Journal of Services Research, Volume 10, Number 2 (October 2010 - March 2011) 2010 by Institute for International Management and Technology. All Rights Reserved.

100 Measuring Operational Efficiency New multi national entrants in this sector will further boost the growth of organised retailing in India. As organized retail is taking an upstream growth swing, it is very important for the retailers to understand that the business in which they are investing money, must give them satisfactory returns. To attain satisfactory returns a retailer must be efficient in his operations which would determine his success. Every retailer formulates many plans during every fiscal year, new season and festive season to increase their sales and improve their customer satisfaction. These are important determinants/ parameters for measuring efficiency of operations in a retail store. Apart from these important factors, the other factors that are planned include, profit margins, choosing product assortment, product pricing, inventory of various products, furnishing of stores, setting of stock keeping units/ gondulas, physical layout and design of the stores and turnover of the store. Organised retailing is blooming in tier-I and tier II cities as well along with the metros. For this reason one of the upcoming cities of northern India- Chandigarh and its peripheral cities Mohali and Panchkula were selected for the purpose of present study. The retail stores here are evolving very fast as organized stores; therefore, it is essentially important for them to understand all the above mentioned facts regarding operational efficiency. During the pre- testing of the retailers it was observed that there are stores which are efficient and among them are the ones which are relatively not, in spite of the fact that all give due consideration to planning their operations efficiently. The point which holds importance here is that how effectively the operations are planned and implemented. The retailers who understand the underscored facts effectively become efficient and the others lag. However, if these underscored facts are studied and analyzed well, the inefficient retailers can also significantly improve their performance and become efficient over a period of time. REVIEW OF LITERATURE India has a highly competitive retail industry, therefore, it is very essential to have know- how of all those factors which help retailers to sustain in the long run. One of the major factors which will keep the retailers a class apart is knowledge regarding operational efficiency. As Charles Darwin said survival of the fittest, similarly operational efficiency of a retailer will enable him to function in his market with minimal inputs and give him maximum output to be the fittest among all.

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101 Sharma, Choudhary It is important to analyse productivity and efficiency in retailing (Barros and Alves, 2004; Lusch et al., 1995; Kamakura et al., 1996). From the literature regarding the contemporary researches in the measurement of efficiency that were published over the last few years (Thomas et al., 1998; Ratchford, 2003; Donthu and Yoo, 1998; Keh and Chu, 2003; Barros and Alves, 2003, 2004), it is evident that DEA has been extensively used to measure the retail efficiency and productivity. The literature review suggests that there are many factors that affect the operational efficiency of a firm such as labor intensive activity (Ingene, 1984 ), competitive conditions (Goldman, 1992), sales volume (Lusch & Serpkenci, 1990), size of firm (Ratchford & Stoops, 1988) and location (Donthu & Yoo, 1998). Academic research to date has focused on many parameters to measure efficiency of retail operations. It was also observed that the major input and output criteria which have been considered relevant for retail efficiency assessment in previous studies have proven very useful to retailers across the globe. To measure the operational efficiency of retail stores at micro level the input and output variables considered in previous studies are summarized in table 1. Table 1: Inputs and Outputs of Retail Efficiency
Author Bucklin, 1978 Ingene, 1984 Paper Title Productivity and Functional Shifting in Spatial Retailing: Private and Social Perspectives A Model and Measurement Approach for Studying Retail Productivity Personal Differences, Job Tension, Job Outcomes, and Store Performance: A Study of Retail Store Managers Evaluating the performance of the Japanese distribution system Performance improvement decision aid systems (PIDAS) in retailing organisations using Data Envelopment Analysis Input Wage rate Socioeconomics and demographics/ Psychological wants and needs/Psychic energy expended/Shopping time invested Retail firm's managerial efforts Inventory investment Industry technology level Retail & wholesale structure Adjustable inputs: the bar area (ft2); the number of covers Uncontrollable inputs: market size (potential cu stomers); the number of restaurants in a 1-mile radius; the number restaurants in a 3 -mile radius Store size Manager tenure Store location (inside a shopping mall versus free-standing) Promotion/give-away expenses DEA 47 retail outlets of one the leading hypermarket and supermarket Portugal chains, 1999-2000 Number of full time equivalent employees Cost of labor Number of laborers Value of assets Number of employees Number of outlets Capital: sum of own funds plus borrowed funds Power and fuel expenses Salaries and wages Advertising expenses Marketing expenses Gross fixed assets Inventories Current assets Working capital Output Sales volume Profits & Value added Market share & Gross margin

Ratchford & Stoops, 1988 Lusch & Serpkenci, 1990 Goldman, 1992 Anthanassopoulos, 1995

Hours worked Customer store loyalty/Customer & employee satisfaction

Food sales (in value) Sales of beverages (in value)

Donthu and Yoo, 1998

Retail productivity assessment using Data Envelopment Analysis

Sales (value) Customer satisfaction (a fivepoint scale) Number of full time equivalent employees Cost of labor Sales Operating results Number of cash-out points Stock Sales Operating results Sales Operational results Sales Operational results

Barros and Alves, 2003

Hypermarket retail store efficiency in Portugal

Barros and Alves, 2004

An empirical analysis of productivity growth in a Portuguese retail chain using Malmquist productivity index Efficiency measurement among hypermarkets and supermarkets and the identification of the efficiency drivers An empirical analysis of productivity growth in retail services: evidence from Spain Developing global competitiveness by assessing organized retail productivity using data envelopment analysis

Barros 2006 Sellers-Rubio and Mas-Ruiz, 2007

Agarwal Reeti and Mehrotra Ankit, 2009

Sales PBIT Return on capital

Source: Compiled by the authors from various research papers

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102 Measuring Operational Efficiency METHODOLOGY AND RESEARCH DESIGN The purpose of this study is to measure the operational efficiency of retail stores in Chandigarh-Tricity and to investigate if any relationship can be established between the efficiency and the size of the stores. Efficiencies are typically measured by using outputs-inputs ratios (Bhat, 2009). The efficiency calculation can be easy in case of only one output and one input variable. However, efficiency value is difficult to define when more than one input and outputs are to be considered. The work of Debreu (1951) and Koopmans (1951) in this field was further developed by Farrell (1957) to label a simple measure of firm efficiency, where multiple outputs are involved. He defined efficiency as technical efficiency and allocative efficiency. Technical efficiency is the ability of a firm to obtain maximum output from a given set of inputs. However, allocative efficiency is the ability of firm to allocate inputs in optimal proportion given their respective prices and the production technology. The combination (product) of both the measures is represented by economic efficiency. In order to facilitate comparison across companies, one efficiency value needed to be defined. Now the question is are all input and output variables equally important? If not, how to the assign weights to each of them in order to get one efficiency value. The method frequently used for comparison of efficiencies is frontier efficiency method or DEA (Data Envelopment Analysis). Charnes et al (1978) introduced DEA in the literature. It is an operations research-based method for measuring the operational efficiency of decision units that are characterized by multiple outputs and inputs. DEA uses linear programming technique to recognize the frontier of most efficient units. It converts multiple outputs and inputs of a decision unit into a single measure of performance, which is generally referred to as relative efficiency. DEA is used to assess retail efficiency and to address some problems that currently exist in retail efficiency measures. It is a store-level efficiency measurement tool that has integral managerial relevance than the traditional efficiency approaches which are more suitable for analyzing efficiency at macro-level using analysis such as, regression analysis, cost functions and total productivity index. In DEA, efficiency deals with producing the maximum outputs for any given inputs or the minimum use of inputs for any given outputs. DEA first finds the most efficient retail stores which produce an efficient
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103 Sharma, Choudhary frontier. A retail store is deemed efficient (efficiency = 1) if its output is optimal (maximum possible) for given inputs in comparison with the outputs and inputs of all comparable stores. The efficient frontier is a series of points, a line connecting the most efficient stores, which are determined from a comparison of outputs and inputs of all retail stores under consideration during calculations. Therefore, DEA produces relative efficiency boundaries of the retail stores under study, which are called envelopes. In this study efficiency is the ratio of the weighted sum of outputs to the weighted sum of inputs.

Weighted sum of outputs Efficiency = Weighted sum of inputs

The weights are estimated separately for each retail store such that its efficiency is the maximum possible or is equal to 1. Weights are automatically calculated for all the stores while calculating their relative efficiencies. Therefore, weights change each time a stores efficiency is calculated using this model and are measured relative to the remaining stores. Symbolically, the efficiency for store 1, for the present study, can be formulated as follows:

U1Y1 + U2Y2 H1 = V1X1 + V 2X 2 + V3X3 Where Y1 & Y2 are 2 output variables, Sales & Customers Satisfaction respectively
X1, X2 & X3 are 3 input variables, Size of Retail Store, Experience Of Manager and Location of Retail Store respectively U1& U2 are estimated weights for output variables and V1, V2 & V3 are estimated weights for input variables The sum of weighted output has to be maximized from the given inputs in a retail outlet for achieving higher efficiency. Therefore, the objective function becomes: Maximize (U1Y1+ U2Y2 )

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104 Measuring Operational Efficiency Recent advances in DEA allow for the estimated weights to be constrained so that no one input or output variable is able to dominate the efficiency estimation. Therefore, in the present study the following constraints were considered for calculation of estimated efficiency of each retail store. 1 2 3 4 Input constraint; V1X1 + V2X2 + V3X3 = 1000 (Sum of weighted inputs is equated to 1000) Weighted output - weighted input <= 0 Non- negativity constraint for output and input weights; U1, U2, V1, V2, V3 >= 0 The weights for out put (U1& U2) and inputs (V1, V2 & V3) for outlet 1 are estimated in such a manner that if similar weights are assigned to all other outlets in the analysis their ratio of weighted outputs to weighted inputs should be less than or equal to 1.

DEA estimates a new set of weights for each retail store such that the estimated weights lead to a maximum attainable efficiency for that retail store. The estimated output weights (U's) and input weights (V's) for all stores must be greater than zero (non-negativity constraint). Microsoft excel solver was used for calculating efficiency using the Data Envelopment Analysis (DEA). Tables were made to analyze and present the data in a clear and understandable manner. SAMPLING AND DATA COLLECTION An empirical analysis was done for analyzing operational efficiency. The present research relies on experience and observation with due regard for system and theory. It is data- based research that gives conclusions, which are capable of being verified by observation or experiment. In this research the facts are gathered firsthand from sample size of 200 retail stores and customers. Out of these 100 retail stores were from Chandigarh, 50 from Mohali and 50 from Panchkula. Data was collected using questionnaires from retailers and customers. The questionnaire had both open ended as well as close ended questions for effective data collection. For measurement of operational efficiency, the study has been limited to five important variables which were chosen after doing an extensive review of literature. Out of these two are output variables;
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105 Sharma, Choudhary sales, which determines the financial outcome and customer satisfaction, which determine the behavioral outcome of respondents. The three input variables chosen for study are size of retail store, manager's experience and location of retail store. The data for these variables was collected from customers and retailers dealing in FMCG products, Apparels, Food courts and cosmetics in Chandigarh Tricity. The choice of the input and output variables is critical to the successful application of this technique. It is understood that the factors that have a direct cost to the firm and tend to vary are a good choice for input variables. For example, if rent is a major cost to the firm that varies from store to store, then it should be included as an input variable. The choice of the output variables reflects the goals or objectives of the company. For example, if customer satisfaction is an objective of the firm, it would be important to include customer satisfaction as an output variable. Variables such as profits and margins could also be very beneficial for analysis but during the pre testing of the questionnaire it was found that respondents were giving biased responses to these questions; therefore they had to be removed for the final study. RESULTS AND FINDINGS The efficiency of a retail store using DEA is estimated by comparing the weighted outputs and inputs of a retail store with the weighted outputs and inputs of all comparable stores under study. As the most distinguishing feature of DEA is, in computing the relative performance efficiency the best performing stores are used as the bench mark. Comparing a retail store's performance efficiency with that of the most efficient stores is an important step towards achieving a retailing operation excellence. The sample size of 200 retail stores was, therefore, divided into three categories- Large, Medium and Small on the basis of their area (sq. ft). Table 2 shows the categories of stores and number of stores in each category. Table 2: The Categories of Retail Stores
Category of Retail stores Large Medium Small Total Area of Retail Stores (Sq. Ft.) 1000 and above 500 1000 500 and below No. of Stores in Each Category 82 52 66 200 % 41 26 33 100

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106 Measuring Operational Efficiency The comparison of retail store's performance efficiency with that of the most efficient stores is done in each respective category i.e. large, medium, small in order to avoid any bias in the calculations and estimation of efficiency. Hence, benchmarking was also done in their respective categories. The calculation has been done in such a manner that the efficiency values for each retail store in a category are relative to all the other retail stores in the same category only. Therefore, these efficiencies represent relative- to- best efficiencies and not absolute efficiencies. The total numbers of efficient retail stores in Chandigarh Tricity are presented in Table 3. Table 3: Efficient Retail Stores in Chandigarh Tricity
Classification of Retail Stores Large Medium Small Total Total Number of retail stores 82 52 66 200 Number of efficient retail stores 8 13 9 30 % of efficient stores 10 25 14 15

It was observed that out of 82 large retail stores in Chandigarh Tricity only 9 retail stores were efficient in their retail operations. The retail stores 1,6,8,12,16,37,45,59 & 71 had efficiency equal to 1; hence, these retail stores lay on the efficient frontier. All other stores are categorized as not efficient (efficiency less than 1) and hence lay inside the frontier. In general, as a group, the large retail stores have an average score of .44 (44%) This indicates that for the large retailers, on the whole, the inputs can be reduced by 66 per cent to produce the same level of outputs. In other words, the inputs are being wasted to the tune of 66 per cent to arrive at the respective levels of the output. This requires a serious consideration. The correlation coefficient between efficiency score and the size of store is negative .09. It shows an insignificant inverse relationship between the size and efficiency. It's difficult to make a clear conclusion as the coefficient is very low. On a closer observation of the results it is clear that none of the retail stores with area exceeding 3000 square ft. has high efficiency value which explains the inverse relationship. These stores have average sales of Rs. 218 lakhs per annum with a standard deviation of Rs. 507 Lakhs. This is the highest average amongst all the categories under study but
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107 Sharma, Choudhary not sufficient enough to justify the space they are occupying. Large retail stores are required to utilize their retail space more optimally. This can be done by making effective use of gondolas and SKU's. They can also look for more profitable avenues to expand their business and to utilize the unused space. Though most of the large retail stores enjoy favorable location (72 out of total 82 stores) and high customer satisfaction value (average of 2.7 on a scale of 1 to7, where 1 is highly satisfied and 7 is highly dissatisfied, but they are unable to attract the required footfalls, therefore they may resort to innovative ways in order to make their presence felt and in turn to increase sales and also to further enhance customer satisfaction. Under the medium size retail stores category, it was observed that out of 52 stores in Chandigarh Tricity only 13 retail stores were efficient in their retail operations. The retail stores 3,6,9,12,15,16,17,24,26, 29,37,39 and 47 had efficiency equal to 1, hence, these retail stores lay on the efficient frontier. All other stores lay inside the frontier. The average efficiency is .73, which is highest amongst all the categories under study. Medium retail stores are performing fairly well and utilizing the inputs with minimum wastage of 27 per cent. These stores have an average turnover of Rs. 107 lakhs per annum with a standard deviation of Rs. 116.15 Lakhs. Most of the stores enjoy favorable locations (45 out of total 52) and have high customer satisfaction (average of 2 on a scale of 1 to 7). These retail stores operate in a highly competitive environment. To improve performance further, incremental innovations can be adopted and operationalised that focus on increasing sales and customer satisfaction and make them able to compete successfully with other retailers. The correlation coefficient between efficiency score and the size of store is negative 0.1, which is again insignificant. This suggests there is further scope for improving the utilization of the space available. Only 9 retail stores were efficient in their retail operations out of 66 small size retail stores in Chandigarh Tricity. The retail stores 2, 3,9,32,46,55,65 and 66 had efficiency value equal to 1, hence, these retail stores lay on the efficient frontier. All other stores are lay inside the frontier. The average efficiency of small retail stores is 0.55. It calls for lot of attention as the inputs are being wasted to the tune of 45 percent to arrive at the respective levels of the output. The average
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108 Measuring Operational Efficiency sales of these stores are Rs. 36 lakhs per annum with standard deviation of Rs. 42 lakhs per annum. Only 8 stores out of 66 are not situated at favorable location. The average customer satisfaction score is also high (2 on a scale of 1 to 7). The low efficiency retail stores can set the stores which are highly efficient as bench marks and work towards making their operations efficient by optimally using their store space and cashing upon their favorable location. Although the experience of the manager in this category of retail stores is highest amongst all the categories under study, these stores are not performing as effectively as medium retail stores. This suggests that the experience of these managers is not contributing significantly toward achieving high output. Therefore, these mangers need to undergo operations management training. The percentage of the retail stores operating efficiently in Chandigarh Tricity is very low (15%). Out of the 30 retail stores which lie on the efficiency frontier, 15(15%) are in Chandigarh, 9(18%) in Mohali and 6(12%) in Panchkula. There is no clear pattern displayed which suggests that the retail store located in Chandigarh or outside has an influence on efficiency of operation. This has both practical as well as theoretical implications. It is interesting to note as the retail space in Chandigarh city area, being the capital of two most effluent states of India viz., Punjab and Haryana, is more regulated than Panchkula and Mohali with regards to lighting, infrastructure, hours of operation, parking etc. LIMITATIONS OF THE STUDY The following could be regarded as limitations of this study: 1. The research study was conducted in 200 retail outlets in Chandigarh Tricity. This sample might not portray an accurate representation of the organized retail scenario in the Tricity. 2. Efforts were made to avoid the pitfalls inherent in any study, like perceptual differences arising out of individual viewpoints, some biases on the part of the respondents might, still have crept in. 3. Certain respondents might have given incorrect information due to shortage of time, on account of disinterest or to conceal their identity. 4. Input and output variables were carefully chosen for the study, but they may/may not accurately reflect the retail firm's goals, objectives and sales situation.
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109 Sharma, Choudhary In spite of these limitations, the study has great significance for the retailers as it provides the important parameters to measure efficiency of retailers which in turn are of utmost importance to any retailer to make future strategies. RECOMMENDATIONS The present study was aimed to analyze some parameters to find out which parameters can help the retail industry to combat the future challenges efficiently. From the observations made in the present study some recommendations are suggested so that retailers can improve their efficiency. It is very important to understand that inventory is a retailer's largest asset, technically it should be a short term asset, but for many it makes into the fixed asset category. The main purpose of the retailer is to ultimately reduce the days the inventory is held up on the selves by increasing sales. This gives the retailer edge above others in the industry. This also reduces the risk of inventory becoming obsolete or customers changing their buying habits or tastes. Therefore, it is recommended to retailers to keep a tight watch on their inventory turnover and device measures to get rid of it, if it is piling up and incurring high carrying cost to them. It is also recommended that the retailers can adopt Just in Time (JIT) inventory management approach. In order to have JIT supply chain management (SCM) to avoid excess inventory, the retailers can think of innovations such as vendor based on site warehouses, reduced material travel time, electronic buying and more use of environment friendly buying. It is recommended that the retailers must understand their Customers in order to give them what they want effectively. This will help them to think in terms of their customers; buy, show, sell, and say things that interest them, not just what interests the retailer. For this, the retailers can have a constant feedback from the customers. Retailers must identify major market and technology trends regularly that directly influence global retailing and the resulting shopper experience around the world. Retailers must identify major market and technology trends regularly that directly influence global retailing and the resulting shopper experience around the world. They should focus on key areas such as Centralization and Integration of Demand Intelligence Technology,
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110 Measuring Operational Efficiency Corporate Social Responsibility and "Green Retail". The success of retailers mainly hinges on two parameters of SCM, which are: 1. Highest customer satisfaction - with the fastest and most efficient delivery 2. Lowest operating cost - inducing lowest inventory Customer satisfaction can be enhanced with the fastest & most efficient delivery and offering better quality products at competitive prices. Lowest operating cost can be ensured by inducing effective practices for inventory management and continuous efforts to enhance sales. The retailers may adopt optimal purchase, multichannel inventory, zero inventory management, rigorous advertising etc. Keeping these parameters in mind, the retailers should device innovative, creative and cost effective measures to achieve operational efficiency. CONCLUSION AND IMPLICATIONS To meet the challenges of Globalization and to remain competitive throughout, the retail industry needs to constantly work upon the areas that can create a difference from growth perspective. The present study indicates that a majority of the large retail stores are not utilizing their retail space optimally. Though most of the large retail stores enjoy favorable location but they are unable to attract the required footfalls. On the other hand, medium retail stores are performing better than large retail stores. The low and moderate efficiency retail stores can set the stores which are highly efficient as bench mark and work towards making their operations efficient by optimally using their store space, efficient shelf space allocation and cashing upon their favorable location. While the store manager's experience is highest in small retail stores these stores are still not performing as effectively as medium retail stores. This indicates that the experience of managers is not contributing significantly toward achieving high efficiency. Also no significant relationship was demonstrated between the efficiency score and size of retail stores. These findings have great significance for the retailers as it provides the important parameters to measure efficiency of retailers which in turn are of utmost importance to any retailer to make future strategies.

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111 Sharma, Choudhary Future research could focus on other variables such as profits and margins etc. which reflect the retail firm's goals, objectives and sales situation to provide greater insight into the issues related to operational efficiency. REFERENCES
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Farrell, M.J. (1957), "The measurement of productive efficiency", Journal of the Royal Statistic Society, Ser. A 120, pp 253-281 Grewal, D., M. Levy, A. Mehotra and A. Sharma (1999), "Planning Merchandising Decisions to Account for Regional and Product Assortment Differences," Journal of Retailing, 75(3), 405-424 Goldman, Arieh. (1992). "Evaluating the Performance of the Japanese Distribution System," Journal of Retailing, Volume 68 (Spring), pp11-39 Good, W. S. (1984). "Productivity in the Retail Grocery Trade," Journal of Retailing , Volume 60 (Fall), pp 91- 97. Gorg, L. and B. Sun (1995), "Efficiency Measurement of Production Operations under Uncertainty," International Journal of Production Economics, 38, 55-66 Ingene, Charles A. (1984). "Productivity and Functional Shifting in Spatial Retailing: Private and Social Perspectives," Journal of Retailing, Volume 60 (Fall), pp 15-36 Kamakura, W.A., Lenartowicz, T., Ratchford, B.T. (1996), "Productivity assessment of multiple retail outlets", Journal of Retailing, Volume 72, Issue 4, pp.333-56 Keh, H.T., Chu, S. (2003), "Retail productivity and scale economies at the firm level: a DEA approach", Omega, Volume 31, pp.75-82 Koopmans, T.C. (1951), "An analysis of production as an efficient combination of activities",in Koopmans, T.C. (Ed.), Activity Analysis of Production and Allocation, Monograph 13,Cowles Commission for Research in Economics, Wiley, New York, NY, pp. 33-97. Lusch, Robert F. and Ray R. Serpkenci. (1990). "Personal Differences, Job Tension, Job Outcomes, and Store Performance: A Study of Retail Store Managers," Journal of Marketing, Volume 54 (January), pp 85-101 Lusch, R.F., Serpkenci, R.R., Orvis, B. (1995), "Determinants of retail store performance: a partial examination of selected elements of retailer conduct", in Grant, K., Walker, I. (Eds), World Marketing Congress, Volume 7, pp.95-104 MecKenzie, Scott B., Philip M. Podsakoff, and Richard Fetter. (1993). 'The Impact of Organizational Citizenship Behavior on Evaluations of Salesperson Performance," Journal of Marketing, Volume 57 (January), pp 70-80. Mukherjee Arpita and Patel Nitisha (2005) "Retailing In India: Recent Trends And Development Survey Findings", Journal of Marketing and Communication, Volume 1, Issue 2, September- December, pp 4- 41 Oliver, Richard L. and Erin Anderson. (1994). "An Empirical Test of the Consequences of Behaviorand Outcome-Based Sales Control Systems," Journal of Marketing , Volume 58 (October), pp 53-67 Ratchford, Brian T. and Glenn T. Stoops. (1988). "A Model and Measurement Approach for Studying Retail Productivity," Journal of Retailing, Volume 64 (Fall), pp 241-263 Ratchford, B.T. (2003), "Has the productivity of retail food stores really declined?", Journal of Retailing , Volume 79, pp.171-82 RNCOS:India Retail Sector Analysis (2006-2007) (online) (cited 21 October 2009) .Available from<URL:http://www.rncos.com/Report/IM058.htm> Sellers-Rubio, R., Mas-Ruiz, F. (2007), "An empirical analysis of productivity growth in retail services: evidence from Spain", International Journal of Service Industry Management, Volume 18, Issue 1, pp.52-69

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Thomas, R.R., Barr, R.S., Cron, W.L., Slocum, J.W. Jr (1998), "A process for evaluating retail store efficiency: a restricted DEA approach", International Journal of Research in Marketing, Volume 15, Issue 5, pp 487-503 Yoo, Boonghee, Naveen Donthu, and Bruce K. Pilling. (1997). "Channel Efficiency: Franchise versus Non-Franchise Systems," Journal of Marketing Channels, forthcoming. Wagner A. Kamakura and Thomasz Lenartowicz (1996) "Productivity assessment of multiple retail outlets ", Journal of Retailing, Volume 72, Issue 4, Winter 1996, Pages 333-356.

Vandana Sharma, Faculty-Marketing, Adam Smith Institute of Management, Gurgaon, India. Himanshu Choudhary , Assistant Professor, Institute for International Management and Technology, Gurgaon, India.

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114 Measuring Operational Efficiency Annexure 1 : Descriptive Statistics of Variables

Large Retail Stores (82) Standard Average deviation 3906.76 9409.00 86.57 217.55 2.71 0.44 93.66 507.23 1.61 0.29 Medium Retail Stores (52) Standard Average deviation 674.00 130.30 138.00 107.00 2.00 0.73 129.58 116.15 0.69 0.25 Small Retail Stores (66) Standard Average deviation 217.00 104.28 157.00 36.00 2.00 0.55 134.64 41.98 0.70 0.28

Size (Area sq. ft.) Exp (Days) Sales (Rs Lakh per annum) Customer Satisfaction* DEA efficiency score

* 1 Highly satisfied and 7 is highly dissatisfied

Annexure 2: DEA Ranking of Retail Stores

DEA Ranking (Large Retailers) DEA Ranking (Medium Retailers) DEA Ranking (Small Retailers)

Efficiency Frontier OUTLETS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 0.82 0.93 0.84 0.93 1 0.64 1 0.53 0.91 0.56 1 0.69 0.56 0.5 1 0.39 0.99 0.84 0.76 0.25 0.47 0.25 0.13 0.25

Rank Order 1 16 11 14 11 1 19 1 24 13 21 1 18 21 28 1 38 10 14 17 52 30 52 73 52

Efficiency Frontier 0.32 0.36 1 0.58 0.94 1 0.5 0.39 1 0.98 0.85 1 0.5 0.5 1 1 1 0.59 0.33 0.75 0.65 0.95 0.6 1 0.95

Rank Order 50 46 1 36 21 1 40 45 1 15 24 1 40 40 1 1 1 34 49 28 30 19 33 1 19

Efficiency Frontier 0.88 1 1 0.9 0.4 0.92 0.8 0.8 1 0.33 0.7 0.58 0.67 0.35 0.69 0.7 0.1 0.75 0.46 0.66 0.32 0.32 0.61 0.62 0.54

Rank Order 12 1 1 10 43 9 15 15 1 46 20 30 24 45 23 20 65 19 38 25 47 47 28 26 35

Journal of Services Research, Volume 10, Number 2 (October 2010 - March 2011)

115 Sharma, Choudhary

DEA Ranking (Large Retailers) DEA Ranking (Medium Retailers) DEA Ranking (Small Retailers)

Efficiency Frontier OUTLETS

Rank Order

Efficiency Frontier

Rank Order

Efficiency Frontier

Rank Order

26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72

0.42 0.13 0.11 0.23 0.21 0.26 0.29 0.33 0.35 0.38 0.23 1 0.46 0.34 0.12 0.34 0.41 0.29 0.22 1 0.14 0.21 0.22 0.22 0.22 0.13 0.4 0.26 0.09 0.11 0.28 0.42 0.25 1 0.17 0.21 0.21 0.42 0.14 0.2 0.27 0.22 0.51 0.51 0.57 1 0.2

33 73 79 56 63 49 44 43 40 39 56 1 31 41 77 41 36 44 58 1 71 63 58 58 58 73 37 49 81 79 47 33 52 1 69 63 63 33 71 67 48 58 26 26 20 1 67

1 0.65 0.93 1 0.64 0.97 0.97 0.79 0.34 0.34 0.26 1 0.24 1 0.8 0.49 0.55 0.79 0.99 0.59 0.97 1 0.86 0.53 0.67 0.56 0.5

1 30 22 1 32 16 16 26 47 47 51 1 52 1 25 44 38 26 14 34 16 1 23 39 29 36 40

0.7 0.51 0.59 0.52 0.77 0.58 1 0.14 0.29 0.23 0.58 0.1 0.58 0.45 0.46 0.18 0.42 0.89 0.79 0.2 1 0.16 0.17 0.29 0.82 0.36 0.29 0.29 0.17 1 0.3 0.22 0.27 0.43 0.55 0.29 0.28 0.62 0.81 1 1

20 37 29 36 18 30 1 64 50 57 30 65 30 40 38 60 42 11 17 59 1 63 61 50 13 44 50 50 61 1 49 58 56 41 34 50 55 26 14 1 1

Journal of Services Research, Volume 10, Number 2 (October 2010 - March 2011)

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