Efficiency measurement of Indian retailers using Data Envelopment Analysis

Abstract

Purpose

The purpose of this paper is to analyze the performance of Indian retailers in recent past and derive meaningful insight for practicing managers in this area.

Design/methodology/approach

This paper analyses the economic efficiencies of select Indian retailers using three related methodologies: Data Envelopment Analysis (DEA), Malmquist Productivity Index (MPI) and Bootstrapped Tobit Regression.

Findings

DEA analysis has shown that five retail firms out of selected 18 are found as efficient under the CCR model of DEA and seven out of 18 retail firms are efficient under the BCC model of DEA. MPI results indicate that 61 percent of the firms have progressed in terms of the MPI during the period under consideration. The Bootstrapped Tobit Regression shows that number of retail outlets and mergers and acquisitions can be considered as the driving forces influencing efficiency of retailers in India.

Research limitations/implications

The paper has a limitation with reference to the availability of data for a few retail outlets, especially in the modeling through the Bootstrapped Tobit Regression.

Originality/value

This study seems to be the first in applying productivity analysis using DEA, MPI and Bootstrapped Tobit Regression for the Indian retail sector.

Citation

Gandhi, A. and Shankar, R. (2014), "Efficiency measurement of Indian retailers using Data Envelopment Analysis", International Journal of Retail & Distribution Management, Vol. 42 No. 6, pp. 500-520. https://doi.org/10.1108/IJRDM-10-2012-0094