Efficiency in a departmental store group

Effective measurement of efficiency levels and changes in these through time is an important yet difficult area of managerial activity. The approach advocated by MJ Farrell has much to commend it, although it also suffers from limitations. This paper demonstrates how the technique was applied to comparing the efficiency of different outlets in a departmental store group. It was found that efficiency gains over time were more marked in the use of labour than in the use of space and reasons are advanced to explain why this is not surprising. While it was not expected that efficiency and profitability would necessarily be closely correlated, there was some suggestion in the evidence that in many instances more efficient stores had higher profits and also that the more efficient stores (apart from those at the very highest efficiency levels) were larger and achieved a higher proportion of total sales through their own departments.