Productivity growth of European retailers: a benchmarking approach

Purpose - The purpose of the research presented in this paper is to evaluate the efficiency and productivity of the European retailers. Design/methodology/approach - Applying a two‐stage approach at individual and global levels, in this study the paper adopts the efficient frontier approach using the Malmquist index, based on DEA to measure productivity of European retailers. Findings - An efficiency and productivity evaluation process is developed incorporating non‐parametric techniques in the European retail sector for the period of 1998‐2006. The author proposes an integrated benchmarking framework illustrated in two stages. In the first stage, work is carried out in an individualized way at the country level identifying the firms that form the corresponding efficient frontier. In a second stage a benchmarking analysis is carried out starting from the selection of the best firms made in the first stage. In this case the firms belonging to different countries are compared against each other. The aim of this procedure is to seek out those best practices that will lead to improved performance throughout the whole sample. The results confirm that convergence/divergence in efficiency and productivity growth do not have the same behaviour patterns, concluding that some countries experienced improvements while others worsened. Individual scrutiny (benchmarks) in the second stage shows that there are four groups of firms that have allowed us to extract important managerial implications. Originality/value - The paper proposes an integrated benchmarking framework illustrated in two stages. With this methodology answers can be given to important questions such as, how efficient and productive is European retailing? What is the evolution of the productivity over time in Europe? Do different patterns of convergence/divergence of the efficiency exist among the analysed countries? What characteristics do the firms with the best managerial practices belonging to the European global frontier have?