Efficiency Analysis of Retail Chain Stores in Korea

• Main Authors: Kyungwan Ko, Meehyang Chang, Eun-Song Bae, Daecheol Kim
• Format: Article
• Language: English
• Published: MDPI AG 2017-09-01
• Series: Sustainability
• Subjects: efficiency analysis; chain stores; data envelopment analysis (DEA); Tobit regression
• Online Access: https://www.mdpi.com/2071-1050/9/9/1629

In today’s low-growth business environment, efficiency management is becoming more important to improve corporate sustainability. In a chain store, the efficiency of individual stores must be well managed to improve the efficiency of the entire enterprise. To do this, it is important to measure the efficiency of individual stores and to find factors that affect efficiency. The main purpose of this study is to find out the factors affecting the efficiency of chain stores and to analyze the results to find out the implications that contribute to an improvement in efficiency. We measured the relative efficiency of individual stores using data envelopment analysis (DEA) and analyzed the factors that affect efficiency with the Tobit regression model. As a result, we found that the number of items per employee and a competitive environment influence the efficiency of stores. An excessive number of items may cause efficiency to be lowered. Therefore, it is necessary to manage the life cycle of the product, considering the trade-off between assortment and efficiency. Competition helps to improve efficiency to some extent, but too much competition can reduce efficiency.