An assessment of operational efficiencies in the UK retail sector

The paper's aim is to assess performance of firms in the UK retail sector. Economic efficiencies of 41 retail companies working in the UK between 2000 and 2005 are examined in this study using three related methodologies: data envelopment analysis (DEA), Malmquist productivity index (MPI), a bootstrapped Tobit regression model. DEA is used to calculate technical and scale efficiencies of companies. Two outputs (turnover, profit before taxation) and three inputs (total assets, shareholders funds, and number of employees) are employed for the efficiency measurement. MPI is used to analyze the patterns of efficiency change over the six year period 2000-2005. DEA efficiencies are then used to test important hypotheses on the impact of environmental variables, namely head office location, type of ownership, years of incorporation, legal form and retail characteristic, on the functioning of the UK retail sector using bootstrapped Tobit regression.