Share:


Internal benchmarking in retailing with DEA and GIS: the case of a loyalty-oriented supermarket chain

    Amparo Baviera-Puig   Affiliation
    ; Tomás Baviera   Affiliation
    ; Juan Buitrago-Vera   Affiliation
    ; Carmen Escribá-Pérez   Affiliation

Abstract

Data Envelopment Analysis (DEA) is a relative measure of efficiency applied to a set of decision units and is being used more and more frequently in the supermarket sector. Nonetheless, given how strongly the sector’s financials depend on demand, companies need to combine this measurement with trade area information to best manage corporate efficiency. In this paper, the proposal consists of integrating DEA with a clearly articulated, structural typology so that supermarkets, based on their particular characteristics, can determine which variables are most critical for improving their efficiency. This methodology has been validated in the case of one of Spain’s five largest supermarket chains. A principal component analysis and a classification analysis were carried out on a series of internal management variables from 61 locations for which DEA had been used to calculate efficiency and to which multiple trade area variables were added using GIS. Some of them are related to the loyalty scheme membership programme. These latter variables described the implantation of the loyalty scheme member programme and were revealed as key elements for the efficiency of the supermarket. This methodology provides marketing profiles that are more adapted to local circumstances, thus allowing companies to set better internal benchmarking objectives.

Keyword : efficiency, Data Envelopment Analysis (DEA), Geographical Information Systems (GIS), multivariate analysis, benchmarking, trade area, geomarketing

How to Cite
Baviera-Puig, A. ., Baviera, T. ., Buitrago-Vera, J. ., & Escribá-Pérez, C. . (2020). Internal benchmarking in retailing with DEA and GIS: the case of a loyalty-oriented supermarket chain. Journal of Business Economics and Management, 21(4), 1035-1057. https://doi.org/10.3846/jbem.2020.12393
Published in Issue
Jun 2, 2020
Abstract Views
123
PDF Downloads
95
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

References

Álvarez-Rodríguez, C., Martín-Gamboa, M., & Iribarren, D. (2019). Combined use of Data Envelopment Analysis and Life Cycle Assessment for operational and environmental benchmarking in the service sector: A case study for grocery stores. Science of the Total Environment, 667, 799–808. https://doi.org/10.1016/j.scitotenv.2019.02.433

Applebaum, W., & Cohen, S. B. (1961). The dynamics of store trading areas and market equilibrium. Annals of the Association of American Geographers, 51(1), 73–101. https://doi.org/10.1111/j.1467-8306.1961.tb00369.x

Banker, R. D., Charnes, A., & Cooper, W. W. (1984). Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management Science, 30(9), 1078–1092. https://doi.org/10.1287/mnsc.30.9.1078

Barros, C. P. (2006). Efficiency measurement among hypermarkets and supermarkets and the identification of the efficiency drivers. A case study. International Journal of Retail & Distribution Management, 34(2), 135–154. https://doi.org/10.1108/09590550610649795

Barros, C. P., & Alves, C. A. (2003). Hypermarket retail store efficiency in Portugal. International Journal of Retail & Distribution Management, 31(11), 549–560. https://doi.org/10.1108/09590550310503285

Barros, C. P., & Alves, C. A. (2004). An empirical analysis of productivity growth in a Portuguese retail chain using Malmquist productivity index. Journal of Retailing and Consumer Services, 11(5), 269–278. https://doi.org/10.1016/S0969-6989(03)00053-5

Baviera-Puig, A., Buitrago-Vera, J., & Escribá-Pérez, C. (2016). Geomarketing models in supermarket location strategies. Journal of Business Economics and Management, 17(6), 1205–1221. https://doi.org/10.3846/16111699.2015.1113198

Brønn, C., & Brønn, P. S. (2005). Reputation and organizational efficiency: A data envelopment analysis study. Corporate Reputation Review, 8(1), 45–58. https://doi.org/10.1057/palgrave.crr.1540238

Byrom, J., Hernández, T., Bennison, D., & Hooper, P. (2001). Exploring the geographical dimension in loyalty card data. Marketing Intelligence & Planning, 19(3), 162–170. https://doi.org/10.1108/02634500110391708

Cachero-Martínez, S., & Vázquez-Casielles, R. (2017). Living positive experiences in store: how it influences shopping experience value and satisfaction. Journal of Business Economics and Management, 18(3), 537–553. https://doi.org/10.3846/16111699.2017.1292311

Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision-making units. European Journal of Operational Research, 2(6), 429–444. https://doi.org/10.1016/0377-2217(78)90138-8

Chaudhuri, M., Voorhees, C. M., & Beck, J. M. (2019). The effects of loyalty program introduction and design on short- and long-term sales and gross profits. Journal of the Academy of Marketing Science, 47(4), 640–658. https://doi.org/10.1007/s11747-019-00652-y

De Jorge, J. (2006). Regional regulation analysis of performance in Spanish retailing. International Journal of Retail and Distribution Management, 34(10), 773–793. https://doi.org/10.1108/09590550610691356

Donthu, N., & Yoo, B. (1998). Retail productivity assessment using data envelopment analysis. Journal of Retailing, 74(1), 89–105. https://doi.org/10.1016/S0022-4359(99)80089-X

Donthu, N., Hershberger, E. K., & Osmonbekov, T. (2005). Benchmarking marketing productivity using data envelopment analysis. Journal of Business Research, 58(11), 1474–1482. https://doi.org/10.1016/j.jbusres.2004.05.007

Drèze, X., & Nunes, J. C. (2009). Feeling superior: The impact of loyalty program structure on consumers’ perceptions of status. Journal of Consumer Research, 35(6), 890–905. https://doi.org/10.1086/593946

Emrouznejad, A., & Yang, G. L. (2018). A survey and analysis of the first 40 years of scholarly literature in DEA: 1978–2016. Socio-Economic Planning Sciences, 61, 4–8. https://doi.org/10.1016/j.seps.2017.01.008

Felício, J. A., & Galindo, M. P. (2015). Family characteristics and governance of small and medium-sized family firms. Journal of Business Economics and Management, 16(6), 1069–1084. https://doi.org/10.3846/16111699.2012.747446

Gandhi, A., & Shankar, R. (2014). Efficiency measurement of Indian retailers using Data Envelopment Analysis. International Journal of Retail and Distribution Management, 42(6), 500–520. https://doi.org/10.1108/IJRDM-10-2012-0094

Goldman, A. (1992). Evaluating the performance of the Japanese distribution system. Journal of Retailing, 68(1), 11–39.

Goss, J. (1995). We know who you are and we know where you live: The instrumental rationality of geodemographic systems. Economic Geography, 71(2), 171–198. https://doi.org/10.2307/144357

Grewal, D., Levy, M., Mehrotra, A., & Sharma, A. (1999). Planning merchandising decisions to account for regional and product assortment differences. Journal of Retailing, 75(3), 405–424. https://doi.org/10.1016/S0022-4359(99)00015-9

Hanousek, J., Kocenda, E., & Shamsur, A. (2015). Corporate efficiency in Europe. Journal of Corporate Finance, 32, 24–40. https://doi.org/10.1016/j.jcorpfin.2015.03.003

Harris, R., Sleight, P., & Webber, R. (2005). Geodemographics, GIS and neighbourhood targeting. John Wiley & Sons.

Herranz, R., Estévez, P., Oliva, M., & Dé, R. (2017). Leveraging financial management performance of the Spanish aerospace manufacturing value chain. Journal of Business Economics and Management, 18(5), 1005–1022. https://doi.org/10.3846/16111699.2017.1357655

Ingene, C. A. (1984). Productivity and functional shifting in spatial retailing: Private and social perspectives. Journal of Retailing, 60, 15–36.

Kang, J., Alejandro, T. B., & Groza, M. D. (2015). Customer-company identification and the effectiveness of loyalty programs. Journal of Business Research, 68(2), 464–471. https://doi.org/10.1016/j.jbusres.2014.06.002

Kato, A. (2015). Productivity and characteristics of firms: An application of a bootstrapped data envelopment analysis to Japanese firm-level data. Journal of Asia-Pacific Studies, 24, 145–159.

Kim, H-Y., Lee, J. Y., Choi, D., Wu, J., & Johnson, K. K. (2013). Perceived benefits of retail loyalty programs: Their effects on program loyalty and customer loyalty. Journal of Relationship Marketing, 12(2), 95–113. https://doi.org/10.1080/15332667.2013.794100

Kumar, V., & Petersen, J. A. (2005). Using a customer-level marketing strategy to enhance firm performance: A review of theoretical and empirical evidence. Journal of the Academy of Marketing Science, 33(4), 504–519. https://doi.org/10.1177/0092070305275857

Kumar, V., & Shah, D. (2004). Building and sustaining profitable customer loyalty for the 21st century. Journal of Retailing, 80(4), 317–329. https://doi.org/10.1016/j.jretai.2004.10.007

Lao, Y., & Liu, L. (2009). Performance evaluation of bus lines with data envelopment analysis and geographic information systems. Computers, Environment and Urban Systems, 33(4), 247–255. https://doi.org/10.1016/j.compenvurbsys.2009.01.005

Leenheer, J., Van Heerde, H. J., Bijmolt, T. H., & Smidts, A. (2007). Do loyalty programs really enhance behavioral loyalty? An empirical analysis accounting for self-selecting members. International Journal of Research in Marketing, 24(1), 31–47. https://doi.org/10.1016/j.ijresmar.2006.10.005

Lewis, H. F., & Sexton, T. R. (2004). Data envelopment analysis with reverse inputs and outputs. Journal of Productivity Analysis, 21, 113–132. https://doi.org/10.1023/B:PROD.0000016868.69586.b4

Li, Y., & Liu, L. (2012). Assessing the impact of retail location on store performance: A comparison of Wal-Mart and Kmart stores in Cincinnati. Applied Geography, 32(2), 591–600. https://doi.org/10.1016/j.apgeog.2011.07.006

López-Roldán, P. (1996). La construcción de tipologías: Metodologías de análisis. Papers, 48, 9–29. https://doi.org/10.5565/rev/papers.1811

López-Roldán, P., & Fachelli, S. (2015). Análisis de clasificación. In P. López-Roldán & S. Fachelli (Eds.), Metodología de la Investigación Social Cuantitativa (1a edición, versión 2). Bellaterra: Dipòsit Digital de Documents, Universitat Autónoma de Barcelona. http://ddd.uab.cat/record/142929

López-Roldán, P., & Fachelli, S. (2016). Análisis factorial. In P. López-Roldán & S. Fachelli (Eds.), Metodología de la Investigación Social Cuantitativa (1a edición, versión 3). Bellaterra: Dipòsit Digital de Documents, Universitat Autónoma de Barcelona. http://ddd.uab.cat/record/142928

Meyer-Waarden, L. (2007). The effects of loyalty programs on customer lifetime duration and share of wallet. Journal of Retailing, 83(2), 223–236. https://doi.org/10.1016/j.jretai.2007.01.002

Meyer-Waarden, L. (2008). The influence of loyalty programme membership on customer purchase behavior. European Journal of Marketing, 42(1/2), 87–114. https://doi.org/10.1108/03090560810840925

Meyer-Waarden, L., & Benavent, C. (2006). The impact of loyalty programmes on repeat purchase behaviour. Journal of Marketing Management, 22(1), 61–88. https://doi.org/10.1362/026725706776022308

Mimouni-Chaabane, A., & Volle, P. (2010). Perceived benefits of loyalty programs: Scale development and implications for relational strategies. Journal of Business Research, 63(1), 32–37. https://doi.org/10.1016/j.jbusres.2009.01.008

Moreno, J. (2010). Productivity growth of European retailers: A benchmarking approach. Journal of Economic Studies, 37(3), 288–313. https://doi.org/10.1108/01443581011061285

Mostafa, M. (2009). Benchmarking the US specialty retailers and food consumer store using data envelopment analysis. International Journal of Retail and Distribution Management, 37(8), 661–679. https://doi.org/10.1108/09590550910966178

Neves Bezerra de Melo, F. L., Sampaio, R. M. B., & Sampaio, L. M. B. (2018). Efficiency, productivity gains, and the size of Brazilian supermarkets. International Journal of Production Economics, 197, 99–111. https://doi.org/10.1016/j.ijpe.2017.12.016

Nielsen. (2018). Retailers database. Nielsen Company.

Nitkiewicz, T., Pachura, P., & Reid, N. (2014). An appraisal of regional intellectual capital performance using Data Envelopment Analysis. Applied Geography, 53, 246–257. https://doi.org/10.1016/j.apgeog.2014.06.011

Noordhoff, C., Pauwels, P., & Odekerken-Schröder, G. (2004). The effect of customer card programmes: A comparative study in Singapore and The Netherlands. International Journal of Service Industry Management, 15(4), 351–364. https://doi.org/10.1108/09564230410552040

Pantano, E., Priporas, C., & Dennis, C. (2018). A new approach to retailing for successful competition in the new smart scenario. International Journal of Retail & Distribution Management, 46(3), 264–282. https://doi.org/10.1108/IJRDM-04-2017-0080

Patel, G. N., & Pande, S. (2013). Measuring the performance of pharmacy stores using discretionary and non-discretionary variables. Opsearch, 50(1), 25–41. https://doi.org/10.1007/s12597-012-0095-0

Roig-Tierno, N., Baviera-Puig, A., Buitrago-Vera, J., & Escribá-Pérez, C. (2018). Assessing food retail competitors with a multi-criteria GIS-based method. Economía Agraria y Recursos Naturales – Agricultural and Resource Economics, 18(1), 05–22. https://doi.org/10.7201/earn.2018.01.01

Roig-Tierno, N., Baviera-Puig, A., Buitrago-Vera, J., & Mas-Verdu, F. (2013). The retail site location decision process using GIS and the analytical hierarchy process. Applied Geography, 40(1), 191–198. https://doi.org/10.1016/j.apgeog.2013.03.005

Sanjuan, N., Ribal, J., Clemente, G., & Fenollosa, M. L. (2011). Measuring and improving eco-efficiency using Data Envelopment Analysis. A case study of Mahón-Menorca Cheese. Journal of Industrial Ecology, 15(4), 614–628. https://doi.org/10.1111/j.1530-9290.2011.00347.x

Sellers-Rubio, R., & Mas-Ruiz, F. (2006). Economic efficiency in supermarkets: evidences in Spain. International Journal of Retail and Distribution Management, 34(2), 155–171. https://doi.org/10.1108/09590550610649803

Sellers-Rubio, R., & Mas-Ruiz, F. (2009). Technical efficiency in the retail food industry. European Journal of Marketing, 43(5/6), 652–669. https://doi.org/10.1108/03090560910946981

Steinhoff, L., & Palmatier, R. W. (2016). Understanding loyalty program effectiveness: Managing target and bystander effects. Journal of the Academy of Marketing Science, 44(1), 88–107. https://doi.org/10.1007/s11747-014-0405-6

Tat Keh, H., & Chu, S. (2003). Retail productivity and scale economies at the firm level: A DEA approach. Omega, 31(2), 75–82. https://doi.org/10.1016/S0305-0483(02)00097-X

Thomas, R. R., Barr, R. S., Cron, W. L., & Slocum, J. W. (1998). A process for evaluating retail store efficiency: A restricted DEA approach. International Journal of Research in Marketing, 15(5), 487–503. https://doi.org/10.1016/S0167-8116(98)00021-4

Tomlinson, R. (2007). Thinking about GIS. GIS planning for managers (3rd ed.). ESRI Press.

Uyar, A., Bayyurt, N., Dilber, M., & Karaca, V. (2013). Evaluating operational efficiency of a bookshop chain in Turkey and identifying efficiency drivers. The International Journal of Retail and Distribution Management, 41(5), 331–347. https://doi.org/10.1108/IJRDM-01-2012-0001

Vyt, D., & Cliquet, G. (2017). Towards a fairer manager performance measure: a DEA application in the retail industry. The International Review of Retail, Distribution and Consumer Research, 27(5), 450–467. https://doi.org/10.1080/09593969.2017.1383293

Yoo, B., Donthu, N., & Pilling, B. C. (1998). Channel efficiency. Journal of Marketing Channels, 6(3–4), 1–15. https://doi.org/10.1300/J049v06n03_01

Yu, W., & Ramanathan, R. (2008). An assessment of operational efficiencies in the UK retail sector. International Journal of Retail and Distribution Management, 36(11), 861–882. https://doi.org/10.1108/09590550810911656

Zheka, V. (2005). Corporate governance, ownership structure and corporate efficiency: The case of Ukraine. Managerial and Decision Economics, 26(7), 451–460. https://doi.org/10.1002/mde.1258

Zhu, J. (2014). Quantitative models for performance evaluation and benchmarking: Data Envelopment Analysis with Spreadsheets (3rd ed.). Springer International Publishing.