Efficiency Analysis in Retail Sector: Implementation of Data Envelopment Analysis in a Local Supermarket Chain

Increased competitiveness leads the importance of efficiency analysis for organizations. There are many tools and techniques for performance measurement. Data Envelopment Analysis is one of the well-known nonparametric, direct programming technique that can deal with multiple inputs and outputs and used for efficiency analysis. In this study, data envelopment analysis is used in retail sector. This study is based on a real life problem and the aim is to measure the store performance of a local retail chain in Turkey. While, size of the store, number of employees, number of deliveries and total cost are used as inputs; number of customers, sales, and store evaluation of customers are used as outputs in this study. Main contribution of this study is using store evaluation of customers as an output by conducting an interview with each stores’ customers. Due to the dynamic environment of the retail sector, model that allows variable return to scale while maximizing inputs; input-oriented BCC is used in the study. At the end of the study, numerical results are obtained from a software called Frontier Analyst, and managerial suggestions are presented in the conclusion part.