Benchmarking Performance in Retail Chains: An Integrated Approach
Dinesh Kumar Gauri,
Janos Gabor Pauler,
Minakshi Trivedi
Whitman School of Management, Syracuse University, Syracuse, New York 13244
Department of Computer Applications, Pollack Mihaly Faculty of Engineering, University of Pécs, H-7622 Pécs, Hungary
Department of Marketing, School of Management, State University of New York at Buffalo, Buffalo, New York 14260
dkgauri{at}syr.edu
pauler{at}t-online.hu
mtrivedi{at}buffalo.edu
Standardizing performance expectations across different outlets within a chain, differing in their individual features, their consumers, and the nature of competition they face, can be an onerous task. We develop an integrated, nonlinear, block group-level market share model of store expectations that draws upon the existing trade area as well as store performance literatures. By incorporating and normalizing a large number of external and internal factors impacting performance, we are able to offer a means for the retailer to determine equitable standards. The model is estimated using a variation of the maximum-likelihood estimation, on a data set fashioned from several sources and aggregated at the block group and store levels. Finally, we propose a set of indices that allows us to evaluate relative performances of stores and regions given the competitive environments they face. We find that a block group-level model offers a better fit, as well as significantly richer implications, than a traditional store-level model. Results show that a significant number of stores operate well below their expected levels, an insight not obvious from the raw numbers used to report store statistics to upper management.
Key Words: retailing; store performance; benchmarking; econometric models
History: Received: December 4, 2007;
accepted: March 21, 2008.
Copyright © 2009 by INFORMS.
