A Study on the Relative Efficiency of Retail Industry in Korea
Chun-Kon Kim, Jin Woong Kim · 2015
This paper investigates the relative efficiency of Korea’s 111 retail firms during 2006-2010 using the Data Envelopment Analysis(DEA) method and Malmquist Productivity Analysis. From the empirical analysis, the results of the DEA provide that the overall efficiency for the retail industry is 0.5942, revealing that retail companies have yet to demonstrate efficient performance. Upon taking a closer look into sub-categories of industries, convenience stores had the comparatively highest average efficiency score of 0.7833 followed by other retail sales via mail order houses(0.7483) and electronic commerce via the internet(0.6424). Supermarkets, department stores, and retail sales in other non-specialized large stores exhibited comparatively low DEA efficiency scores. The explanation for these results seems to be that large-scale stores such as department stores and supermarkets tend to require higher fixed assets, which causes an excess of input.