Bi-level programming DEA approach for efficiency evaluation: A case study of Indian electronics retail stores

Abstract

The retail industry has witnessed enormous growth in the past decade in developing countries like India, China, Brazil, etc. owning to the upswing in globalization, growing trends in e-commerce, multi-format retailing, and increasing penetration of internet. Growth opportunities, on the other hand, has intensed the competition. It is important for retailers to gain a competitive edge in the market through innovative
strategies and continuous improvement. Meticulous planning and efficiency in operations are the drivers for economic sustainability and proability of the business. Important prerequisites to gain efficiency and planning for improvement is the evaluation of base-level performance, defining benchmarks and evaluating the effectiveness of the efforts, taken in this direction. The studies in this domain existing in the literature have considered retail stores as a black box. This approach lacks transparency and overlooks the sub-
processes, their characteristics and internal interaction. This study addresses this issue and proposes a Bi-level Programming DEA approach to evaluate the relative efficiency of multiple retail stores considering a network structure operating in a Stackelberg relation and dening benchmarks for inecient stores. The proposed approach is validated through a case study of the Indian electronic retail chain.