Assessing Performance Impacts in Food Retail Distribution Systems: A Stochastic Frontier Model Correcting for Sample Selection

A key organizational decision for retailers is whether to self-distribute or rely on a wholesaler-supplied network and yet little is known about the impact of this strategic choice on store-level productivity. We estimate a stochastic frontier model for food retailers that accounts for selectivity effects linked to the choice of distribution strategy. We find that adoption of data-sharing technologies has a positive impact on store-level gross margins of stores in self-distributing chains. Technical inefficiency among U.S. food retailers leads to a gross margin that is around $5,000 less for a conventional food retailer and about $7,670 less for a supercenter.


Issue Date:
2014-12
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/190992
Published in:
Agricultural and Resource Economics Review, Volume 43, Number 3
Page range:
373-389
Total Pages:
17




 Record created 2017-04-01, last modified 2017-08-28

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