Evaluating retail efficiency using DEA and AHP: a case in the Turkish apparel retail industry

Purpose: The purpose of this study is to propose a comprehensive efficiency evaluation approach to measure the efficiency of the retailers and to determine the relative importance of a wide variety of apparel retail-specific factors that support efficiency. Design/methodology/approach: The first stage of the proposed approach is the measurement of the relative efficiency of the apparel retailers by using data envelopment analysis (DEA) for identifying the best practice frontier and determination of the improvement ratios. The second stage is the prioritization of the factors that are important in the apparel retail efficiency using analytical hierarchy process (AHP). Findings: The findings of the study revealed that the quantitative criteria to be considered for efficiency through input minimization and output maximization were “number of employees” and “profit before tax,” respectively, however, focusing on output maximization was found to be more critical. In addition, it was seen that the most important qualitative components of efficiency were satisfied customers, qualified staff and branding. Practical implications: The managerial actors in the apparel retail industry can be alerted for new strategic actions to adopt best practices or take precautions for future inefficiencies with the help of the results obtained. The customized hierarchical structure allows determining the priority areas that need to be focused on for increasing the performance of apparel retailers. Originality/value: In this study, DEA and AHP were combined to build a comprehensive efficiency evaluation approach in the apparel retail industry for the first time in the literature. Thus, both qualitative and quantitative variables that are important in apparel retail efficiency were put forward and evaluated. The originality of the hierarchical structure in AHP was its customization to the apparel retail industry.