Productivity and Efficiency Impacts Of Human Resources Practices in Food Retailing

Abstract

Data from an annual survey of U.S. supermarkets including detailed information on store characteristics, operations, and performance are used to develop an index of human resource (HR) practices for food retailers. A stochastic frontier analysis demonstrates that human resource policies have a positive impact on value added in food retailing establishments while efficiency is not adversely influenced by human resource practices. Managerial implications of the model link technical inefficiency estimates for retailers to slight declines in store level gross margins. Evaluated on the basis of technical efficiency, retailers choosing a portfolio of human resource practices which score high on the HR index are able to match the performance of competitors pursuing an alternative low HR strategy. Visits with retail managers and in-store department heads along with a leading food retailing consulting firm confirmed the feasibility of adjusting human resource practices to improve store performance.