Size Matters

Abstract: For retailing companies the scale of operation of their stores is an important strategic decision. In recent years there has been a trend towards fewer but larger stores. However, this decision has an impact on the performance of the stores, which is often neglected. Therefore, this study analyses the company data of a retailing company in the consumer durables sector and will answer the question how the scale of operation has an impact on the performance of a store. The regression analyses comparing the scale of operation to ten measurements of performance, show most of the anticipated effects of larger scales of operation do not persist in the consumer durables sector. Larger stores were found to be performing better on market performance. However, these advantages do not prevail for the productivity and efficiency performance measurements. Then, also the financial performance shows that larger stores are not performing better on operating profit per square meter. Therefore the results suggest that size matters, but larger stores are performing worse.