Transcript Distributive Trade Statistics Section

Performance Indicators
Workshop for African countries on the Implementation of International
Recommendations for Distributive Trade Statistics
27-30 May 2008, Addis Ababa, Ethiopia
UNITED NATIONS STATISTICS DIVISION
Trade Statistics Branch
Distributive Trade Statistics Section
Need of performance indicators (1)
Increased demand for information to asses
businesses status in distributive trade sector

Conventional data items for distributive
trade



Useful in analyzing the structure and production
activity of distributive trade units, however
Not sufficient for direct use in policy or management
decisions
Need of performance indicators (2)
Performance indicators make it possible to
evaluate performance of distributive trade
sector and its units in terms of:




Profitability
Productivity
Efficiency
The list of performance indicators in IRDTS
2008 is not definitive. Why?



Diversity of users needs that may change over
time
Different countries circumstances
Objectives

Performance indicator is:




Policy relevant variable
Number
Quantitative description
In practice, a performance indicator can be:

Any ratio that summarizes two or more important
measurements which is tied directly to the
performance rather than the activity of a unit or a
sector
Users and uses

Policy makers and economic planners




Academicians and researchers



Evaluation of the effectiveness of the trade activity
organization
Identification of potential areas of improvement
Making more informed strategic decisions regarding future
developments
Making comparisons across countries and industries and
over time
Identification of factors leading to better performance
Businesses



Assessment of business environment in which retailers and
wholesalers operate
Development of performance measurement programmes
Identification and setting the long-term trends in
performance and measuring the progress
Types of performance indicators

Growth rates

Ratio indicators

Share indicators
Hint: The importance of distributive trade and any other
economic activity in total economy is measured by means
of growth rates and proportions of two indicators:

Generated value added

Employment
Growth rates (1)

Value added growth



Annual (quarterly) percentage change of value
added of distributive trade activity
Expressed in terms of an arithmetic growth rate as
(Yt/Yt-1) – 1, where Y and t denote the value and
the time period
Employment growth


Annual (monthly or quarterly) percentage change
of total number of persons employed in
distributive trade sector
Compiled by kind-of-activity, by employment
categories, by gender and by size class of
enterprises
Growth rates (2)

Wholesale and Retail Trade Turnover Index



Indicator of the monthly activity of distributive trade sector
in nominal and real terms
Describes exclusively the development and not the level of
turnover
Turnover Index in real terms (turnover volume index)

Current values of turnover




Deflated with appropriate price indices (CPI, PPI, etc.)
Seasonally adjusted
The rate of change (or growth) is determined as a
percentage change of turnover over corresponding month of
the preceding (if chain linked) or a base year
Turnover Index in nominal terms (turnover value
index)


Current values of turnover are not deflated
Calculated as a percentage change of monthly turnover over
the turnover of preceding or a base year
Ratio indicators (1)

Output per person employed




Value added per person employed



Gross output is divided by the total number of persons employed
Indicator of productivity of trade or any other activity
Reflects the change in the input coefficient of labour by activity
and can help in the analysis of the labour requirements by
activity
Ratio of the total value added to the total number of persons
employed
Popular method for estimating the trends in labour productivity
Turnover per person employed


Total turnover is divided by the total number of persons
employed
Useful for interpreting the development in individual distributive
trade sub-sectors
Ratio indicators (2)

Value added per hour worked





Total value added is divided by total hours worked to generate
this value added
Reflects better the effects of variations in the working time
Measures the labour input to the process of production
To provide accurate results it requires good quality data on
hours worked
Gross margin to turnover ratio



Gross margin on goods for resale is divided by the turnover
from trading activities of purchase and resale only
Good indication of trade units’ performance
Provides a basis for comparison between different types of
trade
Ratio indicators (3)

Inventories to turnover ratio


Relationship of the end-of-month values of inventories to the
monthly turnover
Inventory management can have a significant impact on
profitability of trade units
Example: A ratio of 2.5 would indicate that the retailer or
wholesaler have enough merchandise on hand to cover two
and a half months of sales

Sales per retail sales space


Turnover is divided by the sales space, i.e. the estimated floor
area of that part of the premises devoted to selling and
display
Specific categories of sales space should be defined in the
context of national circumstances
Share indicators (1)

Share of distributive trade value added in total value added



Share of distributive trade activity employment in the total
employment of the economy



Proportion of value added generated in distributive trade (or any
other economic activity) to total value added of the economy
If calculated for all economic activities
 Depicts the structural composition of the economy
 Shows contribution of individual economic activities to GDP
Proportion of the total number of persons employed in
distributive trade to total number of persons employed in total
economy
Useful tool for assessing the segmentation and trends in labour
market
Share of e-commerce sales in total turnover

Share of total turnover accounted for the e-commerce sales
Additional indicators (1)

Do not necessarily evaluate the performance; rather they
are used for monitoring of some specific aspects of
organization of trade activity

Their compilation requires collection of additional data

The burden on respondents will be significantly increased

To be compiled by countries only if their own circumstances
warranted the collection of such data
Additional indicators (2)

Retail accounts receivable




Number of retail stores


Amounts of the credits, extended by retail stores to their
customers for purchases made, outstanding as of the end of the
reference period
Financial indicator from the balance sheet of trade units
Importance of this indicator has increased in recent years with
the expansion of purchases on credit
Total number of retail stores operated by an enterprise
Number of fixed market stands and or/stalls

Total number of fixed market stands and/or permanent stalls
operated by an enterprise, either owned or rented
Interpretation of performance
indicators

Performance indicators



Are not absolute numbers
Acquire meaning in the context of comparison and
analysis
Care should be taken when using
performance indicators for comparisons



To ensure that the units or phenomena are alike
enough to be compared
To ensure consistency of definitions and coverage
of data items used in the compilation of
performance indicators
If any, to make the differences explicit
Recommendations


Compilation of performance indicators should be
considered part of distributive trade statistics programme
by all countries
Types and level of details of performance indicators should
commensurate with countries own circumstances and user
needs


Compilation of performance indicators of minor importance
but requiring collection of a lot of additional data should be
avoided
Recommended level of details and periodicity
 Annually - at the 3-digit (group) level of ISIC, Rev.4,
 Quarterly - at the 2-digit (division) level
Thank You