Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

As Europe Changes, America’s Productivity Edge in Retail, Wholesale Will Erode

09.03.2005


Companies in America’s fast-growing retail and wholesale trade sector have been the major drivers of U.S. productivity growth since 1995, and the transformation of U.S. retailing is a major reason the U.S. maintains a substantial productivity lead over Europe.

A comprehensive study by The Conference Board, released today, shows that more than 50% of America’s productivity growth lead over Europe is due to gains in retail and wholesale trade.

The transformation of U.S. retailing from a low-tech industry to a sophisticated high-technology market force has been a major factor in the acceleration of U.S. productivity growth. Retail and wholesale trade firms have reaped significant productivity gains by relying on scale and scope, with massive centralized chains and increasingly large stores growing rapidly. New information and communication technologies and the organizational changes they support have produced new and better information about customers, faster, cheaper, and timelier information flows to and from business units, and smaller inventories.



But despite its slower start, Europe has enormous potential to reduce the productivity gap in these sectors. Many European firms are applying the new technologies efficiently, operational regulations are easing within many countries, and competitive incentives for change are increasing as obstacles to cross-border operations diminish.

The Conference Board study reveals that labor productivity growth among U.S. retail firms jumped to 7.4% between 1995 and 2002, up from 2.6% between 1980 and 1995. Wholesale trade firms showed productivity growth of 8.5% since 1995, compared with 4.1% from 1995 to 2002.

European productivity growth stalled in these sectors, with firms in Belgium, France, Germany, Italy and Spain posting extremely slow gains as productivity growth decelerated in both retail and wholesale trade in each of these countries in the 1995-2002 period. Only in Spain did productivity growth improve, from -0.5% in 1990-95 to 0.5% between 1995 and 2002. The Conference Board study shows that among these countries productivity growth in retail trade ranged from 0.2% in Belgium to 1.6% in France, compared to 7.4% in the U.S. between 1995 and 2002. The figures for wholesale trade show slightly bigger gaps, with the U.S. recording an 8.5% growth rate compared to Germany and Belgium showing 1.6% and Italy showing -0.1% growth. But as this new study argues, some of Europe’s slow productivity growth of the late 1990s may be due to the much-needed adjustments still underway.

Innovation Driving U.S. Gains

“The marriage of new technologies and organizational change is at the heart of America’s growing productivity lead over Europe,” says Dr. Robert McGuckin, Director of Economic Research at The Conference Board and one of the authors of the report. “European firms have not changed as rapidly as U.S. companies, and the regulatory climate in Europe, especially its constrictions on land use, has been a major burden.”

Authoring the new study with Dr. McGuckin are Dr. Bart van Ark, consulting director for The Conference Board’s international economic research program, and Matthew Spiegelman, former Conference Board economist now with Morgan Stanley.

While change is underway in Europe, the pace of organizational transformation and technological adoption has been much slower compared to the U.S. Specifically, five factors explain Europe’s lag:

* A head start: While retailers on both sides of the Atlantic have followed suit in adopting innovations like barcodes, U.S. retailers had a substantial head start over European firms in making the changes required to successfully exploit these technologies.

* Regulatory obstacles: Europe’s regulatory environment has slowed trade productivity growth through two channels – regulation within individual countries restricts competition and differences in regulation across countries inhibit smooth cross-border operations in retail and wholesale trade and the associated gains from scale. One example: although France actually has more hypermarkets per person than the U.S., the establishment of new stores has been highly regulated. This has made it difficult for foreign hypermarkets to move into the French market and compete with local firms. Local zoning regulations have been a major roadblock.

* Scale: Since information and communication technology in these trade sectors is a technology of centralized management, information processing, and analysis, reduced opportunity for cross-border scale has lowered the incentive for investment in Europe relative to the U.S.

* Slower complementary change: Europe’s trucking industry was deregulated only in the mid-1990s, meaning many of the shipping adjustments being made in the U.S. are less far along in Europe.

* Culture and change: Differences in language and culture make it more difficult to streamline operations across Europe, but this may become less of a factor as Europe’s economic and cultural integration proceeds.

“Operational regulations have been eased in many countries, and competitive incentives for change are increasing. Some of the slow productivity growth of the late ‘90s may be due to the actual adjustments being made,” says van Ark.

European retailers and wholesalers have been investing in information and communications technologies at similar rates to U.S. firms in recent years. But the IT share of overall investment is still considerably lower than in the U.S. As many European countries quickly increase their IT infrastructures, they will be in a better position to exploit the efficiencies of the new retail business models.

Europe’s transformation has the potential to move at a very fast pace as companies have learned from the U.S. experience, concludes McGuckin. The growing markets of the new EU members and declining cross-border barriers to business operations indicate Europe should catch-up with the U.S. in the retail and wholesale trade sectors sometime in the near future.

About The Conference Board

The Conference Board is the leading global business knowledge network for the world’s largest corporations. The Conference Board is dedicated to helping companies improve performance and strengthening the role of business in society. More than 2,000 companies in 60 countries are members of The Conference Board, which produces the Consumer Confidence Index, the Help-Wanted Index and Business Cycle Indicators for nine countries worldwide.

About The Authors

Robert H. McGuckin is Director of Economic Research at The Conference Board, and an expert on productivity, industrial organization, economic indicators and statistics. Formerly, Dr. McGuckin was chief of the Center for Economic Studies at the U.S. Bureau of the Census, where he guided development of the Longitudinal Research Database, produced significant research on productivity growth, and headed a broad research program in statistics and economics.

Bart van Ark is a Consulting Director for The Conference Board’s international economic research program and a recognized expert on international comparisons of productivity and living standards. Dr. van Ark is Professor of Economics at the University of Groningen (The Netherlands), where he plays a key role in the International Comparisons of Output Productivity project. His work focuses on Europe, North America and Asia.

Matthew Spiegelman is a former economist at The Conference Board, where he conducted research on international trends in productivity and business performance, specializing in technology, innovation, and emerging markets. He is presently with Morgan and Stanley, but he co-authored this report while working at The Conference Board.

Source: The Retail Revolution: Can Europe Match U.S. Productivity Performance?

Report #1358-05, The Conference Board

| newswise
Further information:
http://www.conference-board.org

More articles from Business and Finance:

nachricht Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

nachricht Europe's microtechnology industry is attuned to growth
10.03.2017 | IVAM Fachverband für Mikrotechnik

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Making lightweight construction suitable for series production

More and more automobile companies are focusing on body parts made of carbon fiber reinforced plastics (CFRP). However, manufacturing and repair costs must be further reduced in order to make CFRP more economical in use. Together with the Volkswagen AG and five other partners in the project HolQueSt 3D, the Laser Zentrum Hannover e.V. (LZH) has developed laser processes for the automatic trimming, drilling and repair of three-dimensional components.

Automated manufacturing processes are the basis for ultimately establishing the series production of CFRP components. In the project HolQueSt 3D, the LZH has...

Im Focus: Wonder material? Novel nanotube structure strengthens thin films for flexible electronics

Reflecting the structure of composites found in nature and the ancient world, researchers at the University of Illinois at Urbana-Champaign have synthesized thin carbon nanotube (CNT) textiles that exhibit both high electrical conductivity and a level of toughness that is about fifty times higher than copper films, currently used in electronics.

"The structural robustness of thin metal films has significant importance for the reliable operation of smart skin and flexible electronics including...

Im Focus: Deep inside Galaxy M87

The nearby, giant radio galaxy M87 hosts a supermassive black hole (BH) and is well-known for its bright jet dominating the spectrum over ten orders of magnitude in frequency. Due to its proximity, jet prominence, and the large black hole mass, M87 is the best laboratory for investigating the formation, acceleration, and collimation of relativistic jets. A research team led by Silke Britzen from the Max Planck Institute for Radio Astronomy in Bonn, Germany, has found strong indication for turbulent processes connecting the accretion disk and the jet of that galaxy providing insights into the longstanding problem of the origin of astrophysical jets.

Supermassive black holes form some of the most enigmatic phenomena in astrophysics. Their enormous energy output is supposed to be generated by the...

Im Focus: A Quantum Low Pass for Photons

Physicists in Garching observe novel quantum effect that limits the number of emitted photons.

The probability to find a certain number of photons inside a laser pulse usually corresponds to a classical distribution of independent events, the so-called...

Im Focus: Microprocessors based on a layer of just three atoms

Microprocessors based on atomically thin materials hold the promise of the evolution of traditional processors as well as new applications in the field of flexible electronics. Now, a TU Wien research team led by Thomas Müller has made a breakthrough in this field as part of an ongoing research project.

Two-dimensional materials, or 2D materials for short, are extremely versatile, although – or often more precisely because – they are made up of just one or a...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Fighting drug resistant tuberculosis – InfectoGnostics meets MYCO-NET² partners in Peru

28.04.2017 | Event News

Expert meeting “Health Business Connect” will connect international medical technology companies

20.04.2017 | Event News

Wenn der Computer das Gehirn austrickst

18.04.2017 | Event News

 
Latest News

Wireless power can drive tiny electronic devices in the GI tract

28.04.2017 | Medical Engineering

Ice cave in Transylvania yields window into region's past

28.04.2017 | Earth Sciences

Nose2Brain – Better Therapy for Multiple Sclerosis

28.04.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>