Exploring efficiency dynamics in Croatian retailtrade

Retail trade in Croatia plays an important role in the economy, as the share of trade in GDP at market prices amounted to 20.0% and the share of trade in employment (legal entities) amounted to 15.2% in 2022. Its importance is highlighted by its vulnerability to external shocks, such as the COVID-19 pandemic and subsequent economic disruptions, including high inflation. In this study, Window Data Envelopment Analysis (WDEA) is used to assess the efficiency of 23 large and very large retail companies in Croatia between 2013 and 2022, focusing on the impact of economic fluctuations on the companies’ operational performance. The results show that Croatian retailers operate close to the efficiency frontier, with scale efficiency consistently performing better than pure technical efficiency, highlighting management and technological challenges as primary inefficiency factors. A detailed analysis of the top five retailers in terms of operating revenue shows their resilience, with some of them achieving full efficiency during the observed period. In particular, Tommy d.o.o. showed consistent efficiency in the Adriatic region due to its strategic focus on small stores in tourist areas, while Schwarz Group members Lidl Hrvatska d.o.o. and Kaufland Hrvatska k.d. showed robust revenue growth and improved efficiency after 2020. The results emphasize the adaptability and resilience of the sector, especially in response to the disruption caused by the pandemic. They also highlight the urgent need for strategies to improve operational efficiency, address labor shortages and leverage digital transformation to meet increasing competition and economic challenges. This study fills a gap in the Croatian retail literature by applying the WDEA to assess the impact of global disruption on the efficiency of large retailers.