Sales versus margins: alternative measures of output and productivity for retail trade

In this article, we introduce new margin-based measures of output—and, hence, productivity—for the retail trade sector, complementing existing sales-based measures and identifying the factors that affect differences between the two types of measures. We find that, from 2007 to 2022, sales productivity outpaced margin productivity in most retail industries examined. In addition, we take a closer look at three representative industries with different productivity trends, examining the role of prices in those trends. In electronics and appliance stores, sales productivity grew rapidly while margin productivity grew more slowly. In beer, wine, and liquor stores, the two measures trended similarly. In pharmacies and drug stores, margin productivity grew 3 times faster than sales productivity. We conclude that comparing these measures aids our understanding of the distinct effects of quantity of goods sold and value of retail services provided on output and productivity.