Labor productivity in the retail trade industry, 1987-99: faced with fierce competition, consolidation, and increased demand, the industry experienced strong growth in labor productivity over the period, partially due to increased investments in information technologies

Monthly Labor Review, Dec, 2001 by Mark Sieling, Brian Friedman, Mark Dumas

The overall growth of labor productivity for new and used car dealers over the period (0.9 percent annually) reflected annual output growth of 2.1 percent and hours gains of 1.1 percent. During the 1990-95 period, labor productivity grew at a relatively slow pace (0.3 percent per year), reflecting output growth of 1.6 percent per year and employee hours growth of 1.3 percent. During the next 4 years, labor productivity growth increased at an average annual pace of 0.9 percent, as output grew by 2.8 percent and hours by 1.9 percent.

Although the number of car dealerships shrank slightly, from 28,300 in 1987 to 25,900 thousand in 1997, total employment grew by 13 percent over the period, from 925,000 to 1,046,100. The employment gains were primarily focused in the area of car repair and maintenance services. (26) Gains in efficiency in the service departments of car dealerships--mainly due to the increased use of computer diagnostic equipment and modular systems in automobiles--may have led to some of these productivity increases.

Auto and home supply stores generally followed the same pattern. With average output growth of 3.0 percent and hours increasing at an average annual rate of 1.7 percent, overall labor productivity increased by 1.2 per year for the 1987-99 period. Labor productivity gains were greater during the 1995-99 period than in the early part of the decade--1.6 versus 1.0 percent. In addition, as with car dealerships, the number of auto and home supply stores declined--from 46,000 in 1987 to 40,500 in 1997--while the number of employees increased--from 345,000 to 415,000. Again, employment gains were greater in the vehicle repair and maintenance segment of the industry rather than in sales personnel. (27)

Gasoline stations experienced higher average annual rates of labor productivity growth than either new and used car dealerships or auto and home supply stores. Over the 1987-99 period, annual output growth of 2.3 percent and a decline in all-person hours of 0.6 percent led to productivity increases in service stations averaging 2.9 percent annually. Unlike most retail industries, average annual labor productivity gains were greater for gasoline stations in the 1990-95 period (4.3 percent) than in the 1995-99 period (2.5 percent).

The number of gas stations fell by 13.9 percent--from 115,000 in 1987 to 99,000 in 1997. Labor productivity in the industry was aided by the long-term trend toward more self-service gasoline pumps and by a reduction in auto repair and maintenance services, which is a more labor-intensive activity. (28)

Apparel stores (SIC 56). Labor productivity in apparel stores increased at the second highest rate among all major retail groups--averaging 4.4 percent a year over the 1987-99 period. Output grew at an average annual rate of 4.5 percent, while hours grew only 0.1 percent per year. Most of the three-and four-digit SIC apparel store industries experienced a decline in the number of establishments and basically flat employment levels over this 12-year period.