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October, 1988, Vol. 111, No. 10

Variety stores experience
shifting trend in productivity

James D. York

Productivity, as measured by output per hour of all persons, in the variety store industry¹ decreased at an average annual rate of 0.5 percent from 1967 to 1986, compared with an average annual rate of 1.0 percent for the total nonfarm business sector of the economy during the same period.² The overall decline in productivity reflects an average annual decrease in output of 2.6 percent and a slightly slower rate of decrease in hours of 2.1 percent. (See table 1.) The decline in industry productivity was not a steady, gradual decline, but reflected a sharp falloff from 1972 to 1977, with modest increases in both adjoining subperiods.

In the 1967-72 period, productivity in the variety store industry advanced at a rate of 1.7 percent. Output rose at a rate of 2.7 percent and hours increased at a rate of 1.0 percent. Productivity and output both peaked in 1972. However, from 1972 to 1977, productivity declined at an annual rate of 4.3 percent, output declined at a rate of 7.1 percent, and hours declined at a 2.9-percent rate. It was the only sustained drop experienced by the industry and accounted for the overall decline in industry productivity. Within this period, the two largest declines were 13.0 and 6.5 percent, which occurred in 1976 and 1977. In those years, output fell by 14.7 and 6.7 percent, respectively, while hours dropped by only 2.0 and 0.3 percent.

Productivity turned around in 1978, increasing by 0.5 percent. This increase continued in 5 of the next 8 years. In the third subperiod, 1977 to 1986, productivity rose at an average annual rate of 1.4 percent. Output fell at a rate of 1.4 percent, but this was more than offset by the rate of decrease in hours of 2.7 percent. In contrast to the first subperiod, productivity in the 1977-86 subperiod grew in the face of declining output. In the first subperiod, both output and hours were advancing.

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Footnote

1 The variety stores industry is designated as Standard Industrial Classification (SIC) 5331. It consists of establishments primarily engaged in the retail sales of a variety of merchandise in the low and popular price ranges. Sales usually are made on a cash-and-carry basis, with the open selling method of display and customer selection of merchandise. these stores generally do not carry a complete line of merchandise, are not departmentalized, do not carry their own charge service, and do not deliver merchandise.

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