Scanner Data – Discussion on the Treatment of

Discounts in the CPI

Muhanad Sammar, Anders Norberg & Can Tongur

Statistics Sweden

Disposition

• Scanner Data in the Swedish CPI• The Swedish Practice• A New System• Data file• Different Rebates and Discounts• Regulations & Guidelines• Future plans

The Price Unit’s Current Position

• Scanner data in the CPI• One major retail chain (Approx 50%) - Daily necessities• Pharmacies (Total data)• The government owned chain of alcohol stores

(Total data)

• Studying scanner data from• Two more retail chains (Approx 35%)• A major railway operator

• Secure scanner data from• Petrol stations• Hardware stores• Electrical retailers

The Swedish Practice 1- Manual price collection (observed prices)

Store A1 Store A2 Store An

Price collector B1

Item 3

Item 2

Item iItem 4

Item 1

Price collector B2 Price collector Bm

The Swedish Practice 2- Transaction prices (weekly deliveries)

Store A1 Store A2 Store An

Item 3

Item 2

Item iItem 4

Item 1

Population C1

Population C2 Population Cn

A complete system has been built

• File validation• File structure• Translate variables' name• Ensure the quality

• Selecting – fixed basket• Price validation

• Limits• Market analysis• Aggregation

• Unweighted geometric mean• Weighted arithmetic mean

Why the Price Unit went to Use Scanner Data in the CPI?• Better quality• Less volatile data (three weeks)• “A study on Scanner Data in the Swedish CPI”• A report by Swedish Consumer Agency

• For 9% of the items in the survey, the prices were hard to find or could not be found at all.

• For 6% of the examined products, the prices on the shelves and packages were different from the purchased prices.

• Human errors

Scanner Data- Variables

• Excel sheet• Transaction prices (=Turnover/Units Sold)• EAN codes (bar codes)• Detailed information

• Product description

• Week/Year

• Store

• Quantity

• Brand

Different Rebates and Discounts

• Member card discounts

• Bonus offers (extras) like “3 for 2”

• Sale

• Coupon discounts

Member Card Discounts

• “Membership” offers are for the moment a steadily growing marketing strategy

• premium checks

• membership discounts

• offers on travel, hotels and various entertainments.

• For one of the retail chains, 80% of all their sales, registered in 2011, were made by members.

• The two major chains have millions of households tied to them through membership cards which are used actively

Bonus Offers (extras) - like “3 for 2”

• Example 1: Same product - $30 off

• Example 2: Different products - $30 off (split proportionally)

$ $ $

Coupon discounts

• Issued by the seller or the supplier (in paper)

• Accepted as any payment

• Issued by the seller or the supplier (Membership card)

Regulations & Guidelines

• The review of the Swedish Consumer Price Index (SOU 1999:124)

• HICP regulations

• Consumer price index manual: Theory and practice (The International CPI Manual)

• National Accounts manual

Price Unit's aspiration

• Secure more scanner data

• Introduce more scanner data into the CPI

• Introduce 5 digit level COICOP (year 2014)

• Enhance international cooperation

• Exchange knowledge and expertise on scanner data and on quality management

Summing-up

• New method of collecting prices• Update guidelines

• Update regulations

• A promising source of data• High quality of actual transactions

An issue of principle:

Should rebates and discounts in the Scanner Data be included or excluded in the target price

for the CPI?