Scanner Data – Discussion on the Treatment of Discounts in the CPI

1. Scanner Data – Discussion on the Treatment of Discounts in the CPI Muhanad Sammar, Anders Norberg & Can Tongur Statistics Sweden

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

3. 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

4. The Swedish Practice 1- Manual price collection (observed prices) Store A1 Store A2 Store An Item 3 Item 2 Item i Item 4 Item 1 Price collector B2 Price collector Bm Price collector B1

5. The Swedish Practice 2- Transaction prices (weekly deliveries) Store A1 Store A2 Store An Item 3 Item 2 Item i Item 4 Item 1 Population C2 Population Cn Population C1

6. 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

7. 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

8. Scanner Data- Variables • Excel sheet • Transaction prices (=Turnover/Units Sold) • EAN codes (bar codes) • Detailed information • Product description • Week/Year • Store • Quantity • Brand

9. Different Rebates and Discounts • Member card discounts • Bonus offers (extras) like “3 for 2” • Sale • Coupon discounts

10. 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

11. Bonus Offers (extras) - like “3 for 2” • Example 1: Same product - $30 off • Example 2: Different products - $30 off (split proportionally) $ $ $

12. Coupon discounts • Issued by the seller or the supplier (in paper) • Accepted as any payment • Issued by the seller or the supplier (Membership card)

13. 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

14. 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

15. 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?