SOURCE: ECRM

ECRM

August 10, 2012 06:00 ET

ECRM: Drought Not Affecting July Food Prices

SOLON, OH--(Marketwire - Aug 10, 2012) -  Efficient Collaborative Retail Marketing (ECRM®), a leader in business innovation and technology, analyzes promoted retail prices to help predict fluctuations in the economy and the retail industry overall. While developing the CPPS (Competitive Promotional Pricing Summary), a strong relationship between retailer promotional price points and macro-economic factors, particularly inflation, were self-evident. Historically, ECRM's regression-based predictions did not include a large range of items, rather the predictions were based on specific contributory items used in the CPI. However, in an effort to generate more predictive reports, ECRM developed a model that forecasts the entire food-at-home category that is used within CPI reports.

In May 2012, the food-at-home category was 8.5% of the total CPI. By inserting multiple promotional pricing datasets into a customized regression model, ECRM is able to predict the sum of six sub-categories on an individual level. Using the BLS weights to consider each of the six sub-categories, ECRM created a basket that is extremely correlated (0.9673) with the food-at-home category. 

The current drought conditions have yet to lead to an increase in food prices, we predict that the food-at-home index will decline for the month of July by 3 points to 229. Visit http://adcompare.marketgate.com/PromotionalReflections/FoodAtHome.pdf for a detailed look at ECRM's predictions. 

Since the CPI and ECRM's CPPS are mere sample studies from very different sources, we are encouraged to be able to predict food-at-home with a surprisingly strong 0.9356 R². Neither CPI reports nor ECRM's CPPS can measure inflation with 100% accuracy, however, since each index is independent, unbiased, and highly correlated, we find evidence of statistical integrity and value in measuring macro-economic factors like inflation.

About ECRM:
ECRM® is a global leader in retailer promotional data syndication and analysis. ECRM® provides business solutions by integrating process, vision and technology. ECRM has revolutionized the sales and marketing process by uniting retailers and suppliers of the consumer packaged goods industry at Efficient Program Planning Sessions, or EPPS® events.

If you are interested in learning more about ECRM's CPPS, please visit http://ecrm.MarketGate.com.

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