## Canadian grocers make \$3M per year from penny-rounding: UBC study

Ottawa announced plans in 2012 to phase out the copper coin

Grocery stores across the country are cashing in on the demise of the penny, according to a young researcher at the University of British Columbia.

Third-year economics and mathematics student Christina Cheng has written a paper that says Canadian grocers are making \$3.27 million per year from penny-rounding.

Ottawa announced plans in 2012 to phase out the copper coin, and as a result, cash purchases are now rounded up or down to the nearest five-cent increment.

Cheng wanted to know whether the change was benefiting shoppers or stores.

“Penny-rounding always becomes a guessing game,” the 19-year-old explained. “It’s a fun guessing game because it might not hurt in the short run, looking at several cents, but in the long run, I wondered if this actually accumulates.”

Curious, she decided to use her spare time outside of class to investigate.

First, Cheng enlisted a friend and they spent about a month and a half documenting more than 18,000 prices at grocery stores, taking pictures of price tags and entering the data into a spreadsheet.

They found that most prices ended in .99 or .98 — numbers that would result in bill totals being rounded up for cash transactions, if tax is not applied.

Cheng took the data and used a computer simulator to create “grocery baskets” with various items. She adjusted different variables such as the numbers of items and amount of taxes, and factored in data from the Bank of Canada on what payment methods consumers are most likely to use.

Cheng said her analysis found that grocery stores are profiting from penny-rounding.

In the end, Canadian consumers don’t end up paying much extra, but the rounding on cash transactions can mean big money for grocery retailers across the country, with each store standing to collect \$157 per year, Cheng said.

In October, a paper Cheng wrote on the research won a competition for the best undergraduate student paper at the International Atlantic Economic Society’s conference in Montreal. Her study is slated to be published next June in the Atlantic Economic Journal.

The Retail Council of Canada disagrees with Cheng’s findings, said Karl Littler, the group’s vice president of public affairs.

The study’s methods don’t reflect real grocery baskets or take into account the impacts of various provincial taxes on bill totals, he said, noting that the average grocery bill is \$53 and consists of a larger number of items than Cheng’s simulated baskets included.

Littler said the council’s members have reported anecdotally that penny-round is about 50-50, with half of the bill totals being rounded up and benefiting stores, and the other half being rounded down and benefiting consumers.

“There’s no nefarious plan here to scoop pennies,” he said.

Cheng said she isn’t looking to demonize Canada’s grocery industry, and simply wanted to look at an issue that affects most Canadians on a daily basis.

Her work on penny-rounding was all done outside of class time as a labour of love, which Cheng said really surprised her professors.

“Tying research with application is what I love to do,” she said.

### Just Posted

##### Collision slows rush hour traffic in Kelowna

Expect delays at K.L.O. Road and Richter Street on your commute Tuesday evening

##### Height not wanted on Kelowna’s Manhattan Drive

City staff said proposed five-storey building poses challenges

##### Thompson-Okanagan population grew despite COVID-19: report

The Chartered Professional Accountants of BC said there are 8,462 new residents in the region

##### COVID-19 outbreak at Kelowna General Hospital declared over

Three people tested positive for the virus — two patients and one staff — one of whom died

##### Traffic stalled by Harvey Avenue crash in Kelowna

One lane is open as crews clean up after crash at Harvey Avenue and Leckie Road

##### 10 years ago: Where were you during the 2011 Vancouver Stanley Cup Riots?

Smashed-in storefronts, looting, garbage can fires and overturned cars some of the damage remembered today

##### Canada needs a national Indigenous History Month, Vernon MLA agrees

Harwinder Sandhu supports motion to recognize June as month to advance reconciliation efforts with First Nations

##### Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

##### POLL: Low-key Canada Day in the works for Vernon

Councillor calling for Indigenous recognition for 2022

##### Active living centre 2022 referendum planned in Vernon

City hoping to get Coldstream and Areas B and C back on board

##### Green light given to downtown Vernon road closure

Single block of 30th Avenue to close over summer months to boost business

##### Dedicated Salmon Arm student earns scholarship to pursue post-secondary education

Savannah Lamb is graduating from Salmon Arm Secondary with a \$40,000 scholarship