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Consumer Behavior
Shrinkflation: Deception or Good Business?
Things consumers can do to avoid being affected by shrinkflation.
Posted September 22, 2023 Reviewed by Ray Parker
Key points
- Shrinkflation is becoming a common practice for product manufacturers.
- Consumers are getting less for their money as the products shrink but the price remains the same.
- There is also an upside to shrinkflation because it helps people reduce calories.
At a time, globally, when consumers are concerned about the cost of living, they tend to be on the lookout for bargains. It is worth being aware of shrinkflation.
What is shrinkflation?
Globally, producers of goods have been noted to decrease the size and content of products but still charge the same price as the previously bigger packet. This is referred to as shrinkflation and is typically more common during recessions.
From a business perspective, shrinkflation may be used to avoid increasing product prices as they manage to decrease overall costs, or even to attempt to align their products with governments' wishes to reduce high sugar and fatty foods. However, in some instances, it may also be done to increase profit margins.
Over the last decade or so, several examples of shrinkflation have been identified in the media and it is clear that it is a technique applied to all sorts of products, including, chocolate, toilet paper, and breakfast cereal. In the U.K. between 2012-2017 over 2000 products had shrunk in size and not increased in price. While shrinkflation is a common practice, relatively little is still known about how consumers respond to such practices.
Recently, a well-known French supermarket has even decided to put up labels in their stores that alert shoppers to products that have undergone shrinkflation, according to The Guardian. The aim? To try and encourage manufacturers to rethink how they price products. But does it change what consumers buy?
Why not increase prices and keep sizes the same?
Consumers can be forgiving of price increases if they consider the price to be fair. For example, the price may be seen as fair if the consumer knows it is the result of increased supply costs. Therefore, there is no choice but to increase the price.
However, most of the time people who purchase products such as food and shampoo will not be aware of the specifics of why companies have increased the price. Thus, it can be a gamble to do so.
One problem is that consumers tend to focus on the price of products, even if it is flagged to them that the price and size have previously been different. Hence, a shrinkflation option is perceived as being more attractive than a price increase. This means that manufacturers should be cautious in price increases as they are more likely to put the consumer off.
Avoiding products whose sizes shrink
If you are concerned about shrinkflation, the way to ensure that you are getting value for money is by being aware and focusing on the price per unit. That way you can ensure that you purchase the item that charges the least per unit. This is particularly easy to do as an online shopper as comparisons are easily flagged when conducting a simple web search, which can provide price per unit of weight or volume.
The upside of shrinkflation for consumers
In some cases, reducing the content size may be good for consumers, especially for foods high in sugar and fat content. As obesity is now classed as a pandemic, the size reduction could be positive for those who crave unhealthy foods. It may help them to consume fewer calories.
Apart from this, it is hard to imagine what the benefits from a consumer's perspective would be because they are getting "less bang for their buck."
References
Yao, J., Oppewal, H., & Wang, D. (2020). Cheaper and smaller or more expensive and larger: How consumers respond to unit price increase tactics that simultaneously change product price and package size. Journal of the Academy of Marketing Science, 48(6), 1075-1094.
