Is “shrinkflation” a better option than charging higher retail prices?

Sep 09, 2022

A recent morning consultation investigation concludes that only 25% of American adults have not noticed “shrinkflation” in all grocery categories, and many of them are looking for alternatives.

Shrinkflation refers to the practice of decreasing the size or quantity of an item while keeping the price the same.

According to the survey of American adults conducted between August 19 and 21, of those who noticed the shrinkage:

  • Forty-eight percent chose to buy another brand;
  • Forty-nine percent chose a generic product instead;
  • A third chose to buy products in bulk rather than small packages;
  • Thirty percent stopped buying from specific brands when they noticed a contraction.

The overall survey revealed that 65% of all respondents are “very” or “somewhat” concerned about shrinkage. The top category where shrinkage was seen was snacks, followed by pantry items and meat.

A defense group last week in France started a petition to stop the practice. The group, food watch, accused that the shinflation is “misleading on sizes and prices for regular consumers.”

However, the strategy is common even outside of inflationary periods since price is the factor most taken into consideration by consumers. Most developed countries now have laws mandating the display of unit prices to protect consumers. Nevertheless, the ongoing chatter about inflation is raising awareness of this practice.

Frito-Lay confirmed Quartz that he reduced the bag size of Doritos to 9.25 ounces from 9.75 ounces. A Frito-Lay representative said Quartz“Inflation hits everyone…we’ve taken a bit out of the bag so we can give you the same price and you can still enjoy your chips.”

A study by researchers led by Macquarie University of Sydney earlier this year found that downsized sizes were better than price hikes because “the price is more noticeable and given more weight than size.

A slightly higher price with smaller packaging was even more preferable.

The researchers concluded by The conversation,Our findings confirm what marketers have clearly gleaned over the past decade. Consumer cognitive biases are strong. So you can expect ever more shrinkage and more ‘price cut’, ‘discount’, ‘new price’ and ‘price match’ tickets to grace supermarket shelves. »

DISCUSSION QUESTIONS: To what extent should retailers be willing to accept shrinkage moves from suppliers? Do you agree that consumers prefer to see smaller packages than higher prices?

Braintrust

“The contraction is inevitable in an economic downturn – and retailers are gaining from it, as private label sales increase.”

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About Catherine Sturm

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