The term shrinkflation isn’t new. It seems to come and go, associated with the cycles of inflation. If we consider Newton’s Third Law, that reflects as something like “to every action there is always an equal reaction,” then it is fathomable to believe that as something inflates, something else might deflate. Well, in this case, “shrink”. Economist Pippa Malmgren is often credited with coining the phrase “shrinkflation”. As a former advisor to President George W Bush, she was quoted in “The Economic Times”, on September 5, 2014, as describing it as a “phenomenon where companies charge consumers the same, or more, for less.” As 2022 has unfolded with interest rates climbing, supplies chains challenged, and oil prices skyrocketing, is shrinkflation happening again?
PROOF IS IN THE PUDDING
Shrinkflation isn’t something you need to imagine. A ride to any local grocery store will reveal that it is indeed happening. Some consumers on social media offered their shrinking experiences.
One of the first products identified was toilet paper. Remember when the pandemic first started, and people were fighting over toilet paper? Perhaps it’s something most would like to forget unless you’re someone who really stocked up. If you still have pandemic toilet paper, then you’re sitting on larger rolls. Jen says, “the same number of rolls, but definitely smaller rolls. I was shocked this time at how much I noticed a difference.”
Peppy was “cheesed off” that the size of cheddar cheese went from 500g to 400g and “the specialty cheese like jalapeno Monterey Jack might be smaller like 375g, (as) the bars are shorter and thinner.”
Ted, another online source had a longer list. It included Bacon & Pepperettes that both went from 500g to 375g, Dish Soap with under filled bottles, some reduced to 982ml, 946ml, and 897ml. He also identifies a cookie package that went from 18 to 15.
While in all these cases the size of the products has shrunk, the price has stayed the same (although in some cases has increased).
WHY DO COMPANIES SHRINK PRODUCTS?
The obvious answer is that companies shrink products because it helps increase profits and augment real or perceived increases in production costs. It is also more palatable to the consumer than seeing an increase in price. The psychological marketing of shrinking the product over raising the price has a history of working.
Think about your last shopping experience. It’s likely that you start and end your grocery shopping journey in the same spots, buying similar products as part of the overall routine. When you pick up that familiar brick of cheese, while you may notice a size difference, if the price hasn’t changed then you’re less likely to believe it impacts your bottom line. Plus, if the packaging hasn’t changed, psychologically your product support remains intact, boosted by all your positive sensory emotions. You may realize that you’re getting less, but because it isn’t costing you more, it only impacts your consumption behaviour at a later time, not necessarily your spending at the moment of purchase.
NON SHRINKFLATION PRODUCTS
When it comes to spending, the good news is that there are some products, like gasoline, that do not experience shrinkflation. The bad news is that because oil companies can’t really shrink the package for gasoline, they increase the price. When you put that into perspective and reflect on how you feel paying more for the same amount of gas, while you may still not like it, it might help you better understand the psychology in product size reduction and the impact on your consumption habits.
While the distance you need to drive to get to work or school doesn’t change, it’s difficult to alter how much gas you consume for necessities. Perhaps it becomes a matter of changing recreational driving habits. From a grocery perspective, while your costs may stay the same, you must consider portion control to maintain the same budget.
Some other alternatives to changing habits include brand comparison. It may be that a store (no-name) brand gives you larger portions. You may also look at bulk-buying and carrying some freezer and other stock at home. Lastly and something most people already do is to look for sale or coupon opportunities.
I get it and so do you, no one likes shrinkflation or the changing habits that go with it. If there is a pot of gold at the end of this rainbow, it’s that there has often been some sort of price or product reset once the economy improves. What we don’t know is when that will be or what emerging global events will continue to influence the size of the problem.
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