You may be surprised when you first notice that your Arm & Hammer laundry detergent ran out that much more quickly. Maybe you just brush it off or blame yourself for using bigger portions, but shrinkflation is a marketing strategy that seems to veer dangerously close to downright gaslighting consumers. The term was first coined as a term in 2009, and shrinkflation, a compound word referring to the practice of shrinking the size of a good while inflating the unit price, has continued to become more and more of a common practice since then.
It’s only now, however, in the wake of the shutdowns and the Russian invasion of Ukraine, in combination with 40-year record inflation rates, that shrinkflation has been adopted to such an extent that it’s garnered national attention. Unlike in decades before, this time, with the help of social media and global connectivity, consumers are able to communicate about what’s going on, warn each other, share examples, and ultimately confirm a phenomenon that’s otherwise hard to notice.
The Perfect Storm
For background, in order to understand the concept, we need to look at the economic conditions that are causing shrinkflation. Essentially, the underlying cause of shrinkflation is increased costs on the producer’s end. Today, the perfect storm of adverse economic conditions has created the ideal climate for the implementation of shrinkflation. Supply chain issues caused by the Ukraine crisis plus the sudden influx of dollars printed by the Federal Reserve to stimulate the post-shutdown economy, have contributed to soaring inflation rates. Another issue is the abrupt retirement of the Baby Boomers, which basically creates a workforce vacuum, with more jobs than people willing or available to work. To entice more workers, the labor costs are rising. In order to afford the labor costs, prices must also go up.
Shrinkflation is the practice of shrinking the size of a good while inflating the unit price.
All of these factors — the higher labor, commodity, and shipping costs — inevitably lead to greater costs of production and distribution for any good. It’s the unique situation created by the current economy that has resulted in concerningly heightened input costs around the globe. In the face of these heightened costs, corporations are faced with three choices regarding how to deal with this issue.
The first option is for the company itself to absorb the blow of the high costs and spare the consumer. Although this may be good for increasing business against competitors, it’s ultimately not an appealing or advantageous strategy for a corporation whose main goal is to pursue profit. This leaves the consumer as the one who must bear the brunt of the input costs.
This leads us to the second option, which is to simply raise the price of the goods. This provides more transparency to the customer, but will also decrease demand, especially for a replaceable and less crucial product. Raising prices is especially risky due to the possibility of competitors not following along and thus outcompeting the firm.
For these reasons, many companies are choosing the safe and subtle route by way of shrinkflation, the third option. The company maintains a constant price for the good and instead quietly decreases the amount that is sold per unit. The irony is that this strategy is exactly the same unit price-wise as raising the cost would be, only shrinkflation is a lot less noticeable. This strategy effectively rides on the assumption that people only check the price and not smaller details like the net weight and unit price of a package. It’s only natural that the price would seem like the most important factor when deciding whether to buy a good. In this way, companies utilize basic psychology to their advantage.
What You Don’t Know Won’t Hurt You
So, what products have been affected by shrinkflation? A lot of popular food items have been shrinkflated. General Mills “family size” cereal has shrunk by 10%, from 19.3 ounces to 18.1, Wheat Thins went from a pound to 14 ounces, Chobani Flips now have a smaller package, and even Reese’s peanut butter cups decreased from 1.6 ounces to 1.5.
Shrinkflation is exactly the same unit price-wise as raising the cost, but less noticeable.
But it’s not just food items that have been altered either; many household goods are no longer what they seem. Dove body wash was reduced from 24 to 22 ounces, Crest toothpaste diminished by 7%, and Charmin toilet paper has been decreasing over the past 60 years, ultimately by 90%. (And that’s not all. See here and here for more examples of shrinkflation.)
While these changes may seem insignificant, with the threat of an impending recession in the near future, every ounce could make a difference. More importantly, though, it’s the ethics that matter. Shouldn’t consumers have the right to know about changes in their products?
Insulting the Consumer
The corporations using shrinkflation hoped that people wouldn’t pick up on it or wouldn’t care about the changes. While ignorance may be bliss for a while, it was only so long until consumers noticed. Around the world, customers are documenting and calling out the shrinkflation that’s happening before their very eyes.
When questioned about the changes, companies either didn’t comment or gave another excuse, like Gatorade did when asked about the 4 ounce decrease in bottle size from 32 ounces to 28 ounces. The company said it was simply indenting the middle of the bottles to make them easier to hold, but didn’t address the increase in price. The worst thing a company can do for its public image is to lie or deflect the truth. Deception is bad marketing for any firm and hurts its image for consumers, damaging its reputation in the long run. Although shrinkflation may seem like a fast and easy solution to unprecedented increases in costs, sneaky solutions are not the answer.
Consumers value transparency and are willing to pay extra for a company that’s honest.
With consumer sentiment at its lowest since 2011, it would be advantageous for a company to distinguish itself from the crowd and be truthful about the changes it’s making. In today’s society, consumers especially value directness and transparency from a brand, and are in fact willing to pay extra for a company that’s honest. Not only will they pay more, but customers will give that brand their long-term loyalty, a crucial aspect of marketing. The best choice for corporations would be the seemingly more difficult road of openness instead of the easy way out: shrinkflation. Regardless of whether they choose to raise prices or shrink packaging, the key is to tell consumers what’s going on. Corporate transparency can go a long way toward building trust.
The best way to combat the fallout of inflation, and now shrinkflation, is through being informed and aware. Check out this website that documents instances of shrinkflation to make sure you’re not being taken advantage of. Research alternatives and substitutes for a good to make sure you’re always getting the best bargain, especially because there’s a risk of recession on the horizon. And of course, check the unit price and net weight as well as the overall price on a product from now on. Make sure you shop smarter and don’t get manipulated by the firms. Finally, practice careful budgeting in all spheres so that your money can stretch further.
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