Shrinkflation

According to Wikipedia, shrinkflation “is the process of items shrinking in size or quantity, or even sometimes reformulating or reducing quality, while their prices remain the same or increase.” The term is relatively new, and is usually attributed to British economist Pippa Malmgren, who used it in a Twitter conversation in 2015 to describe Coca-Cola’s and Pepsi’s push to sell smaller 7.5-ounce mini cans over their standard 12-ounce cans, which would net them a premium of 2.79¢ per ounce on average. The motivation for doing this can usually be summed up as “an alternative to raising prices in line with inflation,” Wikipedia adds.

It turns out that there are varying levels of transparency to shrinkflation. In the aforementioned example of sodas, there’s at least a clear difference between the sizes of these cans, and one could partially credit those manufacturers with some level of truthfulness. But many companies are now embracing shrinkflation using far more devious methods.

There’s actually an entire section on Reddit dedicated to documenting examples of these. (For those not-in-the-know, Reddit is a website that hosts a large collection of digital bulletin boards called subreddits in which users discuss everything from news and politics to funny picture of cats. It is the seventh-most visited website in America, according to Alex.com.) A popular example from that site is for WD40. In the photo, the poster shows an old can that was 300ml next to a new one that is 275ml. Despite this reduction, the new can actually boasts that it includes an extra +25ml, as though base size had been 250ml all along. Another example shows a side-by-side of Darigold French Vanilla coffee creamer that shows a reduction from 32 fluid ounces to 28.

But the sneakiness doesn’t end with consumables. A surprising example shows a comparison of an old Ikea utensil holder and a new one. The new one is over 100g lighter, and the user reported that the lighter one keeps falling over as a consequence. —Scrolling through this subreddit is an interesting study of both frustration and amazement.

This phenomenon is most often employed by large corporations that mass manufacture products, as these reductions are likely to net quite a bit of savings at a large scale. That said, the process of reducing quantity or quality to protect a profit margin is a far older practice than the term “shrinkflation” is, and it can occur in any business, regardless of size. A locally owned restaurant, for example, might attempt to increase a profit margin by changing to cheaper ingredients. Oftentimes that results in a drop in quality. The downstream effect of such decisions is rarely to anyone’s long-term benefit.

The question that arises—the one we should all ask ourselves—is this game worth it? At the end of the day, shrinkflation is seen as a lesser evil when compared to simply increasing prices, but is it really? Is it really less evil? A price increase is honest, at least. After all, costs do go up, especially in a time of pandemic, supply-chain woes, and volatility in eastern Europe. Shrinkflation, on the other hand, is an affront to the customer experience because it’s an attempt to trick the consumer.

While large companies take steps to offer less value, now is a great opportunity for small businesses to differentiate themselves by offering more. That’s not always easy, as picking quality over quantity will assuredly result in higher costs, but at least your company’s reputation will be built upon a commitment to delivering the best products and services. Sure, customers who are primarily driven by sticker price aren’t likely to be swayed by this choice, but discerning customers who care about value and the overall experience are far more loyal anyway. They’re the ones you want to attract—the ones you want to keep.

So, what do your customers think of your business’s product and service offerings? Is the customer experience incredible? Do customers rave about you to their friends on social media? If you’d like to find out exactly what’s working in your business, and what isn’t, then reach out to us at The Brandt Group. Let’s work together to stand up to the trend of diminishing quality and quantity. Let’s resist shrinkflation. In short, let’s offer more.

So, why not start today?