Shrinkflation is a term that describes the practice of reducing the size or quantity of a product while keeping the same price or slightly increasing it. It is a form of hidden inflation that affects many food and household products, such as paper towels, shampoo, cookies, cereal and diapers.
Shrinkflation has become a common tactic for producers to cope with rising production costs and intense market competition. Instead of raising the price of a product, which would be more noticeable and potentially drive away customers, producers shrink the product by a small amount, hoping that consumers will not realize the difference.
The phenomenon has increased in the past year due to inflation and supply chain issues caused by the coronavirus pandemic. According to the federal government’s latest consumer price index, inflation rose 4.9% in April compared with a year ago. While inflation is down from a 40-year high of 9.1% in June 2022, it still remains elevated.
Shrinkflation reduces the value of shoppers’ money and affects their budgets. According to an annual survey by the Federal Reserve that was conducted in October and released last week, 54% of Americans said price increases had affected their budgets “a lot.” The percentage of people saying they were doing “at least okay” financially stood at 73%, a drop of 5% from the previous year.
Shrinkflation can also damage consumers’ trust and loyalty to brands that use this strategy. Academic research has shown that consumers are more sensitive to explicit price increases than to package downsizing, but that this practice can result in negative consumer brand perceptions and intentions to repurchase the product.
Some examples of shrinkflation include:
– Coca-Cola reduced the size of its large bottle from 2 liters to 1.75 liters in 2014.
– Toblerone slashed the weight of its chocolate bars from 200 grams to 170 grams in 2010.
– Bounty paper towels dropped from 98 two-ply sheets per roll to 90 sheets, a decrease of about 8%.
– Suave’s tropical coconut shampoo went from 30 fluid ounces to 22.5 fluid ounces, but kept the same price of $2.49.
– Oreo Double Stuf cookies got lighter: The “family size” package shrunk from 1 pound, 4 ounces to 1 pound, 2.71 ounces.
– Charmin Mega toilet paper shed 22 sheets off each roll but still cost $14.29.
– Huggies Little Snugglers diapers shrunk from 96 diapers per package to 84, while keeping the same $29.99 price.
– Cap’n Crunch’s peanut butter cereal dipped from 12.5 ounces to 11.4 ounces while also staying the same price.
Edgar Dworsky, a former Massachusetts assistant attorney general who runs two consumer-focused websites, Mouseprint.org and ConsumerWorld.org, has collected examples of shrinking products for years. He says the latest round of downsizing continues to affect how far shoppers’ dollars will go.
“Last year, a number of consumer brands quietly shaved off a product’s weight or its size while keeping prices the same — in hopes that shoppers wouldn’t notice,” he said. “The phenomenon, dubbed ‘shrinkflation,’ exploded last year and there’s little sign of a slow down.”
Pippa Malmgren, a British economist who is credited for coining the term shrinkflation in 2009, explained that it is a way for companies to stealthily boost profit margins or maintain them in the face of rising input costs.
“Shrinkflation is the practice of reducing the size or quantity of a product while maintaining its sticker price,” she said. “Raising the price per given amount is a strategy employed by companies, mainly in the food and beverage industries.”
Some experts warn that shrinkflation may get worse as inflation persists, pushing up how much manufacturers and retailers pay for both raw materials and labor.
“This phenomenon, known as shrinkflation, was already happening before the coronavirus pandemic, but is set to get worse as inflation persists,” said Business Insider.
Consumers who want to avoid shrinkflation may need to compare the prices and quantities of different products more carefully and look for alternatives that offer better value for money.
“Shrinkflation gives rise to hidden inflation as the price of a product doesn’t change, but the quantity does,” said Feedough. “This can make it more difficult for consumers to track what they are missing and may even lead to an emotion of being cheated.”
Relevant articles:
– ‘Shrinkflation’ still hitting store shelves, Chicago Sun-Times, May 30, 2023
– Shrinkflation: What It Is, Reasons for It, How to Spot It – Investopedia, Investopedia, December 15, 2021
– Shrinkflation – Definition, Causes, Practical Examples, Corporate Finance Institute, November 13, 2019
– What is Shrinkflation? – Causes, Effects, & Examples | Feedough, Feedough, February 21, 2023