The issue of shrinkflation is a significant concern for 73% of those surveyed expressing worry about this phenomenon. That's according to a recent poll conducted by YouGov, a research data and analytics group. Specifically, 41% are highly concerned and 32% report feeling somewhat concerned.
Shrinkflation typically influences consumer products. Chocolate bars, coffee bags, and cereal boxes have lost a few ounces of volume. Beverage bottle sizes may decrease from two to one liter, while paper goods have fewer rolls or sheets per roll. The reduction in product size or quantity is only sometimes apparent. Still, it can add up over time, resulting in less value for their money.
Why Companies Use Shrinkflation
Boris Castillo, CFA, CFP Wealth Manager at Amenity Wealth, says, “Companies know that consumers are time-pressed.” As a result, consumers are more likely to be price sensitive than size sensitive. Castillo illustrates that if someone goes to the supermarket and sees the package of their favorite beverage with the same artwork and price as before, they're unlikely to notice that they're only buying ten cans instead of 12 for the same price, or that each can only hold ten fl oz as opposed to 12.”
Castillo describes this as companies exploiting consumers' preoccupation. If consumers think nothing's changed, they are likely to continue the buying behavior they are used to before inflation kicks in.
When faced with growing raw materials, labor, or transportation expenses, many businesses turn to shrinkflation as a strategy. Instead of raising prices explicitly, which could turn off buyers, they gradually lower portion sizes. This method permits companies to keep their profit margins stable while having a less noticeable effect on prices.
Effects of Shrinkflation
Shrinkflation can harm consumers by raising the cost per unit, producing a false perception of value, making price comparison difficult, diminishing satisfaction, and disproportionately impacting low-income consumers. Customers must be aware of this occurrence and understand how to avoid it.
How To Avoid Shrinkflation
Focus on Price per Unit
Consumers can guard against shrinkflation by keeping an eye on the unit price to give you a better idea of the product's actual cost and allow you to make more informed value judgments. When comparing petrol prices, we typically focus on the price per gallon being displayed. Similarly, note how prices are listed per ounce or unit in grocery stores as displayed on shelf labels.
Try Discount Apps and Websites
Castillo claims that if you shop online, services like Honey can instantly advise you where else you may find the same item for a lower cost. To take advantage of low sales trends when you have a greater chance of obtaining a cheaper deal, they can also tell you whether there has been a recent average uptick or downtick in pricing.
Focus On Packaging Changes
Look for “new and improved” designs on familiar products. You may see if there were any cuts to the product's weight or quantity by comparing it to earlier versions. By reading the labels carefully, ensure you are still receiving the same amount as before.
Businesses may employ several marketing strategies to divert customers' attention away from shrinkflation. They might, for instance, utilize flashy red fonts or designs to divert attention from size reduction. Curved edges, hollow bases, and other shapes have recently become commonplace in the evolution of product packaging to tamper with product quantity.
Castillo suggests looking for substitutes. “For example, he says, “If you're a fan of calorie-free, flavored seltzer water, there's a universe out there much bigger than just La Croix. Many times, store brands can be good enough.”
Never assume a product's size or quantity will always be the same. To ensure you receive the best value for your money, compare the costs of several brands and packages.
Check for Reviews
Customers are more likely to voice concerns about an item after using it, especially if the product doesn't work as expected. You can learn about the product's quality and quantity by reading the ratings and reviews left by previous buyers. Check out the competition by comparing prices and sizes before purchasing.
Consider Buying In Bulk
According to Castillo, retailers such as Sam's Club and Costco will require you to purchase in large quantities. Still, the unit price will be closer to consumers' pay before the inflationary increase. Sometimes, you can buy in bulk by contacting the manufacturer or wholesaler directly.
Castillo observes that stores are very much at the forefront of the slowing economy. They understand that a marginal profit or break even on a product is preferable to no return at all. As a result, if you're a regular customer, they'll specifically be more likely to work with you and try to fix the issue. “It's becoming too competitive an economy for any vendor to completely ignore your requests.” Castillo says. “Gone are the days where we had too many people looking for too few rolls of toilet paper, and vendors are keenly aware of this.”
Avoid Shrinkflation in 2023
While shrinkflation may seem like a harmless strategy for companies to save on production costs, it can have detrimental effects on consumers. The rise in cost per unit, false perception of value, difficulty in price comparison, and diminished satisfaction can take a toll on consumer budget's and purchasing experience. By taking the steps to be able to identify and avoid shrinkflation, consumers can ensure they are getting their money's worth.
This article was produced and syndicated by Wealth of Geeks.
Amaka Chukwuma is a freelance content writer with a BA in linguistics. As a result of her insatiable curiosity, she writes in various B2C and B2B niches. Her favorite subject matter, however, is in the financial, health, and technological niches. She has contributed to publications like Buttonwood Tree and FinanceBuzz in the past and currently writes for Wealth of Geeks.