Shrinkflation
Shrinkflation is the process of reducing the quantity sold in a package or reformulating the quality of a particular product while the price remains unchanged or sometimes even increasing slightly. It can also be called as package downsizing or grocery shrink ray.
Shrinkflation occurs during the times of inflation and lower consumer demands. Shrinkflation is very commonly done by companies manufacturing basic goods. One of the best examples of shrinkflation is by Kleenex tissue papers. According to InvestorPlace, a small box of Kleenex now has 60 tissues, few months back, it used to have 65 tissues. In United Kingdom, Cadbury Diary Milk reduced the size from 200 grams to 180 grams for the same price, in the year 2019. You can read about more examples of shrinkflation in this InvestorPlace article.
Impact on Unit Pricing
Due to shrinkflation, the price per unit increases. For instance – the price of 65 tissues used to be $0.84, which means the price of one tissue was $0.0129. Since the quantity is reduced now, the price per unit has increased to $0.014.
Reducing small quantities may not be significant to consumers but it helps companies cope with inflation. Shrinkflation allows companies to increase their operating margin and profitability. Downsizing is considered legal until the quantity is clearly mentioned on the packages.
Consumers are often against shrinkflation, because it is a stealthy practice that lacks transparency for consumers. Corporate bodies deflect attention from product shrinkage with “less is more” messaging, for example by claiming health benefits of smaller portions or environmental benefits of less packaging.
How to Avoid Shrinkflation
One of the most common ways suggested by experts to avoid the impacts of shrinkflation as a consumer is by comparison shopping and buying from competing brands post comparison of quantities and prices.
Make sure to compare unit prices. Store owned brands are usually cheaper but not always, so do your research. Buying in bulk could also help you combat the effects of shrinkflation on your wallet. You may also look for opportunities to cut spending by reviewing the flexible spending categories in your budget.
Sources: investorplace.com, thepennyhoarder.com/, www.news.com
