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A mother and her two girls were on their weekly run to the local grocery store. The younger girl picked up a pack of noodles, quite excited that a new flavour had arrived. The mother was happy for their little joys. She was always amazed at how the noodle pack price had almost not changed since she used to enjoy them. Quite an achievement, she thought, being able to maintain price despite the decade which had passed.
One thing she overlooked was the small print at the back crimp. Did you ever wonder how the noodle company managed to keep its price nearly similar for 10 years, despite increasing costs of ingredients, manpower, oil, apart from other things involved. Well, that’s because of shrinkflation. Shrinkflation, a blend of two words, Shrink and Inflation, was coined by British economist Pippa Malmgren in 2009 to explain a yet new phenomenon. If one took careful notice on the back of the noodle pack, and compared it to the yesteryears’ packs, most things would be the same (including the price), but the difference, perhaps, would be stark in the grammage of noodles in the pack. What the mother missed was that the 100g noodle pack had reduced to 70g over the years, a 30% reduction in the weight. That in a nutshell is shrinkflation.
Consumers are notorious for being extremely price sensitive when it comes to the products, they consume regularly. It is no wonder that brands advertise loudly, “Rs Two/Five/Ten only”, making price points attractive for the consumer. The Rs. 1 sachet of shampoo, to Rs. 2 pack of biscuits are seen as pandering to consumers need of easy consumption packs.
Manufacturers try various strategies to beat the rising costs such that they protect their profit margins with growth. Herein comes, shrinkflation, essentially a ‘content reduction’ strategy, viz., reducing the size of a product while the price remains the same. So how has shrinkflation helped the marketers? Market research surveys have clearly shown that consumers are more focused on price rises, the aspect most noticeable to the consumer. Strategies to attract consumers have often found that consumers, given a choice between a bigger sized product with a price hike, or smaller product size with little or no change in price, consumers almost always opted the latter.
It is abundantly clear that the price of a product is more noticeable than the size or weight in the pack. With rising costs of inputs, shrinkflation is here to stay. Businesses will continue downsizing products to keep themselves relevant to consumers. What then should a consumer do, you ask? Caveat Emptor, or ‘let the buyer beware’. The best way to combat Shrinkflation is to keep oneself aware, get the opportunity to look around for competitive products, and shop wisely.
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Views expressed above are the author's own.
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