Shrinkflation, a concept that’s been all over the news and causing outrage among many, is not a particularly new concept. Receiving its name from the fact that while the product sizes are shrinking, prices aren’t. Up until now, no solid data had been provided and while we knew it was happening the extent of shrinkflation may still come as a surprise. According to The Office of National Statistics (ONS) as many as 2,529 products have shrunk in size over the past five years but are still sold at the same price.
Although certain categories have certainly been hit harder, confectionary for example, products from toilet rolls to fruit juice have been impacted by shrinkification. The most memorable and most used example may be when Toblerone, owned by Mondelez, spaced out its triangles and reduced the weight by roughly 10%. Although there has been some speculation as to the accuracy of the claims, expensive imports such as cocoa have been held responsible.
Two options… Shrink the product or increase the price
Economists often assume shoppers make decisions rationally, that price is the most important aspect in decision making. The idea that people focus on and use one prominent measure, such as price, as representation of the whole product is known as representative bias. While it’s true people can be rational, in the real-world shoppers are emotional and pay less attention to price than often assumed.
The most important aspect?
If brands have done their job right and created trust between themselves and their shoppers, brand loyalty is difficult to break. If price was all that mattered, many brands wouldn’t succeed – with so many offering the same products at different prices. So why do shoppers buy the more expensive options again and again? Because they’ve connected with that brand at an emotional and often subconscious level. Gallob suggests consumers with an emotional connection to a brand spend 46% more on that brand, compared to those they have no emotional attachment to.
That said, wouldn’t it be better to be honest with customers? To tell them there is a price increase and some of that cost will need to be split with them? Putting trust in them to stick with the brands they love?
Instead, shrinkflation leaves customers feeling deceived. While firms may be able to ensure product size doesn’t appear to shrink by much, the recent uproar may have been avoided if the packaging had also changed and brands had announced and explained the alterations.
In the end, the power lies with the shopper, but brands can always help persuade their decision by building a trusted relationship. Done right, shopper loyalty acts as a strong barrier to brand competition and shoppers will in fact pay more.