What is Shrinkflation?

It's a neologism that is seldom used by people and doesn't always have a direct translation in the local language of a country. Surely, everyone knows what inflation is, how it works, and its influence on prices. Unfortunately, most of the countries are currently affected by this phenomenon. Inflation has many negative aspects, but we will explore its impact in a separate article. Shrinkflation is kind of like a cousin of inflation. So, let's delve into its mysteries...

During times when the economy experiences recession, high inflation, political or economic uncertainties, disruptions in supply chains, producers are directly affected by the prices of raw materials used in production, which rise over time. On the other hand, the costs of conducting business also increase to maintain profitability and return on investment. Thus, producers are also burdened with the pressure to raise prices to adjust to the economic situation. However, price increases are often negatively perceived by consumers and may lead to reduced sales and decreased overall competitiveness, especially when similar products enter the market at lower prices. Such product availability is advantageous for consumers as it allows for a switch to more financially suitable options. However, for producers, it poses a challenge. This phenomenon is well-known to producers, prompting the question of how to address this issue without losing customer base.

Thus, the concept of shrinkflation was created. The term can literally be broken down into "shrink" and "inflation". It means that raising the price of a product can be achieved in a slightly different manner – by reducing the size of the packaging while maintaining the previous price. This allows producers to keep prices stable by producing less, effectively resulting in a "hidden price increase".

You may recall the scandal surrounding Toblerone chocolate and how they used shrinkflation. Toblerone, shaped like the Alps' symbol – the Matterhorn mountain, reduced the content of its packaging by increasing spaces between the "peaks" in the chocolate. Consequently, less chocolate is needed for each bar, yet the package size remains the same, making the difference less noticeable.

Of course, this is a widely known case, but are all products and their changes equally noticeable to consumers? Definitely not. Therefore, a good indicator here is the weight of the product but also the price per unit. This provides information on the cost per kilogram, liter or number of washes.

Tips

In Promoscore, you can sort by price per unit to compare products from a similar category easily!