The practice of hiding rising costs by shrinking the size of everyday products is often referred to as "shrinkflation." It is a common tactic used by consumer product companies to cope with increasing production costs while trying to maintain the appearance of stable pricing. Instead of raising the price of a product outright, manufacturers reduce the size or quantity of the product, effectively passing on the cost increase to consumers indirectly.
There are several reasons why companies might resort to shrinkflation:
Cost Management: Companies may use shrinkflation to manage their own production costs, particularly when input costs like raw materials, labor, or transportation increase.
Consumer Perception: Increasing the price of a product can be perceived negatively by consumers and may lead to decreased sales. Shrinkflation allows companies to maintain the same price point, at least on the surface, to avoid consumer resistance.
Competitive Pressure: In highly competitive markets, companies may be hesitant to raise prices because it could potentially lead to a loss of market share. Shrinkflation provides a way to manage costs while staying competitive.
However, shrinkflation can have negative implications for consumers:
Decreased Value: Consumers may feel cheated when they realize they are paying the same price or even more for a smaller product, leading to a perception of reduced value for their money.
Confusion: Some consumers might not immediately notice the change in product size or quantity, leading to confusion and potential dissatisfaction when they eventually discover the difference.
Inflation Impact: While shrinkflation might help companies temporarily, it does not address the underlying inflationary pressures in the economy.
Despite its drawbacks, shrinkflation is a relatively common practice, and consumers often encounter it with various products over time. Being aware of such changes can help consumers make informed purchasing decisions and be more mindful of price changes and product sizes.