You may have heard of inflation, but what about ‘shrinkflation’?
If it’s not one thing it’s another. This time it’s a phenomenon called ‘shrinkflation’ where consumers pay the same price for less when it comes to buying goods.
According to CBS News, this is not a new trick, this practice plays a role during periods of rising inflation or economic downturns.
One of the results of the COVID-19 pandemic placed cost pressures on a number of industries along with their products thanks to various reasons which include difficulty in hiring workers, trucking shortages, and price increases for raw materials.
“If you are a manufacturer or retailer, you have a couple of choices — you can keep prices the same, which means you have lower margins. Second, you can run fewer promotions, and that definitely happened in the last year,” said Anne-Marie Roerink, the founder of market research firm 210 Analytics. “And the third measure is to keep prices the same but have a little less in the box.”
Everything from berries to corn has a surge in prices which in turn puts both food producers and grocery stores in a tight spot.
Because of this, they’ve been pushed to make the decision whether the sticker price on the products will increase or the package for the products will get smaller.
Due to a good number of shoppers basing their purchase decisions on price, instead of examining the weight of the package, producers and grocers have gone for the latter — shrinking the packages that the products are in.
“In times of high inflation, your ribeye will be cut a little thinner, so you are around that price point that a consumer believes is ideal,” Roerink continued.
While shrinkflation is not ideal from the consumer’s perspective, it works for grocers and manufacturers allowing them to maintain their margins which are already on the thin side for grocery stores.
Those margins equal about one or two pennies on the dollar.