Prices of some products in the supermarket are going up, yet many of us may be oblivious to it. That’s because prices didn’t really change. Wait, what? You ask?
You may not have noticed the increase in prices for some of these products because their prices remain the same, but their sizes have shrunk without you noticing it. This happens internationally and is also known as “shrinkflation”.
It is said to be happening more frequently now due to rising inflation and a hike in commodity prices due to the war between Russia and Ukraine. When prices of raw materials such as oil, sugar, eggs, wheat, and so on go up, so does the cost of producing the product. Hence, to keep pace with the rising costs, manufacturers adopt shrinkflation tactics.
So, where can you see signs of shrinkflation and how does it affect you as a consumer?
Shrinkflation Is A Kind Of Hidden Inflation
Shrinkflation describes the global phenomenon of shrinking products without any change in the sticker price of the product. Often, consumers are unaware of the reduced size or weight of the product.
By reducing the size or weight of the product whilst maintaining the same price, manufacturers have effectively raised the per unit price of the product. Due to clever marketing or packaging, consumers may not notice this change and may end up paying more without realising the lower quantity. This type of price increase can be seen as a form of hidden inflation.
Examples Of Shrinkflation And How You Can Spot Them
Common household products are the ones that tend to shrink more frequently. These include consumable items like potato chips, chocolates, soft drink cans, cereals, and many more.
Some marketing tactics used by manufacturers to hide shrinkflation include redesigning the product packages and using words like “New and Improved”. This draws your attention away from noticing the weight difference between the new product and what you got with the old version.
Consumer lawyer Edgar Dworsky has been documenting examples of shrinking products from various brands such as Breyers, Keebler, Kellogg’s, and Nescafe over the years.
The following example of Snyder’s pretzel was sourced from his website. The new packaging of the product has a tagline that says, “new look, same great taste”. However, they fail to tell you that it weighs less than the previous version.
Credit: Mouseprint.org
So, the next time you see a product with new packaging, don’t just look at the price but also compare the volume or weight with the previous version.
Shrinkflation does not stop with just packaged products. It can also happen with cooked food, where the portion of your meat or rice is reduced for the same price. More recently, it has been happening with hotel packages too. Daily housekeeping, which was the norm before the COVID-19 pandemic, is now an opt-in option for some major hoteliers, like Hilton and Marriott in the United States.
Read Also: Step By Step Guide To Redeeming Your CDC Vouchers
Companies Adopt Shrinkflation To Stay Competitive And Retain Their Customers
Like everyone of us, manufacturers also have to grapple with rising costs in an inflationary environment. This includes the cost of raw materials, manufacturing, labour, packaging, and transport, which raise the cost of production.
Therefore, manufacturers have two choices to deal with the higher production costs. One is to increase the price of the product while keeping the quantity the same, and the other is to keep the same price but reduce the quantity.
Should companies perceive their customers as price-sensitive, they would probably choose to reduce the quantity rather than raise the price. This allows the companies to remain competitive while not compromising on their margins.
Read Also: Inflation Watch: 7 Things That Are Getting More Expensive
Consumers May View Companies Adopting Shrinkflation Tactics Negatively
When companies employ shrinkflation tactics, it becomes tough for consumers to calculate the increase in the price of the product. This inadvertently gives rise to hidden inflation.
Furthermore, when the products are shrunk in this manner, the price level becomes misleading to consumers. Especially in comparison to other competitor brands that may not have used such tactics on their products.
On the whole, such practices are against the general interest of consumers and could be perceived to be an unfair practice. Companies risk tarnishing their brand reputation as consumers may avoid their products in the future due to a lack of trust.
Consumers Could Fight Shrinkflation By Using Price Kaki
As consumers, we naturally want to get a better deal on the items that we buy. But more often than not, it requires us to make an extra effort to source or hear about these best deals. Fortunately for us, there is the Price Kaki mobile application, which does the heavy lifting of identifying the best deals around us.
The Consumers Association of Singapore (CASE) introduced the Price Kaki mobile application in September 2019 to help consumers make more informed purchasing decisions. The app allows consumers to compare the prices of groceries, household items, and hawkerfare across different retailers based on their current location. It also shows any discounts offered by the retailers.
Currently, the app only shows the retail price of each item. But by the third quarter of this year, the app will also include the unit pricing metric alongside the retail price of each item. Consequently, this will allow consumers to compare the prices of products from different brands by their weight or volume.
Furthermore, CASE expects to increase the coverage of groceries and household essentials from 4,000 to 10,000. It will also cover an additional 200 foodcourts and coffeeshops, on top of the existing information on 114 hawker centres.
Consumers can tap into this crowdsourcing tool the next time they need to shop for their groceries. You will know exactly how much you are paying for the item and be better able to spot a bad deal.
Though you may not be able to stop shrinkflation from happening, you can take decisive steps by being aware of how much you really are paying for each product.
Read Also: Step-By-Step Guide (In English) To Shopping On Taobao In Singapore
