Rethinking shrinking: why brands need to stop using shrinkflation

Any brands that think shrinkflation is a great strategy need to think again. At one time, consumers might not have noticed they were getting 10% less chocolate bar for the same price, or they might have accepted it, albeit grudgingly. But now, consumers are fighting back.  

And it’s not surprising as some of the tactics brands are using appear deliberately deceitful – such as increasing the dimensions of the box whilst reducing the weight of the goods inside. There are social media pages dedicated to spotting the worst offenders and people are threatening to boycott even much-loved brands. The issue has been raised in government on both sides of the Atlantic, and in France, it’s become compulsory for retailers to display information about shrinkflation so that consumers can make informed decisions.

Some brands are already struggling with perceptions of value as consumers have traded down to private label alternatives and found that they like them so more shrinkflation and skimflation will only erode value perceptions even further and damage trust at the same time. And Christmas is coming.

The retailers are have announced their seasonal ranges and it seems they are going all out on affordable luxury this year, with showstoppers and centrepieces such as M&S’s build your own charcuter-tree, or Sainsbury’s penguin-shaped bao buns and lobster thermidor crumpets. Compared to these offers, the news that the Cadbury Buttons Selection Box has reduced from 375g to 340g is more likely to conjure images of Scrooge than of Santa. It is likely that these ranges will do well as they have understood what consumers really need at Christmas – to splash out, have something joyful and spend a little more after a tough year – but to get incredible value for money while doing so.

With inflation slowing and oil prices coming down, costs are stabilising and it’s time for brands to adopt a more generous approach and pass some of this value on to consumers. And value is about much more than just an assessment of unit cost. To win back trust and justify premium pricing, brands need to refocus on what consumers really want and need, and find ways to deliver it that the retailers can’t. If not, they risk losing more ground to private labels in the new year.

Brands need to:

1. Just stop shrinking. Research by Which last year showed that consumers are likely to notice both shrinkflation and skimflation, and that 75% said shrinkflation was not a transparent practice and 76% said it wasn’t helpful. It also showed that 45% of consumers would prefer sizes to say the same and prices to go up.
2. Buck the trend. Rather than just stopping these tactics, how about standing out in the market by giving consumers a little extra? PepsiCo, for example, has added 20% extra to bonus bags of snacks, in response to complaints about shrinkflation. This could be a better strategy than just bringing prices down as consumers might attribute a price drop to the retailer rather than to the brand.
3. Be transparent. If there are still good reasons to change prices or sizes, make it clear that this is what is happening. For example, Arla Foods UK publicised that it had reduced Lurpak spreadable packs from 500g to 400g, but the company also reduced the price so that “consumers that are tightening their belts at the end of the month” could afford a smaller version of the product; this comes across as an authentic and customer-focused move rather than money-grabbing.
4. Emphasise quality. Remind consumers about what makes your brand special in the first place. Private labels may look the same, but do they contain organic, locally sourced or hand-made ingredients? Have the same brand heritage of innovation? Or use traditional, less intensive processes, for example? The ‘Stick to the Original’ campaign by Magnum is a great example of how to communicate that some brands just can’t be replaced with a dupe.
5. Innovate. Look for the innovations that will increase the value of the product in ways that are relevant for the consumer, based on understanding their needs. For example, Fairy Liquid Max Power uses an innovative bottle design which, as well as being convenient, helps people waste less of the product.

We can’t know for certain how macro-economic forces with shape the world in the coming months. And it remains to be seen how successful brands will be over the coming Christmas period. But regardless of whether inflation rises or falls, there is no longer any excuse for brands to use sneaky shrinkflation tactics instead of giving consumers products to be excited about.