Shrinkflation isn’t a brand new phenomenon. As a time period, it gained important traction within the late 2010s and early 2020s, significantly during times of financial uncertainty and rising inflation. Nonetheless, what’s completely different as we speak is the eye shrinkflation as a tactic continues to achieve.
As of August 2024, the hashtag #shrinkflation has garnered 86 million views on TikTok, as customers take to their screens to reveal the manufacturers that use the tactic and share recommendations on getting the very best worth when purchasing. This heightened shopper consciousness is driving a shift in direction of extra considerate and savvier purchasing habits.
Be part of Mintel as we discover how manufacturers can navigate the complexities of shrinkflation. We’ll deep dive into modern methods within the Meals and Magnificence industries throughout the globe that will help you refine your messaging to align with customers’ evolving wants and preferences. Discover ways to strengthen your model’s resilience within the face of rising prices and keep forward in a difficult market panorama.
What’s Shrinkflation?
Shrinkflation, a intelligent portmanteau of “shrink” and “inflation”, is a refined but important technique the place firms scale back the dimensions or amount of a product whereas conserving the worth the identical, and even make worth factors barely increased. This type of worth inflation usually goes unnoticed by customers if the adjustments occur steadily over time. It’s a tactic more and more widespread within the Meals and Magnificence industries, enabling manufacturers to successfully increase costs with out making it too apparent to the common shopper.
Is Shrinkflation Authorized?
Shrinkflation could not break any particular legal guidelines, but it surely does tread a wonderful line with regards to ethics. Whereas there are not any authorized necessities to reveal refined dimension reductions, failing to obviously inform customers can simply be considered as deceptive and a misleading type of advertising.
Nonetheless, in industries like Meals and Magnificence, the place inflationary pressures are squeezing margins, shrinkflation is more and more seen as a obligatory technique. The important thing to sustaining shopper belief lies in transparency – if manufacturers are trustworthy about these adjustments, they will navigate the challenges of rising prices, whereas sustaining shopper belief.
Client Attitudes In direction of Shrinkflation and Inflation within the Meals Business
Within the UK, surging inflation is driving customers to alter their purchasing habits and undertake extra value-seeking behaviours, akin to switching to price range manufacturers. Over three in ten UK customers anticipate to buy extra at low cost retailers, with many additionally anticipating to purchase extra own-label packaged items. Whereas some meals manufacturers are passing on prices to customers, others are turning to shrinkflation, resizing their merchandise to keep up worth factors regardless of ongoing inflationary pressures.
As highlighted in our UK Meals Packaging Report, the rise in packaging materials prices is additional prompting producers to discover lighter weights and decreased packaging, which is able to reshape the calls for within the packaging business. Packaging firms will now have to be extra agile and collaborative to assist manufacturers sustainably mitigate prices.
Mintel has noticed that a number of chocolate manufacturers have employed shrinkflation to offset declining quantity gross sales. As an example, within the on a regular basis chocolate class—which incorporates single-serve and multi-serve codecs like bars, blocks, and luggage—the common quantity per unit bought decreased from 101.5g to 98g between 2021 and 2024, reflecting a 3.5% discount in dimension. Nonetheless, some merchandise have been downsized much more considerably to soak up value will increase with out elevating costs.
Notable examples of shrinkflation have made headlines, akin to Galaxy bars shrinking by 10%, Cadbury Dairy Milk decreasing the dimensions of sharing luggage and High quality Road tubs turning into smaller. Many customers show constructive reactions to the shrinking of their chocolate; half of UK customers say they might quite see their favorite chocolate bars get smaller than have the worth go up.
In Canada, the same story emerges. Over 4 in ten foods and drinks customers are open to smaller parts if it helps maintain costs beneath management. This means that manufacturers can use shrinkflation as a viable various to elevating costs. To have interaction customers within the face of shrinkflation, manufacturers can deal with clear communication and value-driven methods. By speaking brazenly, akin to by means of social media challenges, or packaging labels, manufacturers can construct belief and preserve buyer loyalty.
To additional mitigate the unfavourable influence of shrinkflation, some meals manufacturers are emphasising the standard of their substances. This method resonates with greater than half of UK customers, who would quite have a small quantity of premium chocolate quite than a bigger quantity of standard chocolate. Methods like this not solely justify the decreased dimension but additionally improve the worth of the product.
In the meantime, as of July 2024, the French authorities has launched a decree requiring retailers to tell customers of shrinkflation. This variation speaks to the rising mistrust between manufacturers and customers with regards to product costs. Though inflation in France has eased over 2024, the cumulative impact of worth will increase over the previous two years implies that many customers are nonetheless feeling the pinch, with 71% reporting they’ve been affected by will increase in foods and drinks costs (consumer entry solely). Whereas customers could settle for smaller pack sizes as a cost-cutting measure, they anticipate manufacturers to be clear and clear about these adjustments. To take care of belief, it’s essential that manufacturers talk brazenly about changes in product sizes.
Discover our Meals Market Analysis
Client Attitudes In direction of Shrinkflation and Inflation within the Magnificence Business
Shrinkflation as a tactic has been a long-standing technique within the magnificence business. Nonetheless, the elevated use of social media platforms like TikTok and Instagram are putting this apply beneath scrutiny as customers are empowered with information and are exposing the refined reductions in product dimension or worth will increase which may have in any other case gone unnoticed. This heightened consciousness implies that manufacturers threat being seen as opportunistic, undermining belief and supporting a story that companies are prioritising revenue over shopper welfare.
To assist reasonable the unfavourable influence of shrinkflation, manufacturers within the magnificence business are innovating with methods that preserve shopper confidence and engagement. One efficient method is providing sampling choices alongside unaltered full-sized merchandise. This technique not solely reassures customers that they aren’t being tricked into paying extra for much less but additionally aligns with their need for worth. Minis, samples, and testers are significantly interesting to magnificence customers, particularly Technology Z, who respect the chance to discover merchandise with out producing waste. By offering these trial choices, manufacturers can foster loyalty whereas minimising the notion of shrinkflation as a purely profit-driven transfer.
One other highly effective technique is the introduction of refillable packaging within the magnificence business, which resonates with budget-conscious customers and people dedicated to sustainability. Over three in 5 US make-up customers present curiosity in cosmetics in refillable packaging. Equally, 66% of German beauty customers imagine all grooming merchandise needs to be refillable, with virtually three-quarters having used or eager to strive refillable choices. This method not solely appeals to scrub and eco-conscious magnificence customers but additionally presents a cheap resolution that enhances model loyalty. By emphasising the twin advantages of decreasing packaging waste and saving cash, manufacturers can place themselves as each socially accountable and consumer-friendly, successfully countering any unfavourable perceptions related to shrinkflation.
As customers are pressured to reevaluate their buying priorities throughout occasions of economic uncertainty, the strain is on magnificence manufacturers to show their value and real help to their viewers. A technique of doing that is to construct belief and preserve loyalty with clear worth methods. A standout instance of this initiative is the US skincare model Cocokind. In a daring transfer, Cocokind took to Instagram to share a visible breakdown of its product prices, detailing salaries, company prices, purchasing, advertising, and reinvestments. Cocokind’s initiative contains customers within the model’s journey, making them really feel valued and knowledgeable concerning the causes behind pricing selections, subsequently, making them extra more likely to settle for will increase.
Discover our Magnificence Market Analysis
Challenges Manufacturers Face When Implementing Shrinkflation
Whereas it may be a viable technique, shrinkflation presents a number of challenges that manufacturers want to contemplate:
Client backlashIn the age of social media, shopper vigilance of shrinkflation has reached new heights. TikTok has change into one of many go-to platforms to voice their issues, with #shrinkflation garnering 86 million views as of August 2024. When customers discover shrinkflation, they’re fast to share their findings on-line. Customers are recognized so as to add images of the product and model emblem to show the adjustments, usually tagging the model immediately on platforms like X (previously generally known as Twitter) the place customer support groups have to reply publicly to the allegations. This public show can influence shopper perceptions of the model’s worth by fostering mistrust and may be considered as a type of deceitful packaging, resulting in a extra educated and sceptical shopper base.
Regulatory scruity The potential pitfalls of shrinkflation can prolong past shopper notion to incorporate regulatory challenges. As we noticed with the French authorities not too long ago introducing a decree requiring retailers to tell customers of shrinkflation, this apply can entice scrutiny from shopper safety businesses and governmental our bodies. Manufacturers should concentrate on the regulatory atmosphere and make sure that any changes to dimension or pricing are communicated clearly to not solely preserve compliance but additionally their popularity.
Lengthy-term imapct on model valueWhile shrinkflation could present short-term reduction from rising prices, its repeated use can have lasting unfavourable results on the model’s worth and popularity. As customers change into extra conscious and delicate to those techniques, it may erode their belief, resulting in a decline in loyalty, thus, making it tough for the model to keep up its aggressive market place.
Innovation Alternatives for Manufacturers Navigating Shrinkflation
Beneath, we summarise the highest 4 methods manufacturers can implement to assist preserve customers’ belief when utilizing shrinkflation.
Communication and trustClear and efficient communication about shrinkflation is essential for sustaining belief. Manufacturers needs to be clear concerning the causes behind their determination to shrink product sizes, akin to elevated manufacturing prices or provide chain challenges. Through the use of social media, press releases and different communication channels, manufacturers can current shrinkflation as a obligatory adjustment to assist customers save throughout tough financial occasions.
Empathetic supportDuring financial turndowns, customers usually tend to favour manufacturers that present empathy and understanding of their monetary struggles. Manufacturers can create empathetic messaging campaigns and supply tangible monetary help to look real and supportive of shopper experiences throughout powerful financial occasions, serving to to bolster belief and loyalty amongst customers.
Reveal extra valueTo counteract the unfavourable notion of shrinkflation, manufacturers ought to deal with highlighting the extra worth they supply past simply the product dimension. Manufacturers can intensify their worth proposition by providing a mix of psychological, purposeful, and financial advantages. This method helps customers understand they’re making sensible decisions quite than compromising on high quality.
Transparency in pricingWhen worth will increase are obligatory, manufacturers ought to use easy language to obviously clarify the necessity for the rise. Linking these explanations to a customer-centric worth narrative, akin to enhancing product high quality or supporting sustainable practices, can additional improve belief and preserve a constructive relationship with customers.
Wanting Forward with Mintel
Whereas shrinkflation could also be an unavoidable response to financial pressures, how manufacturers navigate this apply can considerably influence their relationship with customers. As customers change into extra knowledgeable and sceptical, it’s important for manufacturers to prioritise clear communication, exhibit empathy, and spotlight the extra worth they supply. By explaining the explanations behind shrinkflation and emphasising their dedication to high quality and sustainability, manufacturers can rework this problem into a chance to strengthen shopper belief and loyalty, even in powerful financial occasions.
For manufacturers trying to get strategic perception into their international sustainability messaging, check out Mintel’s new Client Sustainability Examine 2024-25.
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