Shrinkflation makes the news in North Carolina and South Carolina supermarkets - smaller sizes, but same cost

Have you noticed your favorite chocolate is a little smaller, there are fewer biscuits in the same-sized package or bags of chips contain more air?

If you haven’t, you’re not alone.

What marketers call a “contents reduction strategy” is more popularly known as “shrinkflation” – reducing the size of a product while the price remains the same. It’s a comparatively recent phenomenon in the North Carolina and South Carolina supermarket business, reflecting the pressure on manufacturers to keep prices down. In fact the word “shrinkflation” entered the lexicon only in 2009.

In November 2016, chocolate lovers erupted into social media fury after the chocolate manufacturer reduced the weight of a version of Toblerone bars to 150 grams from 170 grams by spacing out its triangular chocolate peaks more widely. Other examples of shrinkflation affecting the confectionary industry include Mars reducing the sizes of M&Ms packets by up to 15 percent.

So why does shrinkflation seem preferable when it is effectively the same as putting up the price?

First, there is the “silver lining effect” – a mixed outcome consisting of a small gain (a lower price) and a larger loss (an even smaller size) is more favorable than a net outcome consisting of just a smaller loss (price increasing or package downsizing) alone.

Second, price is more noticeable and is given more weight than size. Thus shoppers were influenced more by the price drop than by the reduction in package size. This attributed to an automatic cognitive response – people have inherent preference toward lower prices.

In most developed countries, consumer protection laws require retailers to display unit prices to enable shoppers to cut through the proliferation of marketing signals designed to attract attention. However, there’s no obligation to show the “before” unit price, so it’s difficult to gauge unit price changes.

It seems to be equally important for North Carolina and South Carolina retailers to advertise unit price changes to help consumers make more informed purchases. But results confirm what marketers have clearly gleaned over the past decade. Consumers’ cognitive biases are strong. So you can expect ever more shrinkflation and for ever more “price drop”, “discount”, “new price” and “price match” tickets to adorn supermarket shelves.