• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Blogs » Think Tank » Smaller Sizes, Higher Cost: What's Going On With 'Shrinkflation'?

Think Tank
Think Tank RSS FeedRSS

Smaller Sizes, Higher Cost: What's Going On With 'Shrinkflation'?

General Mills
General Mills Inc. logos appear on boxes of Cheerios and Rice Chex brand cereal. Photo: Bloomberg.
December 17, 2021
Stefan Read, SCB Contributor

In recent trips to the grocery store, consumers might have noticed that package sizes are shrinking while prices remain the same, or in some cases increase. This phenomenon isn’t in their imaginations — it’s real, and is being referred to by some experts as “shrinkflation.”

Many of consumers’ favorite brands are taking part in the practice. Mondelez International recently reduced the size of Oreo cookie packs by nearly 10%, from 303 to 270 grams. More obviously, Quaker Oats Co. took a whole bar out of boxes of its chewy granola bars, so now you get five instead of six. Lay’s chips, General Mills, Nutella, and Tropicana are among the major brands also participating in the shrinkflation trend.

Shrinkflation is happening because of three major factors. First, the cost of raw materials is rising, due in part to fires and droughts in North America and Russia, flooding in Europe, and fire and frost in Brazil, all among the biggest food-producing areas of the world. Second, higher fuel prices and supply chain backlogs are increasing transportation cost. And lastly, increased labor costs are the result of workers realizing that they have a lot more bargaining power post-pandemic.

When there’s a change in the cost to manufacture an item, food brands have four choices. First, they can do nothing and eat the cost — something no manufacturer wants to do. Second, they can change ingredients, requiring reformulation of the product, negotiation with new ingredient suppliers, and even re-tooling of production facilities. Third, they can raise prices, a move that’s generally noticeable to consumers, who might reach for a competitor’s product instead. And fourth, they can engage in “shrinkflation,” an option that’s likely to be less visible to consumers. That said, the trend is becoming so widespread and abrupt that 75% of consumers say they have noticed shrinkflation happening.

The shrinkflation that shoppers are seeing in grocery store aisles is part of a bigger trend of rising food prices that are projected to cost the average family of four up to $700 per year, the largest increase we’ve ever seen. This has led to changes in consumer behavior. According to a recent study from Dalhousie, two out of five Canadians say they’ve changed their behavior to save on food — for example, buying less meat or shifting to private-label products.

What can we expect from grocers in response to shrinkflation? Smart grocers will want to show up on the side of consumers, by finding new ways of helping them out. According to recent data, almost half of grocery consumers think grocers don’t make it easy to save money. That presents a challenge but also an opportunity.

Savvy grocers are planning to help consumers navigate this issue in four major ways:

  • They’re going to start promoting private-label alternatives to the national brands. These are typically products with similar ingredients but at a lower price, because you’re not paying the “brand” premium. 
  • They’re increasing promotion of what’s being called “enjoy tonight” products, which are discounted as they approach their “best before” dates. This move is part of a broader food rescue and zero-waste trend that’s just beginning to take hold. 
  • They’re partnering with apps to help save consumers money, turning to coupon aggregators like Flipp and RetailMeNot as well as “enjoy-tonight” apps like FlashFood. 
  • They’re leaning into being transparent. That may seem counterintuitive, but the most important thing for grocers is that customers keep shopping with them. The specific brand of orange juice they buy while in the store isn’t as important. If grocers don’t want to risk consumers seeing them as complicit in this sneaky shrinkflation, they should embrace transparency — for example, showing the unit price on labels, not just the total price.

It’s unclear how long shrinkflation will be with us, but its impact on grocery consumers is already being acutely felt. Grocers have an important role to play in helping to alleviate the stress that shoppers are experiencing, by embracing consumer-centric and outside-the-box strategies.

Stefan Read is senior vice president of engagement advisory and strategy practice lead with Jackman.

Consumer Packaged Goods Food & Beverage Retail

RELATED CONTENT

RELATED VIDEOS

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • A PERSON HOLDS UP A TABLET COMPUTER IN A WAREHOUSE, SUPER-IMPOSED BY A GRAPHIC SHOWING A COMPLEX WEB OF SUPPLY CHAIN ELEMENTS

    Three Post-Pandemic Actions for Repairing Global Supply Chains

    Data Management (Big Data/IoT/Blockchain)
  • A MAN IN A SUIT SHAKES HANDS WITH A WOMAN IN A HARD HAT, NEXT TO A STACK OF CONTAINERS

    Three Procurement Technology Evolutions for 2023

    Sourcing/Procurement/SRM
  • DOCUMENTS BEARING THE INSIGNIA OF US CUSTOMS AND BORDER PROTECTION LIE ON A TABLE

    New CBP Regs Call for Greater Diligence by Brokers in Reporting Security Breaches

    Freight Forwarding/Customs Brokerage
  • The blank stare of a child's eye who is standing behind what appears to be a wooden frame

    The Alarming Continued Rise of Modern Slavery in Supply Chains: How Procurement Can Help Reverse the Trend

    Sourcing/Procurement/SRM
  • A GROUP OF WORKERS RANGED IN AN OFFICE, OF DIVERSE RACE, GENDER, AGE AND PHYSICAL ABILITY

    Podcast | The Supply Chain Workforce of the Future Is Already Here

    HR & Labor Management

Digital Edition

Scb nov 2022 sm

2022 Supply Chain Innovator of the Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Honeywell Intelligrated IFM
Infor Inmar Keelvar
Kinaxis Korber Lean Solutions Group 2H
Liberty SBF Locus Robotics Logility
LogistiVIEW Lucas Systems MCA Connect
MPO Nvidia Old Dominion
OpenText ORTEC Overhaul
Parsyl PMMI QIMA
Redwood Logistics Ryder E-commerce by Whiplash Saddle Creek Logistics
Schneider Dedicated Setlog Holding AG Ship4WD
Shipwell Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing