Shrinkflation in Focus as Shoppers Still Feel the Pinch

For those who have followed some of our recent articles, it’s clear that at TCC, we are exploring the theme of value creation and what it really means for shoppers and the retailers aiming to capture their loyalty.

This brings us to the subject of ‘Shrinkflation’ – the practice of reducing pack sizes while maintaining or even increasing the price. This tactic, as old as time for suppliers managing cost pressures., is now gaining attention as Carrefour recently made headlines by deploying in-store signage that identified 26 items where shrinkflation had occurred. This move aimed to alert shoppers to the fact that the products value-for-money had been diminished.

The price warnings implemented across all Carrefour stores in France and were intended to remain until the targeted suppliers agree to cut prices. “Obviously, the aim in stigmatising these products is to be able to tell manufacturers to rethink their pricing policy,” said Stefen Bompais, the director of communications at Carrefour, in an interview.

Undoubtedly a risky move, as it could potentially harm relationships with major suppliers like Nestlé, Unilever, PepsiCo and Lindt & Sprüngli, however, the upside is likely to bolstering trust among shoppers and position Carrefour as a consumer advocate.

Shopper research from IGD indicates that shrinkflation is not universally seen as a negative. Less affluent shoppers are to shrinkflation, as it allows them to still purchase certain brands or categories while staying within their grocery budget. Conversely, more affluent shoppers prefer pack sizes to remain the same and would rather pay a higher price. Similar attitudes prevail for ‘skimpflation’ – the tactic of downgrading product specifications or reducing the amount of more expensive ingredients in products – with a significant minority of shoppers preferring that over being unable to afford the products.

The courage to call out shrinkflatio” fro’ branded manufacturers is a challenging task for many retailers, partly because some have faced challenges over the same manoeuvre within their private label assortments. For some retailers, it is more comfortable to call out perceived excessive price increases by delisting the brands in question. High-profile spats between supermarkets and brands in markets like the UK, Belgium and Germany, have seen brands disappear from shelves for until the retailer / supplier impasse has been defused.

Again, as seen with the Carrefour example, this strengthens the reputation of supermarkets as acting on behalf of the shopper, creating positive optics, especially in an inflationary climate. The message it sends to shoppers is a strong one – we care about creating value for you, something we at TCC champion and applaud.