Shrinkflation is the practice of reducing the size or amount of a product in a given package while maintaining the same sticker price. You know when you buy a box of cereal only to realize that it’s slightly smaller than you’re used to — even though you paid the same amount as before? That’s shrinkflation.
Companies may practice shrinkflation to combat rising back-end costs and maintain or increase profit margins. This can help them stay afloat when faced with growing competition or rising costs. But it’s no fun for the consumer (that’s you) — if you’re wise enough to pick up on it, that is.
Below, learn what you need to know about shrinkflation and how to deal with it.
Why Does Shrinkflation Happen?
First, let’s take a step backwards. Why is it called “shrinkflation” anyway?
When companies shrink their products and thereby inflate the price, that’s shrinkflation. For instance, perhaps you notice that the 14-ounce bag of pretzels you used to buy is now 12 ounces…while the price has stayed the same or risen.
Once you understand how it works, it’s pretty easy to understand why companies shrinkflate their products, as sneaky a tactic as it is. By offering less of their product at the same or a higher price, companies can increase their profit margins.
This, in turn, can help them battle rising production costs, competition from other companies, or simply drive more profits — which, in the end, is the main goal of every for-profit company.
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Examples of Shrinkflation
To avoid implicating any specific brand, let’s use an imaginary example to demonstrate how shrinkflation works and how you might notice it as a consumer.
• Say you’re at the grocery store, and you’re about to buy your favorite bottle of pomegranate juice. It’s a little pricey, but you love the taste — and besides, it’s good for you.
• You pick up the bottle, expecting to pay $8 for your typical 16 ounces. The bottle looks the same and costs the same, but it feels different in your hand. You go ahead and purchase it.
• When you get home, you notice that the almost-empty bottle in your fridge is just a little bit bigger than the new bottle. When you look closely, you notice the new bottle actually has 14.5 ounces, not 16.
You’ve just been shrinkflated.
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Is Shrinkflation Temporary?
Unfortunately, most financial experts say shrinkflation is here to stay, even if the economy rebounds and regular inflation decreases. In the world of making money, more is always better, and shrinkflation can help companies do just that: make more money with the same amount of work and less material.
And because shrinkflation usually happens gradually, many consumers don’t even recognize it’s happening. Instead, they just slowly see their grocery bills and household expenses increase. If companies were transparent and sold the same amount of product at a higher price, you’d likely notice — and perhaps balk — while you were putting the item in your shopping cart.
With shrinkflation, companies can get a financial boost without (hopefully) triggering any consumer pushback. But careful, observant shoppers may still pick up on this sneaky business tactic.
Is Shrinkflation Illegal?
Shrinkflation is currently legal, and companies are not required to announce changes in sizes or packing. Nor do companies typically say that new, smaller sizes are the same as before when they shrinkflate products (if they did, that would likely be considered deceptive).
Consumer advocates are, as you might guess, not usually fans of the practice. And, according to a 2023 study from YouGov, Americans are catching on — and they’re not happy about this practice. In that survey, 73% of respondents said they were concerned about shrinkflation and 41% were very concerned. It’s possible that a consumer group or an individual consumer might someday file a suit and possibly prove the practice is unethical.
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Tips for Noticing Shrinkflation
Want to be aware of whether or not you’ve been shrinkflated?
Given how expensive the cost of living is in general today in many parts of the United States, plenty of shoppers don’t want to fall victim to inflation of any kind, including the shrinky one discussed here.
Follow these tips to help you stay ahead of shrinkflation.
1. Pay Attention to Your Receipts
Although plenty of us forego paper receipts entirely, keeping them can actually be very instructive, particularly when it comes to avoiding shrinkflation. Keeping and comparing receipts, especially for products you buy often, may help tip you off to shrinkflation more quickly than you’d otherwise notice on your own. (Plus, you may get a better picture of how much you actually spend on groceries, as opposed to how much you expect to.)
2. Make a Price-inclusive Grocery List
If you’re really serious about beating the shrinkflation machine, grab that receipt you kept and make your next grocery list — with the approximate price you paid next to each item. That way, you’ll notice shrinkflation before it even happens as you’re about to put the item in your cart.
You can update this on a monthly basis or so to stay abreast of any shrinkflation moves, should companies roll out new, smaller-sized products for the same or a higher price.
3. Pay Attention to Price-per-unit When Shopping
When it comes down to it, price per unit or per-ounce of a product is the best way to understand what a product really costs. When items are shrinkflated, their price per unit or ounce goes up.
Many stores even list price-per-ounce information on the shelf or in an online listing, or you can also do your own quick division. If you see that, say, your favorite orange juice brand now comes in a smaller bottle for more money, you can decide whether to pay up or find another option. This may help you spend less on food.
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Should You Buy Shrinkflated Products?
From a consumer’s point of view, shrinkflation can feel just plain bad. Nobody likes to feel like they’re being deceived.
But only you can decide whether or not the juice is worth the squeeze, so to speak, when it comes to buying from a company that employs this tactic.
• If you really, really love that brand of pomegranate juice, you may just put up with it… and adjust your budget accordingly.
• If you strongly feel that this tactic is deceptive and it’s taking a substantial chunk out of your checking account, it may be time to find brands that don’t engage in this practice.
• You might decide to buy generic brands, or to shop at a warehouse or wholesale club store, like Costco or Big Sam’s. There, you may benefit from economies of scale—and stock up on your favorite items before their prices go up.
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The Takeaway
Shrinkflation is the practice of consumer goods being sold in smaller packages than in the past for the same or a higher price. In other words, your money goes less far. While shrinkflation can be a bummer, it doesn’t have to destroy your finances. By being a vigilant shopper and/or adjusting your budget, you can continue to enjoy products that have been shrinkflated. You can also make sure that your money is working as hard as possible for you by selecting a banking partner that offers favorable terms.
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FAQ
Why is shrinkflation allowed?
Shrinkflation is allowed because it hasn’t been proven deceptive or illegal. There isn’t a law saying companies must disclose packaging changes, nor are manufacturers or marketers claiming they are selling the same size as before. Perhaps if a lawsuit is filed and the outcome favors consumers, this could change.
What is a real life example of shrinkflation?
A common example of shrinkflation is the size of tuna cans, which have steadily gotten smaller over time — even as the price of each can has remained the same or increased.
How do you beat shrinkflation?
By paying attention to how much you spend on products and the amount of product you get each time you buy, you can stay ahead of sneaky tactics like shrinkflation. You can then decide if you want to buy that brand, a different one, or look into shopping at warehouse club stores.
Photo credit: iStock/AlexSecret
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