Perceive Shrinkflation and Efficient Advertising and marketing Methods

Shrinkflation isn’t a brand new phenomenon. As a time period, it gained important traction within the late 2010s and early 2020s, notably in periods of financial uncertainty and rising inflation. Nonetheless, what’s completely different at present is the eye shrinkflation as a tactic continues to realize.

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 tips about getting the most effective worth when buying. This heightened shopper consciousness is driving a shift in the direction of extra considerate and savvier buying 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 shoppers’ evolving wants and preferences. Learn to strengthen your model’s resilience within the face of rising prices and keep forward in a difficult market panorama.

Shrinkflation, a intelligent portmanteau of “shrink” and “inflation”, is a refined but important technique the place corporations cut back the dimensions or amount of a product whereas holding the value the identical, and even make value factors barely increased. This type of value inflation typically goes unnoticed by shoppers if the adjustments occur progressively over time. It’s a tactic more and more frequent within the Meals and Magnificence industries, enabling manufacturers to successfully elevate costs with out making it too apparent to the typical shopper.

Shrinkflation might not break any particular legal guidelines, but it surely does tread a high-quality line in terms of ethics. Whereas there aren’t any authorized necessities to reveal refined dimension reductions, failing to obviously inform shoppers 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 needed technique. The important thing to sustaining shopper belief lies in transparency – if manufacturers are sincere about these adjustments, they’ll navigate the challenges of rising prices, whereas sustaining shopper belief.

Within the UK, surging inflation is driving shoppers to vary their buying habits and undertake extra value-seeking behaviours, akin to switching to finances manufacturers. Over three in ten UK shoppers 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 shoppers, others are turning to shrinkflation, resizing their merchandise to keep up value 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 lowered packaging, which can reshape the calls for within the packaging trade. Packaging corporations will now must 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. For example, within the on a regular basis chocolate class—which incorporates single-serve and multi-serve codecs like bars, blocks, and baggage—the typical 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 price will increase with out elevating costs.

Notable examples of shrinkflation have made headlines, akin to Galaxy bars shrinking by 10%, Cadbury Dairy Milk lowering the dimensions of sharing baggage and High quality Road tubs changing into smaller. Many shoppers show constructive reactions to the shrinking of their chocolate; half of UK shoppers say they’d somewhat see their favorite chocolate bars get smaller than have the value go up.

In Canada, an analogous story emerges. Over 4 in ten foods and drinks shoppers are open to smaller parts if it helps maintain costs below management. This implies that manufacturers can use shrinkflation as a viable various to elevating costs. To interact shoppers within the face of shrinkflation, manufacturers can give attention to 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 keep buyer loyalty.

To additional mitigate the destructive impression of shrinkflation, some meals manufacturers are emphasising the standard of their substances. This method resonates with greater than half of UK shoppers, who would somewhat have a small quantity of premium chocolate somewhat than a bigger quantity of normal chocolate. Methods like this not solely justify the lowered 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 shoppers of shrinkflation. This variation speaks to the rising mistrust between manufacturers and shoppers in terms of product costs. Though inflation in France has eased over 2024, the cumulative impact of value will increase over the previous two years signifies that many shoppers are nonetheless feeling the pinch, with 71% reporting they’ve been affected by will increase in foods and drinks costs (consumer entry solely). Whereas shoppers might 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.

Shrinkflation as a tactic has been a long-standing technique within the magnificence trade. Nonetheless, the elevated use of social media platforms like TikTok and Instagram are putting this apply below scrutiny as shoppers are empowered with information and are exposing the refined reductions in product dimension or value will increase that may have in any other case gone unnoticed. This heightened consciousness signifies that manufacturers threat being seen as opportunistic, undermining belief and supporting a story that companies are prioritising revenue over shopper welfare.

To assist average the destructive impression of shrinkflation, manufacturers within the magnificence trade are innovating with methods that keep shopper confidence and engagement. One efficient method is providing sampling choices alongside unaltered full-sized merchandise. This technique not solely reassures shoppers that they aren’t being tricked into paying extra for much less but additionally aligns with their want for worth. Minis, samples, and testers are notably interesting to magnificence consumers, particularly Era 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 trade, which resonates with budget-conscious shoppers 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 shoppers consider all grooming merchandise must be refillable, with virtually three-quarters having used or eager to attempt refillable choices. This method not solely appeals to clear and eco-conscious magnificence consumers but additionally gives a cheap resolution that enhances model loyalty. By emphasising the twin advantages of lowering packaging waste and saving cash, manufacturers can place themselves as each socially accountable and consumer-friendly, successfully countering any destructive perceptions related to shrinkflation.

As shoppers are pressured to reevaluate their buying priorities throughout occasions of economic uncertainty, the stress is on magnificence manufacturers to show their price and real help to their viewers. A technique of doing that is to construct belief and keep loyalty with clear value 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, buying, advertising, and reinvestments. Cocokind’s initiative consists of shoppers within the model’s journey, making them really feel valued and knowledgeable in regards to the causes behind pricing selections, due to this fact, making them extra more likely to settle for will increase.

Whereas it may be a viable technique, shrinkflation presents a number of challenges that manufacturers want to think about:

Under, we summarise the highest 4 methods manufacturers can implement to assist keep shoppers’ belief when utilizing shrinkflation.

Whereas shrinkflation could also be an unavoidable response to financial pressures, how manufacturers navigate this apply can considerably impression their relationship with shoppers. As shoppers change into extra knowledgeable and sceptical, it’s important for manufacturers to prioritise clear communication, show 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 seeking to get strategic perception into their international sustainability messaging, check out Mintel’s new Client Sustainability Research 2024-25.

Subscribe to Mintel’s free publication, Highlight, to get unique content material and insights delivered on to your inbox.