Is Shrinkflation a Good Business Strategy?

Shrinkflation

For businesses of all sizes, making money and yielding profits is key. Managers try all sorts of strategies to ensure operations are profitable both in the short and long term. One that many businesses have been using recently is shrinkflation. 

What Is Shrinkflation?

Shrinkflation is a modern phenomenon whereby a product decreases in size, yet its price stays the same or increases. Thanks to this, a consumer is getting less value for their money. 

For example, a packet of sweets used to weigh 200g and had a recommended retail price of £2. The packet size was then reduced to 180g, yet its base price remains the same, i.e., £2. In this case, consumers are paying the same but getting less. In other words, they’re getting fewer sweets, ten percent fewer, to be exact. 

Shrinkflation can happen to practically any sort of product. Lots of people don’t notice it. Sometimes, the packet or container is the same size; the only difference is that inside, there’s less of the product. You would only know shrinkflation had occurred if you checked the information and saw its reduced weight. Sometimes, the changes can be apparent, and people notice. 

Shrinkflation, thankfully, can’t affect everything. It can’t affect digital products and services, for example. If you play games online, you won’t one day find that you get less gaming content despite paying the same amount of money. However, it can affect games with monetary prizes, such as esports tournaments or online casino games. These games have prizes you can win based on the amount of money you pay so that one-way shrinkflation would work to have a lower jackpot or lower 1st place prize for the same cost. Luckily for consumers, the best casino sites prefer to increase rather than decrease their jackpot sizes. Whether you’re playing live dealer games, slots, or video poker, there are plenty of ways to win. The best online casinos in the UK will also have generous welcome offers, such as a £100 bonus and 50 free spins or a £300 bonus and 150 free spins. As long as you choose one of the best sites, shrinkflation won’t be an issue.

Why Does Shrinkflation Happen?

There’s a simple reason why shrinkflation happens: money. Or, to be exact, profits. Companies are constantly trying to make bigger returns in markets that are becoming increasingly competitive. 

Faced with the pressure to make more revenue, companies could charge more for their products without changing them. But not many of them want to do this. Customers seeing a price increase without an increase in product size will be put off. If the price stays the same, a customer will likely keep buying the product, even if it’s shrunk slightly. 

Shrinkflation happens because companies want to spend less money on their products to maximise profits. And yet, they want those products to continue being as appealing as possible to the general public. The aim is that the average customer won’t notice the change and won’t realise they’re getting less value for their money.

Is Shrinkflation a Strategy Worth Using?

Many businesses think shrinkflation is worth using because, as mentioned previously, some customers may not notice it. These days, it’s essential to have a good reputation, especially since negative reviews online can be damaging. Businesses looking to make more money turn to shrinkflation, hoping it will save them some bad publicity. 

However, shrinkflation has become very widespread. Lots of businesses use it as an alternative to simply raising prices. Customers annoyed at reduced products may turn to other brands – but those other brands may well have practised shrinkflation too. The point is that when lots of businesses do it, customers will eventually accept it and continue buying the products, even though they’re a bit smaller. 

These days, shrinkflation is worth using because many people would rather pay for less of a product than shop around for an alternative. Using shrinkflation isn’t going to cause a massive downturn in sales; any effects it has on a business’s takings will most likely be negligible. 

Summary

It’s unfortunate that everyday products are getting smaller as the companies behind them try to make money. While this isn’t ideal for consumers, it’s so common that many people have accepted it. Shrinkflation can be a good business strategy, so long as a business doesn’t take it too far and is upfront about it.

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