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, significantly in periods of financial uncertainty and rising inflation. Nonetheless, what’s totally different as we speak is the eye shrinkflation as a tactic continues to achieve.

As of August 2024, the hashtag #shrinkflation has garnered 86 million views on TikTok, as customers take to their screens to show the manufacturers that use the tactic and share tips about getting the perfect worth when purchasing. This heightened client consciousness is driving a shift in the direction of extra considerate and savvier purchasing habits.

Be part of Mintel as we discover how manufacturers can navigate the complexities of shrinkflation. We’ll deep dive into progressive methods within the Meals and Magnificence industries throughout the globe that can assist 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 protecting the worth the identical, and even make worth factors barely increased. This type of worth inflation usually goes unnoticed by shoppers if the adjustments occur steadily 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 client.

Shrinkflation might not break any particular legal guidelines, however it does tread a high quality line in terms of ethics. Whereas there are not any authorized necessities to reveal refined measurement reductions, failing to obviously inform shoppers can simply be seen as deceptive and a misleading type of advertising and marketing.

Nonetheless, in industries like Meals and Magnificence, the place inflationary pressures are squeezing margins, shrinkflation is more and more seen as a mandatory technique. The important thing to sustaining client belief lies in transparency – if manufacturers are trustworthy about these adjustments, they will navigate the challenges of rising prices, whereas sustaining client belief.

Within the UK, surging inflation is driving shoppers to vary their purchasing habits and undertake extra value-seeking behaviours, akin to switching to funds 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 worth 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 diminished packaging, which is able to 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. As an illustration, within the on a regular basis chocolate class—which incorporates single-serve and multi-serve codecs like bars, blocks, and luggage—the typical quantity per unit offered decreased from 101.5g to 98g between 2021 and 2024, reflecting a 3.5% discount in measurement. Nonetheless, some merchandise have been downsized much more considerably to soak up value will increase with out elevating costs.

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

In Canada, the same story emerges. Over 4 in ten food and drinks shoppers are open to smaller parts if it helps hold costs below management. This means that manufacturers can use shrinkflation as a viable different to elevating costs. To have interaction shoppers within the face of shrinkflation, manufacturers can give attention to clear communication and value-driven methods. By speaking overtly, akin to by way of social media challenges, or packaging labels, manufacturers can construct belief and preserve buyer loyalty.

To additional mitigate the detrimental influence of shrinkflation, some meals manufacturers are emphasising the standard of their elements. This method resonates with greater than half of UK shoppers, who would relatively have a small quantity of premium chocolate relatively than a bigger quantity of normal chocolate. Methods like this not solely justify the diminished measurement but in addition 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 alteration 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 worth 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 food and drinks costs (shopper 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 keep up belief, it’s essential that manufacturers talk overtly 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 inserting this follow below scrutiny as shoppers are empowered with data and are exposing the refined reductions in product measurement or worth will increase which may have in any other case gone unnoticed. This heightened consciousness signifies that manufacturers danger being seen as opportunistic, undermining belief and supporting a story that companies are prioritising revenue over client welfare.

To assist average the detrimental influence of shrinkflation, manufacturers within the magnificence trade are innovating with methods that preserve client 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 in addition aligns with their want for worth. Minis, samples, and testers are significantly interesting to magnificence customers, particularly Technology Z, who recognize 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 ought to be refillable, with nearly three-quarters having used or eager to strive refillable choices. This method not solely appeals to wash and eco-conscious magnificence customers but in addition presents an economical resolution that enhances model loyalty. By emphasising the twin advantages of decreasing packaging waste and saving cash, manufacturers can place themselves as each socially accountable and consumer-friendly, successfully countering any detrimental perceptions related to shrinkflation.

As shoppers are pressured to reevaluate their buying priorities throughout instances of monetary uncertainty, the stress is on magnificence manufacturers to show their value and real assist to their viewers. A technique of doing that is to construct belief and preserve loyalty with clear worth 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, purchasing, advertising and marketing, 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 choices, subsequently, making them extra prone to settle for will increase.

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

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

Whereas shrinkflation could also be an unavoidable response to financial pressures, how manufacturers navigate this follow can considerably influence their relationship with shoppers. As shoppers turn into extra knowledgeable and sceptical, it’s important for manufacturers to prioritise clear communication, display 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 client belief and loyalty, even in robust financial instances.

For manufacturers trying to get strategic perception into their international sustainability messaging, check out Mintel’s new Shopper Sustainability Research 2024-25.

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