- The public have got used to shrinking product sizes
- But skimping on services could be far harder for the public to overlook
It’s nearly Easter, which means a bout of speculation about whether Creme Eggs really are smaller this year. The grumbling isn’t unwarranted: it turns out that the chocolate eggs have had a long pedigree of 'shrinkflation' and ‘skimpflation’ over the years. Since 2015, they have been sold in multipacks of five instead of six, while the chocolate shells have been made of something that a spokesperson once disconcertingly described as “similar, but not exactly Dairy Milk”.
We could be set for another round of Easter shrinkflation this year. The cocoa price has soared, reaching a record high earlier this month. This will do nothing to ease pressure on chocolate prices, and Ole Hansen, head of commodity strategy at Saxo Bank, thinks that “higher prices and shrinkflation will be the result eventually”. According to Which? Twix, Smarties, Mars and Terry’s Chocolate Orange Easter eggs have all shrunk in size this year – without a corresponding reduction in price.
When it comes to Easter eggs, shrinkflation is relatively easy to spot: if we buy products once a year, changes in size – and price – jump out at us. But in less seasonal products, shrinkflation can be incremental and far harder to catch. How many shoppers will have noticed that a pouch of Whiskas cat food shrank from 100 to 85 grams last year? Or that a bottle of Comfort fabric conditioner now promises 83 washes instead of 85?
| Which products have shrunk in 2024? | |||
|---|---|---|---|
| Prices have remained the same – or become even more expensive | |||
Product | Old size | New size | % change |
Cadbury’s Brunch Chocolate Chip Bars | 6 per multipack | 5 per multipack | -17% |
Colgate Triple Action Toothpaste | 100ml | 75ml | -25% |
Lurpak Slightly Salted Butter | 225g | 180g | -20% |
McVitie’s Digestives Dark Chocolate Biscuits | 433g | 400g | -8% |
| Source: Which? January 2024 | |||
This is probably one explanation for the public’s tolerance of shrinkflation over the past few years. According to research from Ipsos, 15 per cent of people now think the practice is ‘acceptable’, while 22 per cent are indifferent to it. Ipsos associate director, Michael Clemence, thinks that the relatively long history of shrinkflation in the UK has bred a level of ‘resignation’ amongst UK consumers. After all, consternation about Creme Eggs has been going on for the best part of 10 years.
Skimpflation may be harder to swallow
But ‘skimpflation’, where companies reduce the quality of their products whilst maintaining the price, could be an altogether more dangerous game. In January, Which? reported that Sainsbury’s rice pudding had swapped clotted cream for a cheaper whipped alternative, while Tesco Finest Sausages had trimmed their pork content from 97 to 90 per cent. Given that supermarkets are facing pressure from discount retailers as consumers trade down to cheaper brands, this looks risky for ‘premium’ products. Value brands probably have less to lose.
We see skimpflation elsewhere: cutting back on quality while keeping prices the same works just as well for service providers, too. Getting consumers to do more of the work themselves is usually a giveaway. Economists at the Federal Reserve Bank of St Louis identify self-service supermarkets, the first example of which was surprisingly long ago (in Memphis in 1916) as an early case of skimpflation. Self-service checkouts only accentuated the trend.
But cutting costs risks cutting customer satisfaction, too. As my colleague Jemma Slingo reported earlier this year, Royal Mail could soon cut postal deliveries to three days per week. The move could save Royal Mail and parent company International Distribution Services (IDS) up to £650mn a year, but it would also halve the frequency of deliveries. This kind of skimping is far easier for customers to identify than a subtle recipe tweak.
As a result, others are taking a more cautious approach, at least publicly. Vodafone (VOD) is planning substantial layoffs to improve its margins, but is at pains to claim it is not making the kind of cutbacks that could alienate customers. Last year, it highlighted that it would make a €150mn investment in customer service to ensure shorter phone waiting times.
Over the past few years, businesses have used shrinkflation and skimpflation to manage costs and protect consumer demand. With inflation poised to return to 2 per cent, we will at last see a more normal pricing environment. But it won’t be back to business as usual: shrinkflated products won't grow to their old sizes, and skimpflated products won’t recover their old quality levels. Inflation might be retreating, but its impacts won’t go into reverse.
