Check this image out. At the green arrow, the package said this sweet is 25 gm. Look at the red arrow for what it is: 17 gms. Selling such a sweet could be a fraud. Something similar happened to our of our customers. They ended up sending a few boxes back to their supplier. I wonder if the supplier forwarded it to another newsagent or fixed it.
This is a problem we do not need.
Shrinkflation helps manufacturers quietly cut prices, but it sometimes creates headaches for retailers as products get sneakily downsized without transparency.
Shrinkflation Equals Retailer Frustration
Shrinkflation refers to products shrinking in size or quantity while prices remain stagnant. Instead of buying ten in a package, the package now has eight. Companies hide the quality reduction with tricky packaging tactics to mask these changes from consumers.
Numerous studies show consumers are far more likely to be negatively impacted by price increases than the reduction in size of a product. The strategy might even bolster certain sectors, like consumer staples, because these companies can sustain their margins by implementing shrinkflation tactics.
However, obscuring shrinkflation can seriously impact retailers once discovered. Suddenly, for example, your computer records contain incorrectly labelled products that no longer match what is programmed into your point-of-sale system. More importantly your shelf labels are now wrong.
This causes many problems no retailer wants to deal with.
- Angry, confused customers
- Labor-intensive inventory adjustments
- Point-of-sale system inaccuracies
- Reputational damage and eroded consumer trust
Protect Your Business With Proactive Steps
Retailers can take proactive measures to catch this shrinkflation before major damages occur.
Carefully Screen Inventory
When new products arrive, if they are different, there should be a separate item in your POS System with a unique barcode.
Conduct Random Audits
I like this idea: if the computer scale is in the shop, it is easy to check the weights. If not, bring your kitchen scale to work and test many items in the shop. Verify your figures match what’s on the supplier's packaging, if different, check what is in your POS system.
If you find an error, contact your suppliers to reconcile the differences and move forward. Most likely, you do not have their current catalogue file to import.
Shrinkflation Stings Customer Trust
Vigilance against shrinkflation directly translates to trust-building with customers. When shoppers find your inventory transparently reflects accurate weights and measures, they feel confident you offer reliable products.
Conversely, shrinkflation erodes consumer faith when its obscuring tactics are revealed down the line. Shoppers may wonder:
- What else is wrong with this retailer’s inventory controls?
- Are they overcharging me for other items, too?
- Can I trust product information here?
Once customer suspicion sets in, it becomes challenging to regain their loyalty. It is far better to prevent the problem through proactive measures.