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Shrinkflation, Consumer Deception
  • By Yoon Hye-won, cub-reporter
  • 승인 2024.04.15 00:02
  • 호수 331
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▲ An example of Shrinkflation, where product volume is reduced alongside size changes (Source: StartupTalky)

According to high inflation rates, there has been a significant reduction in the weight of products. Snacks that are excessively packaged compared to their quantity are commonly referred to as ‘nitrogen snacks,’ and this phenomenon has led to the term ‘Shrinkflation.’ ‘Shrinkflation’ is a compound word coined by British economist Pippa Malmgren, combining ‘shrink’ referring to reducing scale or quantity, and ‘inflation’ indicating a rise in prices. This is a strategy employed by companies to indirectly implement price increases by reducing the size or weight of products or lowering their quality instead of maintaining prices, in order to avoid consumer dissatisfaction. Recently, the phenomenon of Shrinkflation has been applied to many consumer goods.

The most notable case is the ‘Philadelphia Cream Cheese’ in the United States. With intent to improve quality, they reduced the content of milk cream from 49% to 17%, expanded the content of milk by 66.6%, and changed the volume of product from the original 200g to 190g. Nevertheless, they are accused of maintaining the same consumer price despite these changes. Similarly, in South Korea, Dongwon F&B’s ‘Yangban Dried Laver’ reduced its packaging volume from 5g to 4.5g, and Seoul Milk’s ‘Cheddar Cheese’ decreased from 400g to 360g per package, yet the prices remained unchanged, sparking controversy.

The reason why many enterprises adopt the Shrinkflation strategy is as follows: When inflation causes the rise of the prices of raw materials, companies can choose to increase product prices or opt for the usage of cheaper materials. However, consumers tend to be more sensitive to price increases than reductions in quantity. Therefore, companies utilize Shrinkflation as a sort of marketing strategy to achieve the effects of price increase without rise in costs, minimizing consumer dissatisfaction simultaneously. However, this type of marketing could have a chance to significantly impact a company’s image and profits. When consumers perceive a reduced product size or quantity, they may lose trust in the brand, leading to long- term damage to the brand’s image. Furthermore, as multiple manufacturers adopt such marketing strategies to maintain both price and competitiveness, this situation may intensify price competition within the market.

Therefore, consumers should respond to the phenomenon of Shrinkflation and be able to protect their rights as consumers. If they simply judge the changed design as an implication of only an improvement, they may not make wise purchasing decisions. When product packaging changes, consumers should scrutinize the unit price rather than the overall price of the product because there is a high likelihood that the product’s quantity may have been altered subtly. Another approach is to compare the same product across different brands to analyze their monetary value. Some countries mandate that changes in product quantity must be specified on the packaging, or they enforce legal measures such as operating platforms to track changes in product prices and sizes.

Shrinkflation, a complex phenomenon in the market, can lead to negative outcomes such as increased consumer dissatisfaction, loss of trust, and changes in market competitiveness. Therefore, to protect consumers, there is a need for appropriate regulations and responses such as mandating signs of product changes or revising consumer protection laws. Along with these social efforts, it is essential for consumers to increase their awareness of Shrinkflation regulations and adopt an active approach in scrutinizing product information carefully. The ongoing trend of product downsizing and price increases can undermine valuable consumer experiences and significantly influence both corporate strategies and consumer choices. Therefore, consumer understanding and response to these phenomena are crucial for the sustainability of stability of a fair and transparent market.

By Yoon Hye-won, cub-reporter  flipp1005@naver.com

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