Shrinkflation and Skimpflation Mean You Get Less For Your Money

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Have you noticed your cereal box getting lighter? Or that the cough syrup you regularly buy tastes watered down? What are shrinkflation and skimpflation?

Companies use shrinkflation and skimpflation—reducing the volume and quality of goods and services—to protect their profits in the face of rising operational costs. These practices directly cut into consumers’ purchasing power, as they continue to pay the same amount of money for lower-value products.

Here’s a look at how shrinkflation and skimpflation affect both customers and businesses.

Why Your Money Isn’t Going as Far

Shrinkflation is when manufacturers or businesses shrink the size or quantity of their products but continue to charge the same price or raise it. Skimpflation is when they skimp on product or service quality while holding prices steady or increasing them.

These strategies differ from inflation in that shrink- and skimpflation diminish value through hidden reductions in size, quality, or service while keeping prices constant or hiking them, while inflation plainly inflates prices. Companies use these approaches to remain profitable amid rising operational costs.

Shrinkflation and skimpflation typically follow periods of high inflation. Consumers often react negatively to blatant price increases, forcing producers to initially attempt cost-cutting measures or process optimization.

Examples

The following examples underscore how shrinkflation and skimpflation manifest across various industries, impacting consumers and businesses alike.

Shrinking size

In 2022, Dawn dishwashing liquid shaved a half-ounce off the content of its smallest bottle while retaining the same packaging and UPC code.
Tresemme also shrunk the volume of its large black shampoo bottles from 32 to 28 ounces last year.

Skimping on quality

In 2022, consumers complained of a quality decline in Scott’s 1,000-sheet toilet paper on the company’s website. A comparison of an old and new packaging confirmed that new rolls weighed 20% less.
Hotels might replace hot, complimentary breakfast buffets that include eggs, waffles, and bacon with prepackaged sweet rolls and cereal.

Skimping on formula

In 2022, food giant Conagra discreetly reduced the vegetable oil in its Smart Balance dairy-free butter substitute from 64% to 39%.

Skimping on service

Stores like Walmart and Dollar General are currently piloting fully self-checkout stores to expedite the payment process, which could allow them to cut workers.
Some hotels have reduced housekeeping services to every other day, or to when guests check out, rather than cleaning guest rooms daily.

Effects and Implications

For struggling businesses, particularly those that are smaller and have limited resources, shrinkflation and skimpflation offer a way to stay afloat without having to hike prices explicitly.

For consumers, shrink- and skimpflation directly cut into their purchasing power. Without clear pricing signals, buyers can’t adjust their behavior and instead continue to pay the same money for products or services of lower value.

If consumers notice shrink- and skimpflation-related changes in products and services, it can tarnish companies’ reputations. If these practices persist, customers may increasingly comparison shop, eroding brand loyalty as they pivot toward value brands.

Regulation

Shrinkflation, while potentially deceptive, is legal so long as companies adhere to labeling guidelines outlined in the Fair Packaging and Labeling Act (FPLA) of 1967. The FPLA requires consumer product packages to clearly display the net quantity of contents in both metric and inch/pound units.

Skimpflation, which is not explicitly regulated in the US, is more challenging to identify than shrinkflation because although product labels display ingredients, they often don’t detail quantities of those ingredients.

Looking Ahead

Experts recommend the following tips to help consumers spot and counteract the effects of the shrinkflation and skimpflation on their purchasing power: