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The Year Ahead: Shrinkflation and skimpflation

2024 year ahead

Consumers are not happy with high food prices, and many believe they are artificially high.

Brian Numainville, principal at The Feedback Group in Lake Success, NY, says countering these negative perceptions should be a priority in the year ahead.

“One big challenge in 2024, whether food price inflation continues or reverses course, centers on better connecting with shoppers to build a more positive perception of both the local store and the industry as a whole,” he says.

“Our research shows shoppers have doubled down and increased their inflation-coping strategies. This, coupled with a distorted perception that food stores make 35 percent net profit after expenses and aren’t on their side when it comes to inflation, and the belief that many stores aren’t listening to shopper feedback, leads to a less-than-positive perception of food stores in the current inflationary environment.”

Worse yet for shoppers are shrinkflation (reduced quantities) and skimpflation (lower quality ingredients) in product when the price stays the same.

“When stores reduce the package size, such as with bags of salad or precut fruit, or offer lesser quality produce, or change out better quality ingredients for less expensive alternatives, this can have a negative impact on consumer perception,” says Numainville.

Shoppers, not surprisingly, do not react well.

“They feel they’re being cheated due to the reduction of size or quality for the same amount of money,” he notes, which in turn affects a store’s image and leads to lost sales.

Carrefour, a retail chain headquartered in France, told its vendors it would stop purchasing their products if they continued to raise prices. It even went so far as to put shrinkflation warnings on a number of items as a way to pressure vendors.

In Canada, grocery chains are under fire for alleged price gouging, with Prime Minister Justin Trudeau threatening to impose taxes on retailers if they don’t curb rising prices.

So while consumers are now keenly aware of these practices, they’ve been around for years.

“Playing with package sizes and portions isn’t a new game, but it’s one that dollar stores and hard discounters like Aldi play well,” explains Carol Spieckerman, president of Spieckerman Retail of Bentonville, AR.

“Adding private branding as a variable blurs comparisons and value equations even more. The bottom line is that retailers have plenty of arrows in the quiver to hedge against inflation and eek out incremental margin.”

She points out that shrinkflation and skimpflation affect produce less than other categories, with the exception of some value-added products.

But Phil Lempert, the Los Angeles, CA-based Supermarket Guru, thinks produce departments can play an important role in raising retailers’ reputations with consumers.

“It’s one of the few departments that’s full of aromas, color, and freshness, and it puts shoppers in a better mood,” he says.

This is an excerpt from the feature story from the January/February 2024 issue of Produce Blueprints Magazine. Click here to read the whole issue.