Description: Watch out for “shrinkflation,” that practice of producers shrinking package sizes to compensate for increasing costs. Instead of passing on the increasing costs to the end consumers, these companies shrink the box size. Shrinking packaging causes consumers, like Ellyn Newall of Edmonton, to feel duped. After getting her grocery order home, Ellyn realized Post’s Honeycomb had produced a new taller box that actually had less volume of the tasty cereal than the old one. It is doubtful that Newall is the only Canadian to feel let down by this packaging practice.
Date: October 18, 2023
Source: cbc.ca
Link: https://www.cbc.ca/news/business/shrinkflation-government-1.6996673
Discussion points:
1) Have you and your classmates encountered any “shrinkflation?” in your grocery shopping?
2) Do you think the government needs to intervene regarding the practices of producers in shrinking package sizes rather than simply raising prices to cover increased costs?
3) Appendix B of Wiley’s Financial Accounting: Tools for Business Decision-Making shows us the financial statements of Sobeys, a major Canadian grocery chain. Chapter Five opens with a vignette discussing Loblaws, a major rival of Sobeys. Do you think one of these grocery chains could gain a strategic advantage over the other by insisting that its suppliers take action on shrinkflation?
Andrew Leslie, Jessie Kpai, Samuel Johnson, Presley Warren-Daigle
1) Yes, we have all experienced some form of shrinkflation. Usually with food products. We noted chips brands making the “family sized bags smaller”.
2) Most of us would agree that the government should take measures to increase visibility of product quanitities to help consumers.
3) It’s hard to tell if this would be beneficial to them. If a chain encouraged suppliers to not shrink their packaging, they would have to raise prices. Since shrinkflation is more subtle than price increases, many customers may the competition as having cheaper prices, even though they are buying a smaller quantity of the product. If consumers are more aware of shrinkflation, or less price-concerned (such as high-end grocery stores) then keeping package sizes the same may be a good decision.
Kenna Van der Pluijm, Sage Jull, Maalik Boukouiss
1. Yes, often in grocery stores items like juice boxes and granola bars tend to be smaller in size than they originally were, but for the same price
2. We think eventually it will get to a point that the government needs o step in and may create a law that if a company is going to reduce a product by a certain percent they should also have to reduce the price. It is not fair for a family trying to send their kids to school with a lunch and full bellies, but they’re paying high prices for little to no product.
3. As we can see from the book, Loblaws has historically been a “stock and ship…This sometimes resulted in the company’s warehouses overflowing while its store shelves were understocked”. Shrinking their products could then be a solution to this problem, as they are not struggling financially. Sobey’s on the other hand, who is losing money over the years, would not really benefit from shrinking their products as they are already on a financial downslope, and shrinking would probably result in negative feedback from the costumers, thus a negative impact on their income.
It also depends on where you live if there are many stores to choose from then customers will probably choose the cheapest option from what available where’s in a smaller town there may not be another option.
Group 11
1) Have you and your classmates encountered any “shrinkflation?” in your grocery shopping?
– Yes, it is getting to the point that it’s a joke what the “air to chip ratio” is in chip bags these days. It’s hard not to feel scammed when you open one and it’s already half empty.
2) Do you think the government needs to intervene regarding the practices of producers in shrinking package sizes rather than simply raising prices to cover increased costs?
– In some ways, a half-empty bag/box of snacks could be seen as misleading so the government could enforce laws against misleading marketing. However, we agree that some responsibility lies with the consumer, who continues to buy these products despite the reductions.
3) Appendix B of Wiley’s Financial Accounting: Tools for Business Decision-Making shows us the financial statements of Sobeys, a major Canadian grocery chain. Chapter Five opens with a vignette discussing Loblaws, a major rival of Sobeys. Do you think one of these grocery chains could gain a strategic advantage over the other by insisting that its suppliers take action on shrinkflation?
– By insisting that companies take action against shrinkflation, they would gain the favour of their customers, however by doing so, they may need to buy from those suppliers at an increased price, and then they might sell at an increased price as a consequence, so unless they’re willing to make less profit per product, it may not make much of a difference at first, however once people start to notice the difference in amount, it will definitely draw in more customers.
Theo Delaney
Tristan Raine
Hailey Arsenault
Spencer Joudry, Janan Anvar, Celcilia Anderson
1. Yes, I have experienced shrinkflation, when it comes to buying a bag of chips almost more than half the bag is filled with air instead of the chips. You feel as though you are spending the full price of something and getting 1/3 of it.
2. As a consumer of these goods such as chips, candy bars etc. I thing that the governments could intervene in some ways such as making the companies packaging smaller so as consumers we don’t feels as though we are getting scammed. But on the flip side it is just as much us the consumers fault for still buying these products.
3. It may not seem like much at first, but once people start to notice the difference in amount, it will definitely draw in more customers. Companies would gain the favor of their customers by insisting that they take action against shrinkflation. However, in order to do so, they may need to buy from those suppliers at an increased price, and they might then sell at an increased price as a consequence.
Patrick Barnhill
Patrick Barnhill, Hunter Wrigley, Daniel Duffy
1) Yes we have all encountered shrinkflation. For example, paper towel has lost like 20 sheets a brand and the sheets seem smaller, and that bags of chips are the same size but contain less chips.
2) we don’t think so yet. The price method and shrinkage together make it stand out more at the moment, but we don’t think were at that point yet where it is at the top of the list for legislature. we do think if they do, it should be more in favour of communicating the change to consumers, instead of a quiet change overnight.Overall if the government were to intervene, they would need to find a balance between protecting consumers and not hurting business or suppressing competition.
3) There’s an opportunity, but the problem is that it might shoot them in the foot. We believe that there is that positive of you can guarantee your suppliers wont alter or change their products for save a buck, but we think as it stands right now, if a supplier has the bargaining power, you could lose them if they don’t want to go along with the message. Not to mention that right now, shrinkflation is more in the back of peoples minds as prices are more concerning. This means they’ll have a better opportunity with discounts and sales, as the alternative may bring negative attention to the industries practices and give movement to an issue that isn’t really thought about in the masses.It is vital for the grocery chain to thoughtfully consider the implications of this strategy. Demanding that suppliers deal with shrinkflation may lead to more expensive negotiations and quality control. Overall increasing costs.
Taking a proactive approach to shrinkflation can be a strategic move the grocery chain, as it can enhance customer trust and loyalty.
Morgan Milley, Brenden Donald, Calum Macdonald, Ethan Cushing
1. Yes a few of us have experienced shrinkflation, usually just with larger food items such as cereal boxes or bags of chips.
2. We do believe it will eventually get to the point where the government will need to intervene. If companies are downsizing their products (cereal boxes, chips, etc) they should also be forced to lower their prices by a certain percentage.
3. Loblaws as seen in the book has had several issues with overstocking their shelves resulting in lots of overstocks at several stores. So for them to shrink their products may be a beneficial thing, as it allows them to carry more stock on shelves. However, Sobeys has been losing money over the years so shrinking their products may not help their situation in any way.
For both the stores it is likely that if they wish to keep their customers satisfied shopping with them, they should monitor their suppliers size vs price ratio over time.
Christopher-James Valenti, Colby Cormier, Jaimie Gallant, Mishael Mathew
1. Yes, we noticed shrinkflation, items like chips bags, cereals, juice boxes and granola bar tend to shrink.
2. No, I don’t think the government should intervene in that situation. There are other priorities and it would be almost imposiblle for them to have control over that since there are so many products and food company. Not only that, laws and regulations would be different from a country to an other and from a province to another. Companies are in the right to do whatever they want with their product as long as they are being honest. Also, it is our job, consummers, to not buy those products if we notice some sort of shrinkflation and if the product doesn’t satisfy us.
3. It is impossible to predict because some people might have different reasons to go to a specific grossery store compared to an other one. Maybe people go to a specific place because it is closer or simply because they have more trust in this place. Also, some people might no want to pay more for a certain product and even if shrinkflation frustrates them, they would still prefer not paying more for a product. Not only that, certain people might just not be able to pay more for a product, so it is impossible to predict.
Lauren Hatheway, Andrew Little, John Christodoulou, Shristhi Kedia
1. Yes, all of us in our group have experienced shrinkflation when grocery shopping. Especially when shopping for cereal, we have noticed that the size of the boxes are much smaller than they were a few years ago. Some of us in our group have also experienced shrinkflation of chip bags and boxes of cookies.
2. We definitely do think the government needs to intervene regarding the practices of producers in shrinking package sizes rather than simply raising prices to cover increased costs. In addition to the packages of products shrinking, prices are also increasing. In this case, it is really not fair to consumers who are basically overpaying for receiving less.
3. We think that certain grocery chains can gain a strategic advantage over the other by insisting that its suppliers take action on shrinkflation, but it might be hard to predict. Insisting that its suppliers take action on shrinkflation, does not mean that they will actually go through with it. This could also potentially stop supplies from supplying certain grocery stores.
Hailey Simoneau, Haley Harrison, Gantulkhuur Lkhagvasuren, Jack Arsenault
1. We think we have all experienced shrinkflation in many different products. Because they are so deceptive with it though, it is hard to know when it actually happens.
2. Yes we think they do need to. We think that they need to be more honest about this strategy because it is very deceptive and is taking advantage of consumers. It would make sense for there to be more regulations in place to make sure people are made aware when companies perform these sorts of things. It will be nearly impossible for them to eliminate shrinkflation but if consumers were at least a little more aware it would be better for everyone.
3. We think that this definitely could be a successful business strategy but it’s also not a guarantee. There are a lot of factors that go into that industry and so they would have to consider a lot of different aspects. This is a lot dependant on the customers and what their demand is, plus what they’re willing to pay for certain products. Different people may also have different reasons for choosing a particular store over another.