Next time you pick up a package of coffee or a pack of toilet paper, take a closer look. You might notice the package looks familiar, but what is inside has subtly diminished. This is

“shrinkflation” in action, a pricing strategy used by manufacturers worldwide. By reducing product size instead of increasing final prices, companies take advantage of the psychology of

shoppers who are more likely to notice a price hike than a slight reduction in size. A PERVASIVE TREND Despite complaints by consumers and recent government initiatives, the phenomenon shows

little sign of abating. According to research by the British bank Barclays, in August, 8 out of 10 British consumers reported that the practice was hitting their finances. A quarter of them

the latest Toblerone chocolate bar for example, now a gappier version of its former self. Other well-known products to have taken a cut include Mars and Galaxy chocolate bars, McVities

biscuits, Magnum ice creams, Pringles, Lurpark butter and the list goes on. In spite of its growing use, shrinkflation is not a new trick in the corporate playbook. In times of economic

turbulence, manufacturers have consistently turned to this stealthy strategy to maintain profitability without overtly raising prices. For instance, the UK government had already recorded

2,529 price quotes across the UK where the size of the tracked item had shrunk between January 2012 and June 2017. Fast forward to today, as global supply chains deal with unprecedented

pressures and generalised hyperinflation, shrinkflation has re-emerged as a silent yet pervasive trend impacting consumers globally. CONSUMERS LEFT FEELING CHEATED Shrinkflation often goes

unnoticed by consumers until they open the package or start to dig in. In some cases, it comes with a product package renewal – such as an increased divot in the bottom of a jar – further

confounding the consumer, who does not immediately realise that there’s less of it. Consumers hate its perniciousness, feeling cheated and disempowered over their purchases. They have

launched a number of petitions and called on supermarkets to follow the lead of French supermarket Carrefour in labelling products hit by shrinkflation. Despite the increased media attention

and scrutiny, in a very few cases voluntary actions have been put in place so far from big retailers. Do companies realise just how bad for business it is? A recent study demonstrated that

the majority of consumers consider shrinkflation a dishonest practice, much more unfair than the price increase. Retailers are not exempted from consumer outrage, since they are also

considered culpable for it, despite their limited control over the package size reduction, as our preliminary findings suggest. GRUMBLES ON SOCIAL MEDIA Our analysis of 4.000 X posts

published between January 2022 and January 2024 containing the keywords “#shrinkflation” or “shrinkflation” shows that consumers consider manufacturers responsible for shrinking the quantity

of the products, but also attribute responsibility to retailers for not protecting consumers from these new market dynamics. Consumers can blame the food industry or specific brands, or

both. In the case of brands, they often explicitly mention the brand and show images of shrunken packaging. Consumers who blame manufacturers for employing such tactics express feelings of

deception or being cheated, especially if this means they get less bang for their buck. Indeed, brand communications about shrinkflation are perceived as deceitful, as they try to convince

consumers about the benefits of the packaging reduction: Of course, size isn’t everything; sometimes fewer ingredients or materials impacts the quality of the product itself. Oreo, for

example, has been accused of reducing the layer of cream between cookies without lowering prices. MORE UNPOPULAR THAN PRICE RISES These insights are further confirmed by the results of our

studies conducted online in the first six months of 2024 involving more than 1,700 consumers from the UK and Italy. Through an online questionnaire, consumers involved via a crowdsourcing

platform (i.e., Prolific Academic) were randomly messaged that their favourite supermarket was implementing shrinkflation or raising prices. The consumers who received our communication on

shrinkflation practices showed higher levels of aversion toward the retailer and perceived higher levels of price unfairness (+7.3%) compared to those who received the message communicating

price increase. Our findings also show a substantial reduction of trust toward the retailer, dropping by 4.5%, together with a drop in attitude, meaning that consumers have less favourable

perceptions toward retailers when they sell downsized products (-4%). Dwindling trust is particularly problematic for retailers, and it might be even more pronounced if shrinkflation is used

for a longer period. GOVERNMENTS RESPOND Some governments are now cracking down on the practice. For instance, since 1 July 2024 stores in France have been required to display warnings on

products that have shrunk in size without a corresponding reduction in price, as Italy followed suit weeks later. In Asia, South Korea’s antitrust regulator has also demanded that food

manufacturers and suppliers inform shoppers if they reduce the size of their products or face fines of up to 10 million won ($7,300). US lawmakers, including President Biden, have publicly

condemned shrinkflation and is considering new executive actions to crack down on the practice. Companies aren’t doomed to unpopularity, however. Should they yield to shrinkflation, our

research shows that they can maintain trust and minimise backlash by proactively informing consumers.