Have Canadian Consumers Caught on to This Age Old Industry Tactic?
Inflation is probably a candidate for the “word of the year” in 2023. It’s the word that all of us – shoppers, brands and retailers would be happy to never have to speak again.
Maybe to avoid speaking the word that should not be spoken, brands and retailers have two other tactics that they are using – Shrinkflation and Skimpflation.
Shrinkflation is when the price of a product stays the same, but the volume or number of servings / uses is decreased. We’ve all seen that 2L container of ice cream that is now a 1.66L container for the same regular retail price.
This is an important tool for manufacturers who may be at the high end of a price range, say $4.99 but is under margin pressure. To maintain or increase gross margins, the brand removes product from the package so that the price per mL/gram goes up but the strategic price point of $4.99 is maintained.
There are several downside risks for the brand emanating from the Shrinkflation strategy.
- Fixed costs to change packaging and changes to the manufacturing line to handle the new packaging.
- Switching or Listing Fees incurred as this item is a new UPC and must be listed separately from the original item.
- The planogram and logistics systems must be changed to accommodate the new SKU.
- Sharp-eyed consumers are more and more likely to notice the changes in the pack size presenting a risk for brand loyalty.
- Many retailers display price per ml/gram on the price tags at the shelf, making it very easy for shoppers to compare the relative value of a wide range of comparable items.
With the power of today’s social media, every shopper is a potential “whistle-blower” on brands who shrink the package and Instagram and Tik Tok are full of clips calling out this type of change being implemented by brands.
On the other hand, Skimpflation is when a brand removes more expensive ingredients and replaces them with less expensive ones. The pack size and retail price normally stay the same, but the product has been changed.
Skimpflation is the latest buzz word in the industry, but it has been around for decades. In my career, it was often referred to as “reformulation” and in most cases the product had its efficacy reduced (i.e. replacing enzymes in laundry soap) or it ended up tasting different. One of the common tactics is to increase the amount of inexpensive “fillers” or adding more water in place of other active ingredients.
Skimpflation is much more difficult for consumers to notice and in many cases, it can be done without consumers noticing at all. The challenge is that after several rounds of reformulation a product today can be quite different from the same product a decade or so ago.
Some of the risks for brands of Skimpflation include:
1) Brands that have taken the Skimpflation path one too many times may end up with a product that starts to alienate loyal consumers or creates a quality gap vs. a competitive product that is a step too far.
2) Consumers are wiser to this tactic these days. Some are learning through the press or social media and others are finding out when their beloved go-to recipe doesn’t turn out the way that it used to because a key ingredient has been swapped out for more water.
3) Another risk is the potential danger for consumer who have food sensitivities. Many consumers have a go-to list of “safe” products that they can use despite their sensitivities. When ingredients in a product are swapped, it may only be communicated via the ingredient declaration. If the ingredient change introduces an allergen, it could go unnoticed by the consumer and illness could ensue.
Skimpflation also exists in services such as airlines and hotels. Remember that meal that we used to get in economy class? Or the free first checked bag? Removing those extras is one of the ways that airlines have tried to maintain margins without having to resort to increasing ticket prices alone.
If you’ve stayed at a hotel lately, you may have noticed that housekeeping may visit the room every second day instead of daily. Or towels are only swapped out when they are placed in the tub. Some Skimpflation tactics are dressed up as something that consumers may actually want – like how less towel changes saves the environment, but in the end, you are getting less but spending the same amount of money.
This is not to say that brands are being nefarious – they are businesses facing increased costs for inputs such as ingredients, packaging, labour and transportation and these costs must be passed along so that returns to shareholders are maintained.
The reality is that consumers are being increasingly educated about Shrinkflation and Skimpflation through word-of-mouth, social media, and the press. The CBC, Globe & Mail and Toronto Star have all had prominent features on the topic recently.

Retailers are also getting into the game of educating shoppers. In France, Carrefour has started to add attention-grabbing shelf signage to products that have been impacted by Shrinkflation or Skimpflation. The BBC recently showed one of these signs that called out a brand that had implemented Shrinkflation with the message “This product has seen its volume fall and the effective price charged by the supplier rise” with the header #Shrinkflation and a prominent photo of the specific product.
See: https://www.bbc.com/news/business-66809188
Fortunately, inflation seems to be ebbing in Canada, but managing margins and price lists will always be one of the most challenging tasks in our industry. Maybe in the future we will be able to maximize pricing with the help of artificial intelligence, but it won’t change the feel of a smaller package in a shopper’s hands or that cake recipe that just doesn’t rise the way that it used to.
Jeff Doucette is the founder of “Field Agent Canada” an on-demand panel of Canadian shoppers providing a suite of innovative services to Canadian retailers and brands. He can be reached at jeff.doucette@fieldagentcanada.com