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The Secret Inflation

By Devika Mathur, edited by Niyanta Desai

Does the fact that your favourite chocolate’s price hasn't increased since your childhood, excite you or make you feel that it is immune to inflation? Well, to burst your bubble, it has. Shrinkflation and Skimpflation have successfully deceived the consumers into wrongly believing that prices haven't increased. This notion immensely benefits marketers.

Inflation can be described as the erosion of purchasing power of a given currency over time. In simpler terms, it is the rise in the general price level. In the year 2021, India witnessed inflation of 4.35%. However, for several years it has seemed that some goods have just defied the concept of inflation. For example, we can still buy a Cadbury Dairy Milk for just ₹10 like we used to as kids or a packet of Maggi noodles for just ₹12! This is when shrinkflation comes to play.

Shrinkflation implies the practice of reducing the size or quantity of a product keeping the price of the product the same or increasing it very slightly. Hershey’s Kisses, which used to be an 18 ounces pack, has been cut down by 2 ounces. Similarly, Toblerone shaved off around 30 grams from the bar in 2010 resulting in the new bar weighing 170 grams. Coca-Cola’s 2 litre bottles now contain only 1.75 litres. In 2010, Tetley slashed the number of tea bags sold in one box from 100 to 88. And a Doritos’ bag now only has 9.25 ounces, in comparison to 9.75 ounces earlier. Well, this certainly does not end here, because, as marketers realized that the techniques of shrinkflation were now catching the eye of the consumers, they further modified the packaging of the product, seeming to look larger than before, yet containing a lesser quantity of product, which explains why a classic bag of chips seems to have more air than ever before.

This concept of shrinkflation was brought to the limelight by Art Buchwald, in his column ‘Packaged Inflation’ for the Washington Post in the 1960s, when he dug up the American industry for “devising new methods to make the product smaller while making the package larger”.Shrinkflation can be largely owed to rising production costs and cut-throat market competition. In a marketplace where the cost of raw materials, labour, energy, and other inputs is constantly rising, and consumers tend to shift to other brands as soon as they notice even a slight change in the price or quality of the commodity, shrinkflation has been a convenient resort for most brands. As a consumer, reading the fine print and analyzing the per-gram weight can certainly help from falling prey to this trap.

Following this trend, yet another concept of skimpflation has gathered much attention around it, especially in the post-covid era. Have you recently felt that there was fewer customer support staff as you entered a particular store? Or if the hotel you stayed in reduced the rounds of housekeeping? Or there were fewer servers in the restaurant? Or your call on a customer care number was kept on hold for a little longer? Or if you chose to fly somewhere, you had to wait longer in queues, or the flight randomly got canceled?

If the answer to any of the questions was yes, you have been through what is called skimpflation. This occurs when businesses choose to cut down on the qualitative factors of their service to cope with the rising costs or input shortage, instead of shifting the burden to the consumers by increasing the prices. Especially in the post-Covid era, when numerous businesses are facing a shortage of labour, and rising prices could mean further losing the consumers, companies have resorted to cutting down on these factors. With a shortage of crew members, flights are now witnessing more last-minute cancellations. Lack of delivery partners has led to an increased delivery time for numerous chains, including dominos. With fewer customer support staff available, consumers have to wait relatively longer to get their concerns and queries resolved.

All this has had a major impact on customer satisfaction. With the declining quality of services, a lot of consumers seem to be dissatisfied with the current services, and might not return to the same businesses. Focusing on customer satisfaction has now become the need of the hour, and might turn out as the deciding factor for who survives these critical times and who does not.


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