Gartner: Consumers Eye Shrinkflation And Skimpflation
July 25, 2022
CMOs
Must Turn to Cost-Cutting Methods That Don’t Harm Consumer
Perceptions of Value
Sixty-two
percent of consumers say they'll stop buying from brands who change
product size (“shrinkflation”) or quality (“skimpflation”) to cut
costs, according to Gartner. Only 7% said they would continue
purchasing from a brand that cut costs in this way.
A Gartner survey of 252 consumers in June 2022 found that
shrinkflation— when the size or quantity of packaged goods is
reduced without a commensurate price cut — is viewed as more
prevalent than skimpflation — an erosion in the quality of a product
by using cheaper ingredients or components, or a reduction in a
service, such as longer delivery times.
“Brands make strategic decisions to optimize costs by changing
packaging, ingredients, suppliers and service offerings all the
time,” said Kate Muhl, vice president analyst in the Gartner
Marketing practice. “Not all of these actions are perceived by
consumers to be deceptive business practices, or perceived to be
happening at all.
“However, in a period of unprecedented inflation, consumers are on
high alert and noticeable changes that impact the value proposition
of a brand’s product or service are more likely to result in harm to
that brand. CMOs can lead by directing teams to emphasize continuity
and value. If needed, they should look to cut services (a form of
skimpflation) rather than product amounts.”
The majority of consumers (75%) expect prices to continue to
increase in the second half of 2022, and 65% of consumers expect to
cut back on purchases or stop buying altogether in at least one
product category. Consumers noticed the most significant price
changes in the “food and groceries'' category (62%). Forty-one
percent of consumers noted “household products” suffered from
shrinkflation, while 32% of consumers noted that “personal care”
products suffered from it (see Figure 1).
Figure 1: Where Consumers Notice Price Increases, Shrinkflation and
Skimpflation (% of Respondents)
Source: Gartner (July 2022)
Consumers differ on what businesses should do to limit price
increases, but one suggestion stands out from other ideas: 45% said
that companies should stop increasing the pay of high-ranking
executives.
“Executive compensation decisions can harm brands, especially in
inflationary periods,” noted Muhl.
CMOs looking to address consumer concerns around price increases,
shrinkflation and skimpflation can explore the following near-term
actions:
•Message
on what hasn’t changed. CMOs at brands that retain product quality
and quantity despite inflationary pressures should ensure that brand
messaging highlights commitments to continuity in price, ingredients
or suppliers. CMOs should design this messaging to combat the
widespread perception that all products have been subject to
shrinkflation, even if that isn’t the case for their brand.
•Amplify value proposition with functional benefits that save
consumers money, such as the durability of big-ticket items, and
lean in on thrift-related market product attributes that consumers
increasingly care about.
•Offer tech alternatives to staffed services without dramatically
impacting the customer experience. Retailers, restaurants and other
service-oriented brands may find that cutting back on staffed
functions is more palatable to consumers than the product tweaks
that consumer product goods (CPG) brands try, even though the former
is also a form of skimpflation.
