If you listen to NPR’s Planet Money, you’ll have heard the economics term shrinkflation. Shrinkflation is when the price of stuff stays the same, but the amount you get goes down. They’ve now coined another new economics term: skimpflation.
“We’ve all heard about rising inflation. The price of stuff is going up. And if you read this newsletter, you’ve heard of shrinkflation. That’s when the price of stuff stays the same, but the amount you get goes down. The economywide decline in service quality that we’re now seeing is something different, and it doesn’t have a good name. It’s a situation where we’re paying the same or more for services, but they kinda suck compared with what they used to be. We propose a new word to describe this stealth-ninja kind of inflation: skimpflation. It’s when, instead of simply raising prices, companies skimp on the goods and services they provide.”
Examples are hotels dropping breakfast buffets, airlines with hours-long hold times, checking your own baggage, pumping your own gas, and Domino’s delivery times going up. Even Disney has cut tram service from their parking lots to their theme parks.
Marketers sometimes try to spin cost-cutting initiatives as product benefits. Chobani Yogurt reduced the amount of product in their package by 12%, keeping the price and container size the same. On the shelf it looked identical, however, on the packaging, they added “Now Room for Your Favorite Mix-ins!” as if providing less yogurt was for the customer’s benefit.
Shrinkflation and skimpflation are suddenly very noticeable because so many changes are happening all at once. The American Customer Satisfaction Index (ASCI) reports customer satisfaction is at its lowest point in 15 years.
In order to maintain their profit margin while costs are rising, businesses are being “creative”. Many are shifting to less expensive components or lightweight packaging, hoping customers won’t notice.
We’re all feeling the pressure of increasing prices, but it’s how you communicate the impact to your customers. Do you play “shrinkflation/skimpflation” games or work with your customer to find a solution that is palatable and fair?
Will Rogers is famous for saying “It takes a lifetime to build a good reputation, but you can lose it in a minute.”
The road is easier together,