‘Shrinkflation’: Choice Pushes for Supermarkets to Disclose Product Downsizing

Two boxes of Kleenex tissues in Ann Arbor, Mich., on May 25, 2022. Dee-Ann Durbin/AP Photo

Supermarkets should be forced to reveal instances of “shrinkflation” as a warning to consumers, according to advocacy group Choice.

Shrinkflation refers to when the size or quantity of a product is reduced while prices remain the same, part of the reason products may “shrink” in size is because rising inflation and costs force businesses to adjust their product offering.

Rosie Thomas, director of campaigns at Choice, said that while unit pricing helped with comparing products on shelves, not everything was being read by the public, with the font sometimes too small for the visually impaired.

“Unit pricing helps with comparing the products on the shelves, but if you have someone who has always bought the 360-gram box of cereal, and all of a sudden that has become a 300-gram box of cereal, you may not notice because very often the packaging looks the same,” Ms. Thomas told the Senate Select Committee on Supermarket Prices, in Melbourne on March 13.

“Our recommendation here is based on developments in Europe. Some supermarkets started doing this voluntarily; putting up notices to say the size of this product has gone down.

“I understand in Spain, the competition regulator has actually named shrinkflation as an unfair method of competition, and similarly requires notices in the supermarkets disclosing this.”

Since the beginning of this year, supermarkets in Australia have come under scrutiny for price gouging, yet have consistently maintained that they do not engage in the practice.

Coles, one of Australia’s major supermarkets, recently responded saying it was “working hard against high inflation, with rising costs that affect the whole economy including farmers, suppliers, and retailers, and which impact the prices customers pay at the checkout.”

“Coles has kept price inflation in its supermarkets below the rate reported by the ABS for the past 16 quarters. For July-September, supermarket inflation declined to 3.1 percent. Fresh food saw a deflation of 2.3 percent,” the supermarket said in a statement.

Another leading retailer in Australia, ALDI, which operates more than 570 stores across the country, also responded saying the last few years have been “challenging” with supply chain disruption, global conflicts, and natural disasters contributing to the increased cost of doing business.

“In 2022, fuel costs doubled and international container freight increased more than four times compared to the previous year,” CEO of ALDI Anna McGrath said. “These factors all impacted ALDI’s supply partners as well as our own operations.”

Researchers Offer New Tool to Help Customers With What to Buy

Researchers have suggested an alternative to the commonly used per-unit pricing label, and that is to display a “per-serve pricing” displaying the cost of produce by serving size.

Their study found that unit pricing gave a perception that some produce was not value for money. For instance, green beans are priced at $12.99 ($US 8.61) per kilogram but only 97c per 75g serve.

“Per-kilogram pricing doesn’t communicate how much is needed for a healthy serve,” Associate Professor Fiona Newton from Monash said.

“Per-serve pricing offers consumers a straightforward way to gauge how much it will cost to meet their daily vegetable and fruit servings.”

The tool, designed by Monash Business School, Deakin University, and Ritchies Supermarket, aims to simplify grocery shopping by providing clearer pricing information.

Initial trials have been completed, with an increased purchase of loose fresh vegetables observed.

However, the impact on fruit purchases was insignificant, possibly due to differences in recommended serving sizes between fruits and vegetables.