SHRINKAGE 101

Shrinkage.

It is a word that means different things to different people. A consumer views shrinkage as the new sweater that is laundered for the first time and is now 3% smaller than when new (woops!). The store owner views shrinkage as the amount of product that is stolen by external customers or internal employees. A manufacturer views shrinkage as the amount of scrap and waste that is incurred in the production process.

Shrinkage’s meaning can change significantly depending on whether you are on the giving end or the receiving end. Lately my wife has been quick to point out that she is experiencing shrinkage in our grocery shopping. The fact is she is buying smaller-sized containers of the same product for the same price as when the container was larger. It irks her that a company somehow things she doesn’t catch this indirect price increase. Here are just a few examples:

  • The facial tissue box that used to cost $1.79 still costs the same, but the tissues are smaller in physical size or quantity.
  • The yogurt container that used to cost $1.29 still costs the same, but its size is 28% smaller.
  • The can of peas that used to cost $0.78 still costs the same, but its size is 6% smaller.
  • The frozen vegetable bag that used to cost $2.00 still costs the same, but its size is 35% smaller.

Perhaps recognizing some of the consumer backlash, she has noticed that on some containers recently bright yellow explosion-style labels are showing up on the front of the package, declaring “Still 12 ounces!” as if that is supposed to be a selling point now.

Then we have the carton of ice cream that used to cost $4.10 still costs the same, but its size is 25% smaller. Shortly after the ice cream trick, one brand of ice cream splashed a big label on its shrunken carton announcing “two bonus scoops included free!” It reminds me of George Orwell’s novel 1984 in which the dystopian government would announce that due to the country’s prosperity, the chocolate ration was being increased. The only problem was that all the while the lead character Winston Smith clearly remembers that the chocolate ration was actually going down (but we’re never going to actually say that now, are we?).

So my question is this: where does a company making a smart decision to increase its profits by reducing its expenses cross over the line to insulting its customers’ intelligence by somehow telling them they are too stupid to notice what is happening? Please just increase the price for the same size and quantity of product, and I will be happy to pay that new price. But don’t make the ploy that I’m too stupid to see that the chocolate ration is going down, not up! If you have confidence in your product, then please don’t play games with my price.

Kathy’s latest catch is toilet paper. Yes, good old TP. She had her suspicions and she finally acted upon them. Upon a careful measurement of an empty TP tube and comparing it to an older empty TP tube, an eighth of an inch reduction was proven. And she thinks it is getting worse.

So now we have to get along on less TP too? Where will it all end? I don’t even want to think about that end.


About James Meadows

Currently I serve as a training team manager for Tyco Integrated Security at a customer-care center in Kansas City. Additionally, I am a business consultant, a freelance corporate writer, an Assembly of God ordained minister, a Civil Air Patrol chaplain, and a blogger.

I believe we are living in the most fascinating times of human history. To maximize the opportunities these times present, I have a passionate interest in leadership development and organizational success, both of which I view as inextricably linked.

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