Shrinkflation: Does size really matter?

Shrinkflation is the practice of reducing product sizes while keeping prices the same – a subtle form of inflation many consumers overlook.  

In this episode, we explore new research by Aljoscha Janssen at Singapore Management University, examining how widespread shrinkflation is in retail, why consumers react differently to size changes than price rises, and what this means for transparency and consumer protection. 

Read the original research: https://doi.org/10.1287/mksc.2024.0948  

Transcript

Hello and welcome to Research Pod. Thank you for listening and joining us today.  

Shrinkflation is something you may have seen out on the shelves of your local shops or even held in your own hand – things feeling a little lighter, or less, compared to what you used to get for the same price. If prices increased for the same amount of product, well, that’s just inflation. However, is that same percentage change in the price per gram of, say, a chocolate bar, a little easier to swallow if the bar itself is smaller while the price you pay remains the same? 

A recent study by Aljoscha Janssen at Singapore Management University in collaboration with Johannes Kasinger at Tilburg University offers invaluable insights into this topic. Their work is significant for consumers who should be aware of excessive shrinkflation, retailers who want to increase profit margins, and policymakers who wish to regulate this.  

The phenomenon of shrinkflation is recognised worldwide but there is little research understanding trends, implications, and consumer reactions.   

Inflation, the year-on-year price increase of any given product, is obvious to us as consumers, because the same grocery shop now simply costs more than before. What is less obvious, however, is when product prices stay the same, but you get less for your money. The notion of less bang for your buck is not new. Despite the word shrinkflation only being coined in 2009, the concept and practice have been around for a long time. For manufacturers and retailers, producing smaller products saves money, relieves cost pressures, and increases profit margins more effectively than raising prices. This success has prompted widespread shrinkflation especially during periods of high inflation.  

Policymakers and consumer protection agencies call for consumers to be protected from shrinkflation and for manufacturers and retailers to be more transparent about such practices. France has led the way with this and in 2024 passed a law that retailers must make consumers aware of shrinkflation. While in the USA, certain states now insist prices per volume are clearly displayed.  

Despite these efforts and global news coverage, shrinkflation is still undisclosed and unknown in many parts of the world. This appears an intentional act to obscure the practice so profit margins can be increased while consumer demand maintained.  

The first step to making change is to understand the problem of shrinkflation – specifically it’s prevalence and the consumer’s perception of this issue. But this is challenging for economists because large volumes of real-world data need to be analysed using advanced statistical techniques, where confounding factors are accounted for. The interpretation of results is also not straightforward because multiple contributing factors may explain a finding, and untangling these to isolate the key contributor is difficult.  

To address this challenge, Janssen and Kasinger analysed a decade of consumer data covering 4 million distinct products sold in almost 50,000 retail outlets in the USA. Retail outlets ranged from grocery stores and mass merchandisers to drug stores and other retailers, and compared the prevalence of downsizing to upsizing and their associated price changes. To clearly identify true size change, the researchers excluded products such as fruit, vegetables and deli items which naturally vary in size. Only products with standard sizes where a permanent change to a smaller size took place were analysed.  

The researchers’ paper on Shrinkflation and Consumer Demand published in Marketing Science in 2025 finds that downsizing is five times more common than upsizing with just under 2% of products having undergone the former. This practice is prevalent across product categories, but items such as snacks, cereals, detergents, and sanitary products have the highest rates. It seems unlikely that the reason for downsizing is customer preference, but instead an intentional act to increase profit margins.  

Interestingly, the research also examines whether downsizing is confined to more recent years. The data from 2010 to 2020 shows downsizing occurred throughout this period, indicating practices like shrinkflation have been ongoing for more than a decade in the United States retail grocery market. 

Next, the researchers wanted to know how size changes influence prices and sales. They found upsizing was accompanied by price increases, while the price stayed the same for downsizing, meaning the consumer pays effectively 12% more per volume for the downsized product. Despite this, sales of downsized products increased by 6% following size reduction while sales doubled for upsized products. This suggests despite downsizing, consumers continue to buy the same product either because they are oblivious to the change, or do not want an alternative product. Such increased sales assure retailers that these practices are an effective strategy for them to boost profit margins with little consumer dissatisfaction.  

Using a constant elasticity demand model analysis, the researchers determined that consumers are more sensitive to price increases than product size reduction. The team acknowledge biases could influence this finding, but believe their robust analyses limit this risk and that the data collectively indicates consumers underreact to downsizing. Janssen and Kasinger also examine why consumer reactions to price and size differ. Their findings suggest consumers are unaware of the size change because retailers hide this while more openly disclose product size increases.  

When interpreting results, it’s important to note there can be other reasons for findings besides the assumed one. Take for example, the finding that consumers underreact to reduced product sizes. Evidence suggests this is because they do not realise the product is smaller due to nondisclosure from the manufacturer or retailer. This may be the reason in the majority of cases, however it is possible that for certain products the consumer is aware and either does not mind or may prefer smaller portion sizes because of healthy eating or an inability to stock larger volumes.  

So, what does this mean for consumers? Janssen and Kasinger’s important study confirms shrinkflation is common in the USA retail market and in most cases remains undisclosed.  

Consumers appear more sensitive to changes in price than product size, so continue to buy the product regardless of its downsizing.  

This notion aligns with the underreaction of consumers to other types of non-salient price attributes such as taxes and added fees. These underreactions incentivise retailers to use obfuscation strategies in a deliberate attempt to increase profit margins, despite bring to the detriment of their consumers.  

This work may prompt consumer protection agencies to advocate with policymakers for improved transparency about size changes. Any product size changes should be clearly communicated to consumers as is already the case in France. Alternatively, it could be mandated that the product price per volume is displayed, although research suggests the disclosure of this does not significantly change consumer reactions. Either way, regulation of downsizing and shrinkflation is needed to protect consumers and the onus is on policymakers to implement this.  

That’s all for this episode, thanks for listening. Links to the original research can be found in the shownotes for this episode, and don’t forget to stay subscribed to ResearchPod for more of the latest science! 

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