Topic: Shrinkflation (Read 403 times)

For me to combat inflation if I were running a company i will do some measures to be able to cope up with the inflation. I would increase prices that is acceptable to the customers. Reducing expenses by cost cutting or finding more efficient ways to operate. Try to negotiate to the suppliers to ask for price support or reduce the prices of the goods that they are supplying to the company. Diversifying revenue can help as well by expanding or offering new products or services. So it would depends on the company what is the best solution to cope up against inflation.

I think that's a misnomer is a bad and not good solution as you say "reduce the quantity (and often the quality) of product to sell it at the same price as before" and another option I think is to adjust its pricing strategy to reflect changes in inflation, rather than using the depreciation model. Yes, I think this is deemed necessary and a consideration for companies to contain and fight inflation in the framework of increasing production and distribution efficiency to reduce costs without sacrificing quality or quantity.

That's a marketing strategy to remain in business. Because not everyone understands inflation, a company cannot simply increase the prices of its products as it may disappoint customers. So, you don't have to hate it, just accept the reality that we are all affected by inflation and businesses are trying to keep their companies surviving during these tough times.

This sounds nice in theory but in practice those managing a company respond to the stock holders of such company, and those people care about the profits their business can produce, and if they concentrated on the quality of the products they offer regardless of the profits they can produce they will soon find themselves without a job.

So measures like offering less product for the same price are measures which are implemented relatively quickly and which are not temporal at all, and I know this is true as I take the time to look at the price of everything when I buy my groceries, and over the years many goods have reduced the product they offer and increased the price at which they offer it.

If I were running a company and faced with the challenge of inflation, my first priority would be to maintain the quality and quantity of my products or services. I believe it is important to maintain customer satisfaction and brand reputation, and reducing the quality or quantity of products is not a sustainable solution.

However, simply maintaining quality and quantity may not be enough to combat inflation. One strategy I would consider is to innovate by developing new products or services that are less affected by inflation or that can command higher prices. This may involve investing in research and development or exploring new markets.

Business is business, and everything else is irrelevant, considering that we have already become a society that is almost completely dependent on producers and sellers, and self-sustainability is becoming a fairy tale that even children no longer believe in. When the system makes you an "addict", then it is very easy to manipulate you, even if you realize that you are being manipulated.

A good article for those who want to see how it looks on concrete examples -> Here's what that looks like.

What about those companies that decrease the size and the quantity yet sell it at a higher price not only to fight inflation but also to stay profitable during these hard times without having any care for their consumers? Yes, that happens and we can always see that happening at lower scales and companies that are not too famous or average.

Personally, as you said, I wouldn't mind getting the exact same product that I like at a little bit of a higher price if the quality is the same, or, it is also not bad if the quantity is decreased but the quality is intact and the price is the same.

Not only that, these companies then have the audacity to still increase the underlying prices on these reduced quality and quality products a few months later. I can understand if there is an actual issue with ingredients going up in price and that will be an element of it, but you so often hear about increased profits in these companies too. There are definitely limits though and consumers are getting much more savvy to these type of hikes, when the quality drops especially it makes it easier to jump over to rival products which may even start to become superior. These big companies often walk a very fine line between covering increased costs and pushing away long term buyers of their products, thankfully it is much more visible now and backlashes can often cost them more money if they're caught.

Diverting company funds to buy bitcoins can be an effective strategy to fight inflation in the long term, as bitcoins are considered relatively stable assets against inflation and movements in the value of other currencies. You should consider your company's risk profile and liquidity needs before deciding to invest in bitcoins. Investing in bitcoins may not be suitable if your company requires high liquidity or has a low risk profile.

Moving funds back from bitcoin to the company once things are back to normal can be a good move to reallocate funds to more active business operations. However, you should consider the fluctuations in the bitcoin price at the time, and sell bitcoins at the right time to maximize profits.

It's not that simple with the current situation. The inflation we're currently experiencing is "sticky". Plus to "combat inflation" is the Cental Bank's job because it's in their mandate to maintain price stability. What you're saying is to combat the effects of inflation, which really is a symptom that inflation is getting more uncontrollable. But in my opinion, with still too much money in the system, demand will remain to push prices up.

The problem is that businesses are using the current inflationary environment by raising their prices and/or decreasing their production in an effort to further boost their profits under the guise of global inflation. Businesses and corporations might not be able to stop inflation, but they can certainly make a bad situation even worse. In this country, supermarket chains are hitting records for earnings during a time that is typically characterized as unsettling and underwhelming. It's a confusing situation; on the one side, governments allow prices to rise continuously because there is little to no oversight, and on the other, businesses contribute to inflation since they are greedy to raise their enormous profits.

Very interesting. If I'm not mistaken Shrinkage is a fraudulent practice that can undermine consumer trust in a brand. While it can help a company maintain profit margins in the short term, it can ultimately lead to long-term losses as customers may seek alternatives.

To combat inflation, companies can explore various strategies such as increasing efficiency in the production process, negotiating better prices from suppliers, or finding alternative sources of raw materials. They may also consider offering products at different prices or offering discounts for bulk purchases. I think the solution for the win win solution is transparency is the key. Communicating openly with customers about price increases can help maintain trust and loyalty.

Actually it's quite understood that during occurrence of inflation it affects commodities and raw materials for manufacturing industries, so during inflation things began to accelerate and double it price, but a good manufacturer most keep up to standard and give official announcement of increment of product because of the conditions they purchased a raw materials for production, and it happens when a country is harmonised in aspect of governance, because producing a substandard materials because of inflation and it caused harm to humans after used, I think it will bring or introduce downfall to that particular industry, quantity production because of inflation is not ideal for someone who want it's industry to have a reputation and recommendations.

While inflation is a normal feature of the economy, hyperinflation is seen as a shock to the economy due to inflation, the prices of these products have gone up a lot which is hurting the economy. Savings will help the economy recover uncertainty increasing people's savings reduces consumption. But reducing costs will not increase demand and if there is no demand, entrepreneurs will not be interested in investment. Even if there is a crisis, they will be able to meet their product demand from savings.

Inflation is telling you to stop eating the junk food and go start living a more healthier life style. Hahaha.

But that's where it actually starts. When the plebs like us start to notice that inflation is starting to take away more and more of our savings, that's when we budget our money more carefully. It helps lowering demand, and therefore also starts to help in lowering inflation. But there's a negative effect. A Recession. That's because business and services would also have lower profits and will be forced to get rid of a percentage of the company's employees, OR be creative = smaller amount of Potato Chips.

Simply, to defeat inflation there must be a recession. The Central Banks must cause a recession, through monetary tightening, as early as possible while the economy is still strong and while the consumers still have their savings. It will make the recovery faster.

Yeah I noticed this also. Basically when you go shopping you will notice two things

1) Products which cost 50% more

2) Products which cost 10-20% more but less quantity

Basically the bag is the same size except the label has indicated there is less contents inside. Very common with potato chips and cereal boxes.

If I were in charge of a business, I would prioritize increasing productivity, cutting expenses, and identifying fresh development prospects.
Finding ways to cut costs without compromising quality is a possibility. This can entail revising supplier agreements, identifying more effective manufacturing procedures, or cutting overhead costs. Alternatively, you could simply raise prices to keep up with inflation as another option. However, this can be tricky because it might lead to customers looking for less expensive alternatives.

If they downgrade their products or food it will affect their market as customer like the originality of the products itself. For example, in here the Jollibee fast food is actually popular but due to inflation you could notice that their gravy needed to be served if you don't have any orders but before you could actually ask a gravy as long as you like. People find it displeasing so they return it, however the prices of the menu increases which people had no choice but to pay extra for the choice of their quality.

I can totally relate! I feel like crap looking at the snacks that I usually buy from time to time becoming full of air rather than actual chips/fillings/food size! Really degrades the nostalgic feel of reminiscing about the childhood days that I long for every time I open those snack brands. And even if it weren't related to that, it's still freaking disappointing looking at something expecting it to have a lot inside of it because of how it is packaged but end up seeing just a few bits and a ton of air. It's like buying air inside a pack and getting a bit of food for free!

But, on a business owner's side though, I'd probably be making the same decision since nowadays people prefer the cheaper stuff more along with those "30% Extra" labels despite knowing that it isn't even real. I mean, if a person starts a business, his main goal would naturally be profits. And going for the strategies that would make products sell more and give out the most amount of profit possible would obviously be the choice he'd prioritize most.

What a businessman can add to this strategy to make it as fair as it can be to the consumers though is to make sure that the product getting adjusted in terms of quality or quantity won't affect the actual purpose of the product. If it does, then find other ways to cut costs or just increase the price with a reasonable amount that wouldn't be too much for the consumers but would still give you considerable profits. That is, if a businessman really does care about the consumers.

If that is your preference that is cool, however the fact that a great deal of companies do this should tell us that for them it is preferable to offer less product for the same price than the same amount of product for a higher price.

Customers are very sensitive to any price increase, and if a company raised the price of their products in order to keep up with inflation then they will lose customers against a company which decided to offer less for the same price, and about how companies could combat inflation there is really not much they can do, as even if they bought their supplies before the prices went up, at some point they will have to buy again at inflated prices, so as you can see companies are also victims of the inflation caused by the governments.