Shrinkflation And Skimpflation Impact On Nigerians
Nigerian consumers are experiencing a troubling trend on two fronts.
With galloping inflation, granted food inflation dropped to 39.53% in July from 40.8% in the previous month, high energy cost including petrol and a depressed naira exchange rate to the dollar means manufacturers, producers, food vendors, service providers are doing all that they can to stay operational and avoid shutting down. It's a challenging time at the moment everywhere.
How do we define shrinkflation and skimpflation.
Shrinkflation is the practice of reducing the size or quantity of a product while the price of the product remains the same or slightly increases. Skimpflation is using less expensive, and perhaps inferior ingredients to produce or manufacture what appears to be the same product or cutting back on services rendered.
In both cases, Nigerian consumers may unknowingly be paying the same, or in some cases more, for a lesser quality product or reduced quantities.
How common is it.
Shrinkflation is easy to see. Nowadays when you buy ground nut or locally prepared delicacies from vendors like moi moi, okpa, pap, fried pieces of plantain or sweet potato, pieces of cooked meat or chicken you'll notice the price might stay the same at ₦100 or ₦200 but the quantity is significantly reduced. This sometimes also applies to prepared meals that have smaller portions to match previous price points. We all saw yam tubers being cut to small pieces to fit previous prices e.g. a large tuber of yam that might now cost ₦3000 could be cut to 3 pieces to match past price point of ₦1000 for each piece. Manufacturers aren't exempted. Remember tin geshia sardines? There used to be a time you would find 4 pieces of fish inside the tin but nowadays you'd see 2 pieces inside. Some detergents, soaps and washing up liquids have reduced in size too yet prices remain the same.
Skimpflation is sneakier and a little harder to detect for example buying a bag of rice in which lower quality rice grains have been blended with higher quality grains and sold to unsuspecting consumers. Atimes the bag of rice might even be layered with multiple varieties i e. low quality rice at the bottom, fair grade rice in the middle and top quality rice at the top. Skimpflation can also happen in service based businesses. For instance a hotel that used to include free breakfast with the room price would remove breakfast or a restaurant that included free bottled water with a meal might no longer provide that.
These are just a few examples but many more exists for regular shoppers to experience. In all these cases the consumer is still charged the same amount but the service has reduced and the consumer doesn't necessarily benefit from those savings.
Why is it done.
Businesses prefer this strategy because it is less noticeable and visible to non-discerning customers since the difference is usually small unlike price increments which can’t go unnoticed by customers. Occasionally, brands may opt for shrinkflation or skimpflation over fears that a price hike will make customers to switch loyalty to their competitors who maintain their prices though they may have reduced their product sizes or cut down on the service they provide.
What to do.
Shrinkflation and skimpflation can be argued to be unhealthy practices but not illegal, per se, although in the case of the rice example that is certainly not right.
So as consumers we need to pay close attention to product details such as size, weight, and quantity when shopping; search out competitors including unpopular brands; alternatively you may downsize, allowing you to get more value for your money or concentrate on the unit price, which provides a clearer view of the actual cost i.e. bigger amounts sometimes have a lower unit cost and purchasing in bulk can often reduce the consequences of shrinkflation. Yet consumers may still need to make a concession: higher quality options might come with higher prices. As far as the effects of inflation go, we just might need to keep adjusting our preferences based on price and our circumstances.
In August 2024, the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) watchdog gave a one-month deadline (i.e. September 2024) for traders, supermarkets and the likes to reduce prices because they say the traders and supermarkets are exploiting Nigerians. Whilst we don't know how this would be enforced it's fair to say shrinkflation and skimpflation won't be ending anytime soon particularly as input cost to produce continue to remain high. Perhaps there is something to be learned from France where from July 1st this year French retailers will have to display notice for two months informing customers when any product has been reduced in size without any corresponding cut in prices i.e. shrinkflation. Makes me wonder what can be done for skimpflation.