The incredible shrinking shopping baskets
A host of familiar grocery products are getting smaller while their price stays the same. Why?
Tough times might be weighing heavily on UK shoppers, but one burden, at least, is becoming lighter: their shopping trolleys.
With the cost of getting products onto the shelves rising higher and higher, some suppliers are reducing the size of their wares while maintaining the same retail price.
Imperial Leather soap is the latest item to shrink. Manufacturer PZ Cussons said it was reducing the size of its bars from 125g to 100g, citing a steep rise in the cost of ingredients like palm oil, to avoid a hike in the amount charged to customers.
In February, Cadbury's Dairy Milk bars went down from 140g to 120g - the equivalent of two chunks - while the recommended retail price remained unchanged.
At the same time, Toblerone bars became one triangle shorter to ensure the Poundland chain could carry on selling them for £1, blaming "increases in cost bases".
To producers, it is a rational business strategy. To consumer advocates it has all the hallmarks of a rip-off.
But what both sides could agree is that the trend offers an insight into the psychology of shopping.
Continue reading the main story“Start Quote
End Quote Brandon Leigh PZ CussonsConsumers only have a certain amount of money in their pockets”
At its heart lies the question of why it makes better business sense to reduce the size of products rather than simply charge more at the till.
Certainly, there is little doubt that manufacturers have had their margins squeezed by rising commodity prices.
Cadbury said it cut the size of Dairy Milk to ensure it was still offering "a very affordable treat" even though the cost of cocoa beans has more than doubled in five years.
On the London futures market, cocoa was trading at around £896 a tonne in April 2006. By April 2011 the price was close to £2,000 a tonne.
Likewise, speaking after the announcement that Imperial Leather bars would be shrinking, PZ Cussons' finance director Brandon Leigh said shoppers would always resist price rises more than size reductions.
"The price point has become more important than the size of the product," he added.
"Consumers only have a certain amount of money in their pockets and are paying more for fuel and other items, so I'm sure they would rather this than the price going up."
However, not everyone agrees that the strategy is so reasonable.
Shopping baskets are getting lighter - but so are our wallets
A 2010 report by the BBC's Watchdog programme suggested that some firms had been less forthcoming about size reductions, keeping their size dimensions and packaging unchanged.
Martyn Hocking, editor of the consumer magazine Which?, argues that the tactic is more about befuddling the shopper than providing what they want.
"We think this an underhand way of raising prices," he says.
"If the price doesn't change and the packaging looks identical, consumers are going to believe they're buying the same thing."
So are manufacturers really correct to say that customers would rather get less than pay more?
Dr Sheila Keegan, a chartered psychologist and business consultant, believes it is probably true that shoppers are more resistant to price hikes.
However, she suggests this is more to do with the fact that the increases are more noticeable.
Moreover, she points out that most consumers simply do not have the time or inclination to closely inspect the weights and measurements of their purchases every time they visit the supermarket.
Continue reading the main story“Start Quote
End Quote Saira Khan EntrepreneurIt really, really annoys consumers when suppliers aren't upfront”
"We don't buy rationally," she says. "We're more likely to think about how much something costs than about what we're getting for our money.
"We tend to shop on an adaptive, habitual basis - we buy what we've bought before. Life's too short to go around comparing everything. I suspect most people wouldn't notice [a size reduction]. For a supplier, of course, that's very useful."
At the same time, producers may realise that offering their customers less will scarcely win them a vote of approval - but they argue that they need to respond somehow when the price of raw materials is on the rise.
Entrepreneur and former Apprentice contestant Saira Khan says that shoppers will appreciate these pressures and believes Cussons did the right thing by being open about its move.
However, she warns that brands will face a backlash if they try to sneak smaller products onto the market in the hope that no-one will notice.
"I think most people understand that the cost of raw materials and ingredients is increasing and, in order to give the customer the same price, the size of the product might have to go down," she says.
"What's important is that manufacturers are honest about it - it really, really annoys consumers when suppliers aren't upfront."
In what are tough economic times for many, smaller bars of soap and chocolate may not be the biggest concern to many shoppers.
But, regardless, those lighter shopping baskets will mean a heavier burden on our purses and wallets
Monday 13 June 2011
BBC News - The incredible shrinking shopping baskets
via bbc.co.uk
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