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2011-06-14 10:58:34
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
Consumers only have a certain amount of money in their pockets
End Quote Brandon Leigh PZ Cussons
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 basket 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
Saira Khan
It really, really annoys consumers when suppliers aren't upfront
End Quote Saira Khan Entrepreneur
"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.