There are a lot of things that I do not fully understand. We all have things we do not fully understand. There are terms and concepts that we’ve heard about our whole lives… in school, from parents, and in the news… that we really don’t understand, and surely couldn’t explain to others. And with all the information out there, we couldn’t possibly understand everything anyway. It often isn’t until we are directly affected by something that we take the time to gain a better understanding of whatever that is.
With all the talk about the increasing inflation these past two years, I decided to take a deeper dive into understanding what it was, how it worked, and what affected it. While I’ll spare you any complicated details, it was the rapid increase that caught my attention. It was a little over 1% two years ago and is over 8% now (the long-term average is 3.26%). And being a consumer, owning my own business, and having six children (four in college), I thought it wise for me to get a better understanding of inflation, and be better prepared on how to handle its impact.
What really got me thinking about this whole inflation thing was reading a new word this week… shrinkflation. Last week, Merriam-Webster announced 370 words and phrases it added to its dictionary. One of those words… shrinkflation. It is defined as “the practice of reducing a product’s amount or volume per unit while continuing to offer it at the same price.” Hmmm. Sounds deceptive, eh?
I read that word for the first time this week while reading a friend of mine’s blog post. John DiJulius, a customer service expert, introduced this word and how it relates to the customer service recession. (You can read that post by clicking here.
The bottom line is that when things get tough, recessions kick in, and inflation goes up, businesses have tough decisions to make. Do they lay off workers? Do they increase their prices? Do they seek cheaper ingredients or parts? Do they just accept less profits? I knew all of these where options, but was bummed to see that some have come up with yet another option… to simply reduce the size of their product, giving the consumer less, while continuing to charge the same price. The worst part… it is being done with the hopes that the general public doesn’t notice. They know people will throw a fit, and possibly choose a different product or simply not buy, if they raise their prices, so instead, they deceive their customers. As DiJulius points out… “For example, Gatorade reduced its bottle size from 32 to 28 ounces while charging the same price, which is equivalent to a price increase of about 14%.”
There you go… raise the price 14%, without actually hiking the price. And all without the public ever noticing. It’s genius! I can just imagine the joy, excitement, and pats on the back that went on in the meeting where someone made this suggestion.
Here are a couple of images that DiJulius had in his post so you can see the deceit first hand…
So be aware of shrinkflation. You will likely be getting less than you think. And know that the best businesses will never be deceitful, cut down on quality, or sacrifice long-held standards that made them great in the first place.
In 2008, when that recession hit, I was asked what I was going to do in regards to my practice. A friend asked how I was going to manage, what I was going to do to survive, and how I was going to offset the financial strains. While there were many options… raise prices, cut down on staff, reduce the quality of care, etc., I told him I was going to work a little harder and take a little less. I knew that our patients had come to rely on the highest quality of care available and trusted me with their most valuable asset (their health). I also knew that, like a storm, those tough times would pass. And like the strongest trees in the forest, I would still be standing when it was over, while the weakest would fall. That’s exactly what happened then, in my practice, other businesses, and industries as a whole.
As times get tougher, stick with those you know and can trust. Whether its products, services, or even information, the ones that have served you the best over many years, and have never let you down, will be the ones standing strong when the storm passes, there to serve you with honesty and integrity. Shame on those that choose to compromise at your expense… and kudos to those that don’t.