Shrinkage at the Supermarket

A trip the supermarket may not fill up your cart as much as it used to. It turns out that rising gas and food prices have convinced many companies to offer their products in smaller packages. So a 16 ounce box of cereal now may only contain 14.5 ounces. The price stays the same as it was for the larger size. The companies say they are doing this instead of raising the price on the 16 ounce item.

It's an interesting strategy because the change is not immediately noticed. We tend to grab a box or a can of food by looking at the label rather than the weight. If the price seems about what it always is, we don't stop to think about it. But later on, people may notice that their breakfast cereal doesn't last as long as it used to. Now the revelation that the food companies resized their products with hardly any publicity, has some feeling resentment towards those brands.

I'll be curious to see if this business model works. Over time, people seem to accept certain market changes. I remember when $3 a gallon gas first hit the pumps. People complained but then accepted the change and kept driving.

With food, it may be different as there are more choices. For a low cost cracker, it may be very important to keep the price stable at 99 cents by shrinking the package. In this case, people buy the product because it's cheap. A high end snack may be able to get away with charging more for the same amount. Here the consumer may value taste, prestige, or quantity above cost.