Shrinkflation and consumer demand

This study investigates shrinkflation-the practice of reducing product size while maintaining or slightly changing prices-in the U.S. retail grocery market. We analyze a decade of retail scanner data to assess the prevalence and patterns of product size changes across various product categories. Our findings show that approximately 1.92% of products have been downsized. When comparing total sales, product downsizing is more than five times as prevalent as upsizing. Product downsizing typically occurs without a corresponding decrease in price and is widespread across product categories. Consequently, consumers end up paying more per unit volume. We further find that consumers are more responsive to price adjustments than to changes in product size. This finding suggests that reducing product sizes is an effective strategy for retailers and manufacturers to increase margins or respond to cost pressures, offering valuable implications for retailers and policymakers.