VIDEO There are a lot of angry shoppers wandering the aisles of Canada’s grocery stores, turned off by shrinkflation and brands that they think are unfairly using inflation to justify price increases , according to a new survey by marketing company UAB Omnisend.
Omnisend said 72 per cent of respondents said shrinkflation — the practice of reducing the size of a product but charging the same price — was especially evident in groceries, while 92 per cent said they had noticed instances of shrinkflation.
“Consumers understand that costs change, but they want those changes to make sense,” Marty Bauer, an e-commerce expert at Omnisend, said in the report. “Shrinkflation creates the opposite impression: that a company is hoping customers will pay the same and notice less. In many cases, it can definitely feel like an insult.”
Almost 90 per cent of respondents said they think brands are using inflation as a crutch to “unnecessarily” hike prices , changing how they view products they used to trust and causing around a third to stop buying go-to names.
Shrinkflation reared its head during the worst of the recent inflation crisis when Canada’s consumer price index accelerated to 8.1 per cent in mid-2022, forcing the Bank of Canada to hike interest rates .
Retail analyst Bruce Winder said consumer packaged goods companies used shrinkflation to try to protect margins and price points for their products.
“I think (shrinkflation) is happening a little less,” he said. “A lot of the companies that did it have been bitten … because they’ve seen volumes drop off, probably because they’ve seen trust go down.”
Canadians aren’t the only ones who noticed reduced package sizes.
Omnisend, which also polled people in the United States, Australia and the United Kingdom for the survey on a variety of consumer concerns, recorded similar shares of shoppers noticing shrinkflation.
In the grocery aisle, 65 per cent of Americans, 54 per cent of British consumers and 58 per cent of Australians reported seeing shrinkflation.
Bauer said grocery shrinkflation is especially a gut punch for consumers because it’s an area that causes them a lot of financial stress.
For example, four in 10 Canadians said prices for groceries felt the most out of control of their everyday costs, followed by gas prices at almost two in 10.
Food inflation continues to exceed overall inflation in Canada, coming in at 3.9 per cent year over year in June compared to 2.8 per cent for the full consumer price index.
Geopolitical events are mostly responsible for pushing up food prices, including the war in Ukraine and the closure of the Strait of Hormuz, which continue to put pressure on fertilizer costs.
Winder also cited climate change and the increase in fires and shifting crop yields — “very different than they were before” — as factors in the higher food prices.
“There’s just a number of things that have created a perfect storm, sort of post-pandemic, on why costs are going up,” he said.
For example, 44 per cent of Canadians blamed tariffs and trade policy, followed by government policies at 35 per cent, global supply chains and shipping costs at 23 per cent and retailers at 16 per cent.
Regardless of who or what is to blame, people are feeling “worn down” when it comes to covering costs for essentials such as groceries, utilities and rent, the survey said.
In Canada, 36 per cent used credit cards to cover essentials, “knowing they might not pay if off right away,” the survey said, while 16 per cent dug into savings they were holding for another purpose and nearly 13 per cent resorted to buy-now, pay-later plans.
“Credit cards, buy now, pay later, dipping into savings, borrowing from family and friends, these are all strategies that were once meant to help manage unexpected expenses,” Bauer said. “The problem is that once these financial safety nets become part of the monthly budget, consumers are left with fewer options when the next unexpected expense comes along.”
Ominsend surveyed 4,000 consumers in the U.S., Canada, the U.K. and Australia in March. Its survey has a margin of error of plus or minus three per cent.
• Email: [email protected]
VIDEO 