What's Next, Now: March 2024
This month, our crystal ball predicts shrinking groceries, disappearing DEI commitments, a growing women’s health market, and more.
While talk of “inflation” has dominated the headlines over the past few months, its second cousin has rolled into town: shrinkflation. Shrinkflation describes the practice of companies selling their products in similar packaging, but with less weight, volume, or quantity — or, consumers are paying more for less.
Affecting everyone, even Cookie Monster, political figures are advocating for the “2024 Shrinkflation Prevention Act” to expand regulatory authority and allow the FTC to pursue civil actions against companies that engage in this practice. Data from the Federal Reserve shows that from 2020 to 2022, corporate profits rose by a whopping 75% — five times as fast as inflation.
Shrinkflation is one of the factors contributing to the current “vibecession” — the disconnect between the current state of the economy and consumers' feelings about it. While most measures of the economy continue to improve, things like shrinkflation, as well as rising prices at grocery stores and restaurants, are exacerbating consumers' anxieties.
And speaking of a disconnect, the CEO of Kellogg’s received some flack after recently suggesting that families with strained finances could cope by eating “cereal for dinner.”
As packaging shrinks and prices rise, consumers are feeling the pressure on their wallets. But so far, we’ve yet to see a brand step up as a consumer advocate, instead responding with strategies that help only with rising costs on their end (We’re looking at you, Wendy’s, and your now-defunct plans for dynamic menu pricing.) In the long run, brands must balance how to manage their P&Ls in the face of rising costs while keeping their consumers top of mind.