Beware the disadvantage of downsizing

Kellog’s is just one of many food companies that have downsized products and packages so as not to pass along price hikes to cost-besieged consumers.

One of our shoppers summed things up by saying: “Prices are soaring, and packages are getting smaller. I think we are in a pickle.”

The packages she is talking about are those that have slimmed down as a way of passing on cost increases, not the cute little cans of Coke for which some consumers are willing to pay a premium. Not unlike producers, many consumers are having a hard time and shopping more carefully than they have in years. Wondering about package size changes makes shopping even harder.

An Aug. 8 front page article on rising prices in the Wall Street Journal reported that 5% of grocery packages are shrinking. The article states that Kellogg’s “has shrunk about 10% of its U.S. breakfast cereal boxes by an average of 2.4 ounces” and that “by giving consumers less for roughly the same price, food executives hope to keep consumers from moving to cheaper brands.”

Maybe it will, but shrinking packages make some consumers who feel they’ve been fooled really angry, especially when they aren’t aware they are buying less until they get home. Packages have been downsized during many previous periods of rising prices, but none of those periods have been quite like this one.

In today’s marketplace, consumers who know that they should be eating and drinking less are still buying larger and larger packages because they are often more cost effective and keep food fresh for longer. More and more packages are being flagged when they are upsized. “NEW LARGER SIZE,” “NEW RESEALABLE PACKAGE,” “NEW EASY OPEN PACKAGE,” “NEW PULL TAB” or “NEW POP TOP.”

The prevalence of all those announcements makes the failure to acknowledge downsizing feel more deceptive than ever before. Except for packs touting a 100-calorie size, have you seen any flags announcing “NEW SMALLER SIZE,” “NEW BUDGET SIZE,” “NEW ‘EAT LESS’ SIZE” or “NEW REDUCED-PORTION SIZE?”

Besides building trust, flags like this might actually help sell more units to consumers, who believe that buying smaller sizes helps:“There are dietary upsides to downsizing, and I recognize and rationalize them. More packages are getting like the 100-calorie packages. With smaller packages, I am hoping to be fooled into eating less as well as getting less for my money.”

“The smaller sizes may help get us all back on a diet (yeah, right!) I actually appreciate not having to buy huge things just because the rest of America thinks they need to super-size it. I don’t want to be super-sized!”

Trust busters

Doing business as usual means acknowledging and flagging positives and burying negatives in the hopes that few consumers will notice. That doesn’t make sense when so many besieged consumers are feeling that the cost of everything is going up.

“The price of gas and the rising cost of food and non-food have put us in a very hard situation. We just do not have that much money coming in.”

Some believe that everyone is out to fool them. One asks: “How can the price of gas raise the price of little cans of cat food?”.

The adorable little girl who seemed to be singing her heart out at the Beijing Olympics fooled millions of people around the world. Today’s packagers shouldn’t forget that they too live in fish bowls, where blogs damage reputations. Even consumers whose everyday lives haven’t changed say they have begun to “stop and think before they buy” and “teach our kids to stop and think before they spend.”  They have been selling houses and stocks at a loss, going from two-car to one-car families, forsaking stay-at-home mom status to return to work part time or take second or third jobs, struggling to pay increasing housing fees and college tuitions, combining trips to save gas and cutting back wherever they can.

Groping for who and what is trustworthy is more important in today’s marketplace than it has been in years. Many of today’s consumers are more likely to check freshness dates than unit prices-they have gotten out of the habit of using unit pricing unless they are specifically interested in comparing the price per ounce or quart of two competing products. That means that discovering that the package has been downsized is likely to be done at home, when the package doesn’t last as long or serve as many as they expected. In-use discovery is a real trust buster, and consumers have lost trust in brands or companies that make them feel duped or stupid.

Feeling dumb or taken for a fool is an especially dangerous feeling at a time when trust in food and other consumer products is being eroded by a string of alarming dangers, most of which are based on breeches and violations of safety protocols. Consumers have been alerted to safety problems in category after category. Until recently, products like spinach, tomatoes, peppers and dog food had been safe for as long as people could remember. Now, a new safety issue seems to pop up between every natural disaster.

“If it’s not financial collapse and flooding, it’s poisonous tomatoes and global warming. We’re walking, pardon the pun, on very thin ice. The bank, the broker, the mortgage holder, the mortgage insurer, the toy companies, the government, the meat packer, the most trusted supermarket! Every company and institution is letting consumers down.”

“Whole Foods was one place I thought that whatever I bought was safe and healthy. Now it turns out that even they have been selling contaminated ground beef. If they can’t trust their suppliers, or watch them carefully enough, how can I trust them? And if we can’t trust Whole Foods, who can we trust? What’s left for us except raising our own food or becoming vegetarians or both?”

When customers are surprised to find less product
in the packages than the last time they purchased it, they lose trust
in the seller-and sometimes in the retailer as
well.

It’s hard for many packagers to cope with
rising commodity and transportation prices without passing on price
increases to consumers. And ‘sizing to price,’ or shrinking the package
so it can be sold at old price points, is one of the ways to do
it.

The real downside of this kind of downsizing is
letting down customers who trusted you. It’s almost impossible to grow
a brand or a business without trust, and this is an especially risky
time for playing loose with your consumers’ trust in you or your brand.
Add surreptitious downsizing to all the other letdowns, and brands lose
whatever luster they’ve been fighting so hard to
regain.

In this market, downsizing in a way that as
few people as possible will notice, has the potential to shrink
customer bases in parallel with packages.
F&BP