I don’t know if you’ve had the same experience as I have when it comes to shopping for goods. I first noticed it when my favourite bath soap felt somewhat small. This was the beginning of a realisation; businesses had started a trend of downsizing in order to fight inflation. Now we see it clearly in beverages and all sorts of food items. It is not unique to Zimbabwe though we have one comical case of it recorded.
Inflation is one of the most reviled things in existence. As such the avoidance of it can be priority number one. The downsizing trend seeks to keep the absolute price, the one you pay the same by reducing the size of the package. Say your favourite hot chocolate brand comes in a 500g pack and you’re used to paying a certain amount for it. The downsizing approach is to sell you a 400g at the same price as the 500g pack. Sounds crazy right? Check your favourite beverage.
Effectively you are of course paying more. Clearly, the amount you pay per gram has increased but downsizing or stealth downsizing is predicated on the idea that peoples minds are fixed on the absolute price, how much they part with. It worked on me and I’m guessing you just realised it worked on you too.
Not always successful
Then there was that one case where it failed dismally. Harare City Parking thought they could sell an increase in their pricing per hour from ZWL$1 to ZWL$2 by stating that they had not increased the price of an hour but rather had reduced the time ZWL$1 is entitled to to 30 mins. But a rose by any other name is still a rose. It’s ambitious to attempt to sell a price doubling as stealth downsizing.
Beverage manufacturers reduced sizes from 500ml to 440ml and 330ml to 300ml. That’s a 12% and 11% decrease respectively assuming price holds the same. A 100% increase could never be sold as price downsizing. It’s also important to consider that in some cases it is difficult if not impossible to apply stealth downsizing. In certain commodities, standard sizes are set and deviation from these has found little success. This is not to say it won’t work on basic commodities as my soap story clearly shows it does.
Good for the Customer
Downsizing can help cushion the blow of inflation on your customers though, this cannot be ignored. Quite frankly we tend to buy certain things in the sizes that are made available to us and these sizes are arbitrary. There’s no real reason why cooking oil comes in 2 litres instead of 2.2 or 1.8 for that matter. So where a good can be provided in a smaller quantity then perhaps it is advantageous to do so. Had the people at city parking considered a reduction to 50 or 45 minutes perhaps they would’ve fared better? Yes, these are still increases but they are palatable. Especially in the view of our sticky wages.
Handle with care
Of course, they are still price increases when measured per unit. But how much of the unit does one really need? If you are considering downsizing for your business just exercise due caution. Think carefully about how customers view and use your product. While someone parking their car may not feel the difference that 5 or 10 minutes that they never use anyway makes they would most certainly feel the difference 30 minutes makes. But if you work on a time basis and know that your clients can be assisted in a 20-minute window where you normally charge for 30 minutes it’s worth considering.