Saturday, 19 December 2015

Why This Is Happening To Quality Street Tins

This picture seems to have gone viral, with everybody glad to see what they knew all along - that our products are smaller than they used to be. The term for this in economics is called 'shrinkflation'. This is where sellers surreptitiously reduce the size of their goods (the mass of a chocolate, the size of the tin, etc) as a way to put up the price of their goods while appearing to be competitive.

In other words, there are two ways to increase prices of goods of variable size and quantity - you can do it the transparent way by adding a sum on to the original price, or you can retain the original price and reduce the mass of the product. That is what is happening with those tins of Quality Street - the unit cost is increasing but at a rate whereby the purchase price, relative to former purchase prices, has not shifted in a way that puts off price sensitive consumers.