A Systematic Review of Shrinkflation in Retail Markets

Masahiro Honda
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Masahiro Honda: Keio University Graduate School of Economics, RIKEN AIP

No DP2025-007, Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University

Abstract: This study conducted a systematic review of shrinkflation, a pricing strategy where product sizes are reduced while prices remained unchange, effectively increasing unit prices. Firms widely adopt this strategy in the retail market to increase profits without triggering consumer resistance to direct price hikes. Prior research was categorized into three themes: (1) determinants of shrinkflation, including inflation, cost pass-through, and consumer inattention; (2) shrinkflation as a firm strategy, focusing on size elasticity, trade-offs between size, price, and quality, and package design; and (3) the impact of shrinkflation, covering macroeconomic consequences, perceived unfairness, and unit price display. The synthesized findings showed that the package size elasticity of demand under shrinkflation ranged from 0.12 to 0.80, which was broadly lower than price elasticity, making shrinkflation an effective cost pass-through strategy for firms to maintain profitability. However, this approach also poses risks, such as customer attrition and reduced consumer welfare.To address these concerns, enhancing transparency measures, such as unit price labeling and clearer information disclosure, has been found to be effective. Finally, this study discusses implications for future research directions based on pricing studies, as well as recommendations for corporate strategies and policy regulations.

Keywords: Pricing strategy; Package downsizing; Consumer behavior; Package size elasticity; Inflation (search for similar items in EconPapers)
JEL-codes: D12 D22 E31 L11 M31 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2025-04-30
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