Shrinkflation and Consumer Demand.

This article examines the prevalence and consumer response to shrinkflation—the practice of reducing product size while maintaining or slightly changing prices—in the U.S. retail grocery market from 2010 to 2020 using NielsenIQ scanner data. It finds that about 1.92% of products were downsized, a rate more than five times that of upsizing, with downsizing generally occurring without corresponding price decreases, resulting in an average 12% increase in price per unit volume. Consumer demand is significantly more sensitive to price changes than to size changes, with a 1% price increase reducing sales by about 1.19%, while a 1% size decrease reduces sales by only 0.56%, indicating limited consumer attention to size reductions. These findings suggest that shrinkflation is an effective strategy for retailers to increase margins and highlight potential policy implications for enhancing transparency and consumer protection.