How To Navigate The ‘Shrinkflation’ Economy While Protecting Quality And Brand Promise


You’ve seen the headlines and felt the pressures of the realities of a post-pandemic economy. As businesses flex their creative muscles to return profit margins to their former glory, many are looking at product size. While shrinking sizes can be a cost-efficient and timely switch with fast results, it also draws immediate customer impact. There are better ways to navigate this economy while protecting quality and brand promise.

1. Review Sales Data to Discover Efficiency Opportunities

Let data be your guide as you explore opportunities for greater efficiency. Take a broad look at the total data set for your sales patterns to establish a baseline. Then, drill down to more recent segments where you may better project current buying behavior.

If you have loyalty programs where you can assess individual customers’ buying habits, extract buying frequency and product size data. Isolate buying patterns against product size to see what’s most preferred and when. Doing so can reveal otherwise missed opportunities, like the ability to reduce a product option.

For example, imagine you’re selling tea in 20-count boxes, but your most popular options are available in a 40-count box. Customers may enjoy not having to buy boxes as frequently, but at what cost to your business? The manufacturing costs, labeling changes, and shelf space may be costing you more than you think.

Store data may also reveal that the best sales and coupons are applied to the 20-count boxes. By eliminating the larger quantity item, you can boost manufacturing efficiency without sacrificing quantity or quality.

2. Break Down the Product Lifecycle to Determine How Much Size Matters

Don’t close that spreadsheet just yet; there’s more insight to uncover from your customers’ buying habits. After looking at buying frequency to explore product range, it’s time to dig into individual product sizing.

The term ‘shrinkflation,’ when a product size changes but the price remains the same, can be seen everywhere. The amount of cans in a seltzer water case goes from 12 to eight. The ounces in a bottle go from 16 to 12. However, not all product sizes shrink with the same customer impact. Sometimes, product size changes are welcomed in certain categories.

In the fast food industry, it’s widely understood that sizes have moved beyond super, reaching even mega size. As customers consider how they want to buy and enjoy such items, many are intentionally buying smaller. Whether it’s a health preference or a budget move, it’s a change worth noticing.

Launch a post-purchase survey, isolating those buying smaller sizes to a subset of questions. If the data indicates that they’d prefer more modest sizing, stress-test this change in sample markets before converting completely. By responding to customer preferences in size, you can maintain quality and price and delight customers at the same time.

3. Rethink How You Fulfill Products in a New Economy

Shrinking sizes often track back to the journey your product must make after manufacturing. Shipping weight matters and small changes in individual package sizes can present attractive opportunities for brands. Before you shrink, rethink and retool your product fulfillment process to ensure you’re at your most efficient.

Examine your shipping process at every level. Identify the cost per shipment, taking into account surcharges for fuel, timing, and parcel sizes. Product weight is one of the immediate benefits of changing product sizes, but changes like better route planning can be cost-saving too.

Upgrade your direct-to-consumer experience to make direct sales efficient and enjoyable. Explore subscription options, a strategy that benefits you and the consumer. If you’re selling bath and body care for the whole family, offer subscriptions supporting the demands of your busy customers.

A subscription creates sales consistency and shipping planning opportunities, which can help determine manufacturing needs. For your customer, a subscription eliminates a to-do list item and often results in savings on products and shipping. Keep in mind your warehousing relationship will be integral to this strategy, which can ensure subscriptions are fulfilled and expectations are met.

Preserve Product Quality and Customer Loyalty

As you navigate today’s economic pressures, shipping landscape, and customer expectations, let quality be your north star. Preserve the features and benefits of your product with a vengeance, ruthlessly protecting what your customers have come to expect.

If product changes are needed, go above and beyond on service and training to ensure your customers are well taken care of. Monitor and address customer feedback through whatever changes unfold, taking action and updating processes in response. By prioritizing the customer experience throughout change, you can improve your initiative’s effectiveness while preserving trust, loyalty, and brand legacy.



Source link: https://www.forbes.com/sites/johnhall/2023/09/17/understanding-shrinkflation-and-why-its-important-for-your-business-to-always-prioritize-quality/

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