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A Systematic Review of Shrinkflation in Retail Markets

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  • Masahiro Honda

    (Keio University Graduate School of Economics, RIKEN AIP)

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.

Suggested Citation

  • Masahiro Honda, 2025. "A Systematic Review of Shrinkflation in Retail Markets," Keio-IES Discussion Paper Series DP2025-007, Institute for Economics Studies, Keio University.
  • Handle: RePEc:keo:dpaper:dp2025-007
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    More about this item

    Keywords

    Pricing strategy; Package downsizing; Consumer behavior; Package size elasticity; Inflation;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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