The double-barrelled pressures of inflation and staffing shortages are forcing food businesses and grocers to take cost cutting measures and customers are noticing, according to a recent survey.
The changes have led to media stories about the rise of “shrinkflation” and “skimpflation.” The former refers to reducing product sizes while maintaining price, and the latter refers to any number of ways retailers can reduce service levels to try and prevent raising prices.
The twin trends were the focus of a recent Field Agent Canada study, in which they surveyed 1,554 consumers (Feb. 1-6) to see just how much these issue were having an impact on the Canadian grocery shopper experience.
In terms of so-called skimpflation, fully 61% of respondents said they have noticed fewer employees in grocery stores in recent months, and 44% said they have experienced worse customer service.
And when it comes to shrinkflation, 96% said they’ve noticed higher prices overall and 58% said they’re seeing smaller product sizes.
Consumers' recognition that they are getting less for the same money was one of the most surprising findings from the survey, said Field Agent Canada GM Jeff Doucette.
In the past, shrinking sizes was considered an innovative way to contain costs by some producers, he said. “Now it seems consumers are on to that.”
Food companies will have to ask themselves if it’s worth the trouble to make all the changes to reduce product size if customers realize what it is—a hidden price increase.
With so many other prices going up, the better strategy would be to increase the price and just be transparent about it: “People are sort of expecting it,” he said. “With everybody else taking price increases today, I would suggest you're probably just better to take a price increase instead of trying to do all of that.”
Meanwhile, retailers should be paying attention to how their customers react to the skimpflation happening in-store.
“Consumers are really noticing that [grocers] are cutting back in terms of the store labour component in general. That service is getting worse, there's longer lines at checkout and shelves are less [well stocked].”
However, while grocers are undeniably dealing with a host of new problems and challenges, Gary Sands said the Canadian Federation of Independent Grocers has not heard from its members about having to cut staff in response.
“The supply chain is very tired after two years of a pandemic. We have had catastrophic flooding in B.C., Omicron has ripped through the supply chain, and now, we have blockades disrupting the supply chain and delaying deliveries,” said Sands, senior vice-president of public policy for the industry group.
“All of these factors drive up costs throughout the supply chain and inevitably they have to be passed on to the consumer,” he said, but added: “I have not heard of any independents cutting costs or having fewer staff as a result.”
In the Field Agent study though, about four in five shoppers say they have noticed out-of-stocks, and 55% said they think lineups are longer at checkout, while 48% said there are not enough checkout clerks.
During a call with analysts last month, Metro president and CEO Eric La Flèche said labour pressures existed pre-pandemic and were “clearly amplified” with the surge in Omicron cases in late December.
“As far as labour in our stores, the pandemic affected increased absenteeism for sure, but we have labour challenges as an industry and we’re addressing them,” said La Flèche. “We’re recruiting, installing technology in our stores with self-checkout to mitigate the impact of not finding cashiers for certain shifts, but overall I think we’re managing it pretty well.”
Of those who reported noticing deteriorating customer service, 35% said the poorer services has led them to shop less in-store, 26% said they have changed retailers and 23% said they are shopping in stores less overall.
However, 27% said “skimpflation” has not affected how they shop at all. And, Field Agent also asked respondents if they’d rather have better customer service and higher costs, or reduced services and lower prices.
“People still say they want the low prices,” he said. Asked which action from a grocer they were most willing to accept, 45% said poorer customer service, 32% said smaller packages and 23% said higher prices.
“There’s this grumbling of ‘We don't like long lines, or we don't like stores that are messy, or disorganized.’ But they also would prefer that versus having to pay more for their groceries.”