Shrinkflation, Skimpflation and PAYFLATION are related to inflation in that rising prices and costs in the economy lead to lower living standards for consumers.
Shrinkflation occurs when the price of a product stays the same but it gets smaller in size. It is a strategic way for a business or manufacturer to raise prices without raising the cost of the product a consumer buys.
Many grocery products have been hit by shrinkflation. For example, a box of cereal may appear to be the same size it was a year ago and the price is the same. However, rather than the contents weighing 16 ounces, as it once did, the contents now weigh 12 ounces. In this example, shrinkflation happens when the materials, ingredients, production costs and/or labor companies use to make their products start costing more. Instead of raising prices, the consumer receives less product. This strategy is widely used in the food and beverage industry to maintain or boost profit margins in the face of rising production costs.
Other industries are using the shrinkflation strategy too. Known as Skimpflation, this business strategy skimps on service as a way to cut costs and reduce labor and other overhead expenses. For example, the hotel industry is widely making changes to housekeeping expectations yet hotel accommodations cost the same, or even more. Guests may be required to ask for new towels during their stay, or only receive replacement towels for those left on the floor. Guest rooms may only be cleaned upon request or every-other-day. One of the main reasons companies skimp or reduce services is to maintain profitability, meaning less money for staffing and materials.
PAYFLATION is a term we created at Southland Data Processing to describe those hidden payroll fees that add-up over time and cost your business unnecessary money. We help businesses fight PAYFLATION by providing complimentary reviews of a company’s payroll service and offer solutions to create new efficiencies and, ultimately, save money. For example, we routinely help clients convert from manual timekeeping procedures to an automated system. Doing so is saving administrative costs, reducing errors and the time needed for corrections, and providing accurate hourly payroll data.
The experienced payroll professionals at Southland Data Processing offer a complimentary review of your existing payroll service and workforce management. Contact us and Let’s Talk how we can help you fight PAYFLATION!
As buyers become more aware and feel the impact of these inflationary trends, consumers are taking the time and effort to make more informed purchases by:
Comparing brands. Brand loyalty is important, indeed. But if the store brand is significantly less money or offers more, consumers are compelled to switch.
Compare the price per ounce. Compare the unit pricing. For example a 10 ounce box of crackers may be $5.00, but a 20 ounce box is $7.00. The latter is a better deal.
Consider other providers. If there is a hotel brand, for example, that you’re fond of look at other similarly ranked brands and use travel sites to search-out any special offers or packages.
Buy in bulk, look for store specials, and take advantage of discount apps. While all of these options may take a little more effort, it could lead to cost savings that also create new long-term buying habits.
Contact Us for a complimentary review of your payroll solution. Whether you’re an existing client or considering Southland Data Processing, we’re here to help you improve your business operations, develop solutions and provide unrivaled service.
For the latest updates, follow us on LinkedIn, Facebook, Twitter, YouTube, Instagram and TikTok for even more business tips and news.
*Southland Data Processing, Inc. (“SDP”) is not a law firm. This article is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other SDP materials does not create an attorney-client relationship. SDP is not responsible for any inadvertent errors that may occur in the publishing process.