• Diversitech Team

How Can Retailers Maximize Their Profitability?



Profitability is to apply some shrinkflation, and this is a thing in the food industry where companies like Pringles and Cadbury reduce the quantity of servings in the products that they sell.

Shrinkflation is the practice of reducing the size or quantity of a product while maintaining the price or increasing it very slightly. This phenomenon has become more prevalent in recent years, as the cost of ingredients and manufacturing has increased.

While shrinkflation can be seen as a way to avoid raising prices and losing customers, it can also have a negative impact on consumers. For example, if the size of a product is reduced but the price remains the same, consumers will end up paying more per unit. In addition, shrinkflation can also lead to products being reformulated with cheaper ingredients, which can affect quality.

One of the most common complaints about shrinkflation is that it can lead to a loss of trust between the company and the consumer. When companies reduce the expected specifications of products without properly explaining why, it can be seen as deceptive. In some cases, it can also lead customers to buy products from competitors.

In difficult economic times, consumers are more likely to switch to cheaper brands or products if prices are increased. However, shrinkflation can lead retailers and manufacturers to be more innovative and cost-effective, especially where production costs are high, in reformulating current product lines.

Retailers can emphasize that although the size of the product is reduced, the quality remains the same or even improves. This can help build trust with customers and prevent them from switching to competitors’ products.

In the hand tool industry, when you're able to do this, in addition to reducing waste, raw materials, and packaging size, you're offering better pricing and value for customers, and at Diversitech Global, we have the experience doing just that.

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