Inflation v Shrinkflation

The good citizens of Willoughby City Council (I live in Lane Cove North) all received a recent invitation to Help Secure Willoughby’s Future, detailed in a three-page double sided fold out brochure, full of fancy graphics and charts.

We’re presented with four options on which we can all Have Our Say. These range from a rate increase of 3.5% and a reduction of services – yes you read that right – to a whopping 20% increase in rates tied to increased services and infrastructure.

cartoon of a girl at the movies eating candy

Obviously, no increase is favourable in this financial climate though this doesn’t seem to be an option. But the marketer in me admires Council’s style. Willoughby has the second lowest rates in Northern Sydney - $1,088 pa compared with Lane Cove at $1,317pa (and we get our green bins collected every week and we have three general council pickups every year). Of course, Covid, wild weather, inflation blah blah blah. But we humble residents don’t really care about that – they’re Council’s problem. Ours is where to find extra money to pay our sky-high mortgages and utilities and grocery bills.

Early in my career I worked at Nestlé as Brand Manager for Allen’s lollies – the pick ‘n’ mix jellies still known and loved today – strawberries and cream, pineapples, wiggly witcheties and so on. There were eighteen varieties, sold to milk bars and servos through wholesalers, with a recommended retail price of Two for Five cents. The time came, as these things do, that we had to put the price up. But here was the dilemma – what’s the next price point after two for five cents?

The curly issue of passing on a price rise was a constant low-level threat and invariably went down like a lead balloon with all our customers. Later in my career I worked as the Account Manager for Leisure and Entertainment – a job as brilliant as it sounded. I went to annual Movie Conventions on the Gold Coast, where I held the odd client meeting and watched new movie releases all day. Super fun. The least fun part of this job, however, was passing on a price rise. We had zero say in these unilateral decisions which came down from the number crunchers on high, people who lived and breathed spreadsheets, P&Ls and sales targets. And our clients absolutely hated them, to the point where they threatened to de-list our products.

For our pick ‘n’ mix price rise, we thought about just making the products smaller and maintaining the price, but a factory trial soon knocked this on the head – the strawberries on the cream were more pimples than fruit. Today, product downsizing to avoid a sensitive price hike is coined Shrinkflation. But hundreds of readers’ responding to a recent article in The Guardian show they’re none too happy about it. Especially when products have built up a long-term relationship with their consumers such as Rose’s Marmalade and Pear’s Soap. French supermarket chain Carrefour is even putting labels on shelves, saying “This product has seen its volume or weight fall and the effective price from the supplier rise.”

In the end we went with putting the price up to Three for Ten Cents – still a 33% increase and not an easy sell in the mid-90s. We smoothed the way by changing our cardboard packaging to plastic containers and throwing in the odd pair of serving tongs. Yours Truly had the task of touring Australia and doing the hard sell on the price rise at state trade nights. I had to field open questions from the floor, a formative experience for a twenty-five-year-old English girl speaking to dozens of (almost all male) confectionery wholesalers, who ate Brand Managers for breakfast.

Ah, the fortitude of youth. I got away with it and our product range lived to tell the tale before eventually being mostly converted into hanging bags.

So, here’s my advice to Willoughby Council. The Have Your Say options in the dropdown website portal are all well and good, but what I want to see is some open forum Town Hall meetings, like trade nights, where the good citizens of Willoughby can ask anything they like. The outcome might be the same but at least we’ll feel heard.