The jig is up: Package sizes are down

Over the past year or two, many packages have become either shorter, skinnier, or more narrow. And consumers have figured it out: Partially because they’re hyper-sensitive to how far their grocery budget is going these days, and partially because of whistle-blowing media coverage. (If you’d like to see some examples, visit this story from the Star Tribune in Minneapolis, or watch the coverage by CBS News that began last fall. Commercial pre-roll required.)

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This means war. This week, there were hints that a grocery store price war may be developing. (The threat is serious enough that it’s had an impact on some supermarket stock prices, according to Marketwatch.) I found this story at Cincinnati.com (close to home for Kroger and P&G). Just for the fun of it, I found another version of the story in The Morning News of Springdale (about 19 miles south of Bentonville).

Implications: In any squabble—price wars included—it is natural to wonder, “Who started it?” In this case, I’m not sure we can blame one retailer or the other. I think the conditions were set by a blend of tighter money supply, shrinking value-per-package at the manufacturing level, and a consumer who began to say, “Enough is enough.” They were ready for a price war. And sooner or later, someone was going to oblige.

My wife, Julie, is the procurement director and CFO of the Anderson household (okay, truth be told, she’s the CEO). She’s very good at what she does… and she didn’t need a story on the television news to tell her that our dollars were not going as far at the grocery store.

Last summer, she began to notice food price increases related to higher energy costs. When gas prices fell with the approach of fall, grocery prices didn’t. She noticed. And when recipes call for a “four-ounce package” of a certain ingredient… it doesn’t take long for someone to realize that the package is now 3 or 3.5 ounces. She noticed.

Consumers can be very smart people. If you’re a packaged goods company that is compelled to raise prices or reduce costs, perhaps you should consider coming clean... rather than risk insulting your customer’s intelligence. If you’re a reseller, have the vendors in your category set the stage for a consumer revolt? Are you ready for it? Could you even lead it, as a means of not simply being one of its casualties?

[Thanks to Steve Marx for tipping me off to the recipe size issue!]

Mike Anderson