It is generally accepted that consumers are more sensitive to changes in price than changes in volume, and this gives sellers a powerful way of introducing stealthy prices increases that customers may not even notice.
With tissue and toilet paper the practice is referred to as "de-sheeting" – reducing the number of sheets in a box or roll. In the food business it's called "weight-out", as it refers to putting less product weight into each package. A great example of this was the almost universal drop in weight of canned coffee, going from a standard of one pound to 13 ounces.
The "missing" three ounces is generally referred to as "slack fill", more formally known as "nonfunctional slack fill". Whatever you call it, it's the empty space at the top of the can or bag.
The practice is popular when sellers don't feel they can get away with a more visible price increase – during a recession for example, or with a commodity product that has already undergone steady increases in price. Worried that customers will revolt at a higher price tag it's tempting to increase price by decreasing quantity... and hope that customers don't notice.
And it's not a one-time thing either. When the recession ends, or people get used to the new price, the seller will often introduce a new, larger "jumbo" or "economy" size package that returns to the old size, but at a higher price. This gives them the room for another stealth price increase down the road when market forces suggest that is the best option.
Sometimes the smaller size is hidden by keeping the container the same size, just with more "slack fill" (empty space) inside it.
This can be a dangerous game - there are government regulations concerning slack fill, which they define this way:
Slack-fill is the difference between the actual capacity of a container and the volume of product contained therein. Nonfunctional slack-fill is the empty space in a package that is filled to less than its capacity...FDA Code of Federal Regulations Title 21
There are some exceptions...
There are six reasons under federal regulations for acceptable slack fill. They include protecting products during shipping, unavoidable settling of the contents and limitations of the machines that enclose the package. But too much extra room can get a manufacturer into trouble.
In other cases the seller will try and draw attention to the difference in size, often even trying to sell it as a feature. A smaller chocolate bar may be sold as a healthier, fewer calorie option. A smaller pack of tissue may be presented as an eco-friendly alternative that uses less packaging.
In some aspects of retail floral reducing pack size simply isn't an option. A dozen roses is the standard, and trying to pass off ten as an alternative is likely to be noticed (and resented). Same thing if you try and reduce stem length – customers are likely to notice.
In other aspects of the retail flower business stealth increases happen all the time. They are so customary we don't even think about it.
This of course is the fill-to value segment of the floral business, where we're often quite happy to let the customer tell us that they want a centrepiece, and that they'll spend the same amount as they did the last year, which was the same as the year before that, and the year before that, etc.
Or we let our floral POS systems do it for us – they actually suggest that we suggest the same price year after year! Where else are you paying the same prices you did five years ago?
You might be charging the same amount year after year, but the realities of the flower business dictate that each year that fill-to-value arrangement is going to get a little smaller. The cost might stay the same, but you are in fact introducing stealthy price increases.
And the customer becomes increasingly underwhelmed, as each year they get an arrangement that is just a little less spectacular than the one they remember from the year before!
It's important to try and nudge your customers up. Ignore the terrible advice that says every sale you make to a customer should be 20% bigger than the one that came before it, and focus on gentle price increase that reflect your ability to delight the customer.
Beyond Cost Plus is sponsored by FloristWare. POS software for florists doesn't have to come from a wire service. It doesn't have to cost a fortune. And independent POS does not have to be a compromise.