Saturday, January 31, 2015

This Time They've Gone Too Far

Chobani Yogurt is the latest in  a long line of retailers to downsize its products in an attempt to maintain market share. It recently shrank its yogurt cups from 6 ounces to 5.3 ounces, while holding the price steady.
Chobani is by far not the only company shrinking its products without lowering the price. Such downsizes are a common strategy among consumer package goods companies looking to pass along rising input costs without hiking prices by shrinking everything from cake mixes to Kleenex.
When input costs rise, companies have several options, including raising prices. That's risky if competitors don't follow suit...
"We do think it's a viable strategy for (companies) to downsize," said Todd Hale, Nielsen's senior vice president of consumer and shopper insights, in a phone interview. "If they don't do anything, they'll see their profits erode. Downsizing has been one of the most popular efforts."
Okay, I get it. Companies need to do something to maintain profit margins. They can raise the price, use lower quality (i.e., cheaper) ingredients, or reduce the size. That's just Business 101.

But there are some products where the size shouldn't be tampered with. Most of us would be happy to pay a little more to continue getting the same size of this product.

I speak, of course, of toilet paper.
If it feels as if you're running through toilet paper rolls faster than ever before, that's because you are. But it might not be your fault.

Slowly but surely, toilet paper rolls have been shrinking.

Toilet paper squares, the individual sheets that connect to make each roll, were once 4.5 inches wide and 4.5 inches long. That standard, however, has shifted, or at the very least loosened its grip on the industry, to a point where companies are selling sheets that are a half-inch shorter or thinner, or both.

A reader wrote in to a columnist at the Los Angeles Times saying he has noticed a roughly 26 percent reduction in the surface area of his toilet paper.

"The old standard for a single sheet of tissue was 4 and 1/2 by 4 and 1/2 inches, a nice square," the reader wrote. "Some tissue companies have changed the length of the sheet to 4 inches, with a width of 4 1/2 inches, no longer a square."

Others, including Consumer Reports, have noticed the trend, too. The consumer advocacy group said that rolls are becoming "narrower," cardboard tubes are getting bigger, and sheets are shrinking in size and number. So toilet paper rolls might look the same at a first or even second or third glance, even though they carry less toilet paper.
I'm not an expert, but I doubt if we are using less of this invaluable product. I think this might be an example of what economists call inelastic demand - that is, the demand for a product changes very little in response to a price change. We are going to buy the same amount of toilet paper despite increases in price. So why skimp on the size. Why not just charge a little more and give the quantity we're used to - and use?
On the surface, it might seem as if brands like Charmin and Scott are simply trying to sneak their way toward bigger profits in the personal hygiene aisle. And there's some truth to that — companies are, after all, selling less toilet paper for the same price, and often doing so subtly.

But there's a broader, and perhaps more important explanation, that is related only tangentially to toilet paper: The same few companies that make toilet paper also make other paper products, and those products haven't been selling well lately.

"Paper towel volume is way down," said Emily Balsamo, an industry analyst at market research firm Euromonitor.

"The fall in paper towel and napkins is driven mostly by the away-from-home segment," Balsamo said, referring to offices, restaurants and anywhere else people might be using public bathrooms.
You can thank those hot-air hand dryers for that.
The thing about toilet paper rolls is that unlike paper towels, they're much harder to replace, or even ration. Companies understand this very well.

"They're hedging their bets with toilet paper, because Americans aren't ever going to start skimping on toilet paper," Balsamo said.
That's good. Because otherwise we'd have to revert to olden times and use "leaves, grass, stones, corn cobs, animal furs, sticks, snow, seashells, and, lastly, hands.”

No thanks. I'll stick with TP.


Well Seasoned Fool said...


"Are you in touch with your inner self"?


"No, not since I stopped buying toilet paper at the Dollar Store".

Old NFO said...

Oh damn WSF... Now I need a new keyboard... :-)