The relatively new Orkla boss Nils K. Selte has realized something that the rest of the industry has not yet fully grasped: People get really angry and feel cheated when the goods they buy in the store shrink in size, while at the same time the price is kept – without that you are informed about it. The phenomenon is known as “shrink inflation”, a combination of the words shrink and inflation. Because when Orkla and Selte were confronted with shrunken Orkla products on Thursday, Selte laid flat: “This is not fair,” said Selte. Orkla has shrunk the bag of Smørbukk from 192 to 150 grams. Photo: Sofia Storhaug / news Will leave the ball dead The statement is a solid attempt to leave the ball dead as soon as possible. Selte says, among other things, that he will ensure that Orkla does not continue like this in the future, and that it is not ethically correct to “adjust for increased costs in this way”. So simple, and so difficult. Because the drop is great if he is unable to deliver on this. He is legally open to criticism if Orkla continues to deliver bags where it is not clear that they have shrunk. As Storting representative Mimir Kristjansson from Rødt pointed out to news earlier this week; the manufacturers have no problem writing “new and bigger bag”. Then the opposite should also be possible. He is, of course, absolutely right. CEO Nils K. Selte in Orkla. Photo: Thomas Brun Harmful attention For the brand supplier Orkla, attention and images in the media of their shrunken products are very harmful. When selling brands for a living, customers need to like your products and be satisfied. If customers feel cheated, they are punished and loyalty is weakened. Selte is smart who is the first to be so clear in his speech. He also sets a standard for other, competing, manufacturers – who may be penalized for being less offensive. In addition, one can hope that he also contributes to the chains staying too good to raise prices more than necessary, by going ahead and playing with more open cards. Brands give power Having strong brands gives greater power in the very important negotiations with the grocery chains, both in terms of price and space on the shelves. If you have a solid brand, you can get paid better, and have an increased likelihood of repeat purchases. You also don’t need to spend as much money on marketing if the brand is well established. The admission from Orkla must be seen clearly in this context. At a time when galloping costs are eating away at profits, brands that people are actually willing to pay for are extra important. Loyalty gives a greater willingness to pay, and is the key to Orkla continuing to make money from its brands. Prices will go up Because he is also very clear about one more thing, namely that the prices of food will go up significantly in the future as well. How much he does not want to predict, but there is probably good reason to fear a new and sharp price jump when the next price adjustment window opens in February. In times like this, loyal and satisfied customers are more valuable than ever. Marking the bag with “this item has shrunk” may not exactly be a sales trick, but customers at least get an honest decision-making basis before putting the item in the basket. When you see how much reaction the opposite has received, one can hope that the customer appreciates the openness – and continues to remain loyal.
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You don’t joke with old goody bags – Statement
