Industry Insights: October 11, 2023
by Jordan DeGraw • October 11, 2023
The Shrinkflation Boogieman is Lurking
Hello, friends! It’s a new week, and I’m pulling all of my Halloween decorations and industry insights out of dusty storage bins. Remember, whether you give me the credit for these insights or just put them by those lil’ pumpkins on your front step, it’s my hope that they provide you with some value in the marketplace. This week we’re getting spooky about YOLO spending, product shrinkflation, and marketing storytellers. Let’s go!
With interest rates so steep that you’re afraid to park your car on them, looming student loan payments, and rampaging inflation you’d expect consumer spending to be on the decline. Contrary to these expectations, data reveals that Americans have upped their spending game. In August, there was a surge in spending by 5.8% compared to the same month the previous year, a figure that notably outpaces the 4% inflation rate. This surprising trend is further evidenced by companies like Ticketmaster and Delta Air Lines, both of which have reported record revenues. It seems many may be shrugging off recession fears and putting on their “YOLO” glasses.
The employment sector is abuzz with activity as the hiring season kicks into full gear. Retail giants like Amazon, Target, and Macy’s are gearing up for the holiday rush and have unveiled ambitious plans to expand their workforce. Amazon’s announcement is especially noteworthy. The e-commerce behemoth has declared its intent to bring on board a staggering 250,000 workers. This move effectively quashes the pessimistic forecasts which had pegged this year’s holiday hiring to be the most sluggish since the 2008 financial crisis, and reveals that entire cities could be populated with Amazon employees one day…
There’s an issue that’s drawing even more ire than inflation, and it’s known as ‘shrinkflation.’ It’s a tactic where brands, grappling with rising costs, subtly reduce the quantity of the product they sell. In some cases, this downsizing is paired with a price hike. Consumers are proving to be keenly observant and discerning. A recent study found that 48% of consumers would switch to a different brand if they perceive that a product has been subject to shrinkflation. Such is the level of discontent around this practice that Germany is mulling over legislation that could potentially outlaw shrinkflation. Which left me wondering, how is it not ALREADY illegal?
Landlords cover your ears! Rent control is a topic that traditionally sees a split in opinion, especially among economists. However, recent developments have shown a shift in this stance. A group of economists has penned a letter to the White House, advocating for the implementation of nationwide rent control. Economists have historically been against rent control, but the letter argues that the argument against it relies too heavily on “economics 101” principles and that real-world dynamics in a “whoopsie daisy economy” say otherwise.
For those aspiring to own a home, there’s a glimmer of hope on the horizon. Recent data indicates that 32%of homebuilders slashed their home prices last month (probably with a giant pair of golden scissors). This move, aimed at invigorating sales, marks the most substantial price drop since December 2022. While interest rates continue their upward trajectory, it seems builder confidence might be showing signs of waning.
Once upon a time this August witnessed an intriguing trend among marketers. A notable 22% increase was observed in the number of marketers who touted “storytelling” as a key skill on their LinkedIn profiles, compared to the figures from the previous year. This uptick underscores the growing recognition among brands about the indispensable role of storytelling in a successful marketing strategy that ends happily ever after.
In anticipation of the bustling holiday shopping season, Amazon has told a spooky story to its sellers. The e-commerce titan has issued a clear directive: ensure that inventory reaches its warehouses by Halloween. Any delay might lead to potential capacity snags, jeopardizing the smooth processing of orders during the peak shopping frenzy (which would leave sellers cold and shivering with revenue losses).
The courtroom drama surrounding the antitrust lawsuit against Google took an interesting turn recently. The Department of Justice (DoJ) session featured an Apple executive on the witness stand. The testimony revolved around Apple’s decision to retain Google as the default search option on its devices. The reason? In Apple’s perspective, there simply wasn’t a “valid alternative” to Google. I hope Bing wasn’t within earshot. Ouch!
For those marketers who harbor dreams of agency stardom, there’s a quirky treat in store. Snapchat has unveiled a 16-bit video game, meticulously designed to emulate the dynamics of the pitch process. Now, marketing aficionados can immerse themselves in the hellish thrill of agency life, even during their leisure hours.
Just for Fun:
Legos aren’t just toys, they’re a way of life. Last year, the iconic building block brand reported a whopping 28% profit margin. Surprisingly, this places Lego in a league closer to luxury brands than their toy counterparts. For context, Ferrari, a name synonymous with luxury cars, recorded a profit margin of 24%. Similarly, the conglomerate that owns Louis Vuitton and Tiffany & Co. posted a 27% margin. When you contrast this with other notable toy manufacturers, the difference is stark. Hasbro and Mattel, both giants in the toy industry, lagged behind with profit margins of 7% and 12% respectively.
Maybe think carefully before answering the next time you’re asked “would you like a receipt?” In the US alone, these slips of paper devour resources to the tune of 3.7 million trees and 10 billion gallons of water each year. Adding to the concern is the fact that a staggering 93% of these receipts can’t be recycled. Recognizing the magnitude of the problem, legislators in California have proposed legislation advocating a significant change in retail protocol: merchants would need to proactively offer customers an electronic receipt before resorting to the traditional printed version.
That’s all our industry insights for now, friends! Carve them up, scrape out the seeds, and light a candle in there if you like. Join me again next week when I try to build a blog post entirely of Legos.
Have spooky week (and don’t ask for a paper receipt),
Your friendly Industry Insights devotee,