Skimpflation – The services has gone!

In my previous article, I penned down my thoughts on ‘Shrinkflation’. Interestingly, when I was going into more details about ‘Shrinkflation’, I learnt about another trending term ‘Skimpflation’. While similar to the previous one, it is another type of inflation generally practiced by many companies. You must now be wondering, what is Skimpflation is. ‘Skimpflation’ is a situation where, owing to a rise in manufacturing and/or operating costs, labour shortage, or others, companies compromise on the quality of the goods or services while the price/cost of the good or service remains unchanged.

Let’s open the doors and start by walking backwards. Inflation is a situation where the standard of living shrinks as a consequence of unhealthy price hikes of goods and services. This phenomenon is completely okay in the long run. But here, time is of the essence. If it happens continuously in the short run, every country will have to pay the price. Inflation has two indirect formats, i.e., ‘shrinkflation’ and ‘skimpflation’. In shrinkflation, companies silently reduce the quantity or size of the deliverables while the price remains the same. Most of the time, during purchase, customers don’t have any idea about this practice. Therefore, on moral grounds, it is not a good practice. Whereas, in skimpflation, companies are forced to drop some services or compromise on the quality of the product or service standards to stay competitive. This could be due to factors beyond control such as an increase in manufacturing and operating costs, or sudden shortage of manpower, etc. Here too, the final price remains unchanged.

In this ongoing unprecedented pandemic, many companies were observed practicing ‘skimpflation’. For example, you might have to wait a little longer while getting a resolution of your problem from a customer executive; not getting any free (or paid) meals in your short domestic flight in the name of the precautionary measure taken by airlines; you may not able to access the cafeteria in your company that just welcomed you to ‘work from the workplace’ even though this service was offered with the complete package initially; you are no more getting “try and buy” services in most of the retail stores; ‘delivery time’ increased with sudden effect, etc. There are plenty of such instances we are surrounded with.

In this digital and social era, many users around the world are voicing out these and more concerns through various available internet-enabled platforms. One user also wrote that the practice of ‘skimpflation’ is ‘GREED!, nothing to do with Covid’. Many users are of the belief that it is just a profit-making practice and businesses are now keeping their customers aside.

Now the first question is, is it legal? In my opinion, the reason for doing anything is always important to know. As a precautionary measure taken to break the chain in this crucial covid-crisis, it is legal and important too.

Second, is it ethical? I believe that not all situations are the same. In airlines, they should give a happy bite of compensation for non-food travel in the form of a discount. It will show their concern and enhance the trust in customers’ minds. But, we should not forget their take on this that they were offering these services for free. It means that there is no actual price for a free service. Hence, they can’t offer any discount. Are we as customers, just rational or emotional too? I wish our favourite brands would think in this way too.

Last but not least, is it permanent? Well, this requires a “wait and watch” approach. The market is dynamic and competition is inevitable. Sooner or later, in terms of business, everything will get flat. Market forces will show their charm to all of us. Once this deadly virus and its oncoming variants are done with, only then can we have an answer.

Dr.Anuradha Yadav
Assistant Professor
DSCE-MBA  

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