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Thriving Stylist Podcast
#362 - Is "shrinkflation" a good fit for your business as a stylist?
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“Shrinkflation” isn’t a new phenomenon, and you’re most likely experiencing it right now in your day-to-day experiences as a consumer. We are in a tight economic spot at the moment and service-based industries have had many challenges in the...
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Do you feel like you were meant to have a kick ass career as a hairstylist? Like you got into this industry to make big things happen? Maybe you're struggling to build a solid base and want some stability. Maybe, you know social media is important, but it feels like a waste of time because you aren't seeing any results. Maybe you've already had some amazing success but are craving more.
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Maybe you're ready to truly enjoy the.
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Freedom and flexibility this industry has to offer. Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you're ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists. I'm Brit Seva, social media and marketing strategist just for hairstylists and this is.
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The Thriving Stylist Podcast.
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What is up?
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And welcome back to the Thriving Stylist Podcast. I'm your host, Brit Siva and today we are talking about shrinkflation, which is a word you either totally know or you've never heard before, or you've heard it, but maybe you don't a hundred percent know what it means. And I want to talk about exactly what it is and if it's a good fit for your business as a hairstylist. So I think that shrinkflation has a very negative connotation, but so does inflation and so does bad economy. And the reality is we are in a tough economic spot as a country right now. And because of that we are in a service based industry. And historically service based industries have had pretty significant challenges in economic downturns. And so while consumers might not love shrinkflation, they also don't love inflation and they also don't love price increases. And none of us want to have our personal income take a hit. And so I want to talk about kind of the good, bad and ugly of shrinkflation. And I want to offer the opportunity for you to consider if this is actually, actually a good fit for your business. Because thousands, if not hundreds of thousands, probably closer to at least tens of thousands of major mainstream businesses, have chosen to opt in to shrinkflation. And I think it's short sighted of us as an industry to at least not consider it. So let me explain exactly what it is. Shrinkflation is when a company chooses to offer less product or service at the same price. So rather than doing a price increase, the price stays the same. But what you get at that Price point becomes less. So it's an alternative to raising prices when the cost of goods or cost of business increases. So when you look at what companies have participated in shrinkflation in the last few years, Gatorade is a big one. They reduce the size of their bottles from 32 ounces to 28 ounces. Did you notice if you're a Gatorade consumer, Walmart reduced the number of paper towels in a RO from 168 down to 120. Price point is the same amount of sheets of paper towel decreased by over 25%. Tillamook. Tillamook reduced the size of its ice cream cartons from 56 ounces to 48. Skippy peanut butter reduced the size of its jars from 18 ounces to 16.3. Crest 3D white toothpaste shrunk from 3.8 ounces to 3.3 ounces per package. Huggy's baby wipes decreased from 768 wipes down to 704. So when I talk about shrinkflation, it may not be something that consumers are super excited about, but when I talk about things like Gatorade, paper towels, ice cream, peanut butter, toothpaste, baby wipes, these are things that the average American household is subscribing to at least one of. Even if you don't drink Gatorade, you likely eat peanut butter or brush your teeth or use a paper towel. And I'm just rattling off some of the examples I found. I'd be willing to guess that if you look at easily 50% of the products that you have in your cupboards, in your shelves, in your pantry, a lot of those things have experienced this shrinkflation. So those are all consumable goods. Let's look at more service based type products. So when you look at airlines, how many of you noticed an increase in the cost of travel in the last few years? I'm going to say most of us have. People complained about it. So airlines felt that pressure. They've continued to experience a cost of running their business. However, they know that consumers are already price sensitive to tickets. So what did they do? They realized that they could not continue to increase cost of airline tickets. There was already so much pushback. So now what they've done is they've increased the cost of checked bags. So what you'll notice is even I noticed this. And it's funny, I didn't attribute it to shrinkflation, but we took there's a baseball tournament that my son participates in out of state every year it just happened. And I noticed that last year we took this trip and we were able to check his baseball bag for free. It was the one free checked bag we use. You can't take baseball bats on an airplane, obviously. So we checked his baseball bag. It was able to be checked for free. This year I had to pay $220 in checked bag fees each way. And it hit me because I was like, I know for a fact I didn't have to pay this last year. And I didn't. So what the airlines. And I didn't realize it until we were checking in for our flight. 24 hours before we took off, I noted that I was checking a bag and was like, huh, I've never had to pay this before. And then when I was doing research for this episode, I was like, oh, that's why. So it's not just the checked bags. If you've noticed, beverage services on some airline trips have also changed. So historically, if you were taking a flight, you were offered soft beverages. So water, coffee, teas, sodas. What I've noticed is on several flights I've taken recently, and these are all flights of under, I'm going to say two and a half hours. But like, some of them were longer flights. All I was offered was water or orange juice. If I was flying in the morning and then in the afternoon, it was just water. There was no offer of do you want a Diet Coke? Which I would have loved to have taken. It was this is a tray of waters and OJs. Do you want one or not? It was a very simplified menu. And that's an example of Shrinkflation as well. When you look at like snacks on airlines, there's a lot of flights where you don't even get offered a bag of pretzels anymore. That's all Shrinkflation. Something I haven't experienced, but I found when researching this episode is a lot of credit card companies and other companies that used to send paper bills. We've known for years that everyone's trying to go paperless and electronic billing statements are becoming more popular. Well, I guess that in 2024, a lot of companies sent out notices that says if you want to receive a paper statement, there's a monthly fee for that and it's like 3.99amonth or something. But $4 a month times 12 months a year, that's an additional almost 50 buc year just to get your paper bill. That's Shrinkflation. Okay. The other thing that's an example of service based shrinkflation is postal service with their increased postage rates. And they're also considering reducing the mail delivery dates down from five days a week to four. In some cities there's delivery six days a week. In some cities it's five. They're considering a nationwide shift to four. So again, maybe they won't increase the price of postage next year, but you won't get mail delivery service as often. Those are all examples of service based shrinkflation. So why should we consider this? There's a company called Mintel. It's mintel.com and a study they did found that surging inflation is driving consumers to change their shopping habits and adopt more value seeking behaviors such as switching to budget brands. Okay, this is where it gets interesting for me. Over 30% of consumers expect to seek more discounted services and offerings in the next few years. So I've mentioned this before and I still believe in it. I don't think that we're stepping into like a coupon cutting era. I really don't. And why I say that is because in the last recession, Groupon had its heyday. Coupon clipping was huge. It was like, how much money did you save this month? We're not seeing that trend again. What we are seeing this time around is getting maximum value for your spend. So did I get what I paid for? Does this feel like the amount of time and money I had to invest made sense for where my life is at? It's less about am I saving money? And more about is where I'm choosing to spend money, feeling values aligned to me. And while at the end of the day people are looking to protect their bank account, which I totally understand, the way they're going about it is very different. So I want to talk about if 30% of consumers really are saying where can I save a little bit? It's a conversation worth having. So who could. And I'm going to talk about how you would implement this in the salon in a moment. But who could shrinkflation be potentially good for? Because not all of you should even consider this. Some of you shouldn't. And in fact, what does that work out to be? Math wise, 70% of you probably shouldn't, but 30% of you should. So who should consider this? Anybody who did a cost of goods increase. I started talking about the problems with cost of goods increases. I believe it was the end of 2020 and I have continued to talk about the problem with cost of goods increases for almost four years. I never supported them. I always said they were going to be problematic. And now they are a huge issue. And where I want to go with that is I understand that cost of goods is a factor in your price point. I understand you have a profit margin to protect. I understand that for some of you, the cost of running your business based on goods alone increased by 20 or 30%. I totally get it. The way I've always coached to pricing is that there are seven factors. And if you go back and listen to podcast episode two to one on the Thriving Stylist podcast, I break down all seven of the factors. Cost of goods is one of them. Raising your price just because of cost of goods was always dangerous. It was always bad business practice. And now we're really at the heightened peak of the pain associated with that. So if you did a price increase simply based on the fact that the overhead of running your business had increased, you're somebody who might need to consider this. If some of these other things are happening for you. Anybody who is currently priced significantly above average market value and is having demand issues, if you are the price front runner in your market, like you are priced above market value, but your demand is still really good and your perceived value is still really high, you don't need to consider this. But if you got yourself into a position where I just saw actually a really great Instagram post the other day, I wish I had saved it. It was a barber, and he was so beautifully and vulnerably sharing that he really radically increased his prices. I think it was at the end of 2020 into 2021, 2022, like, pretty significant because his demand had become so high. And a lot of stylists and barbers and estheticians saw this. And so they did this huge price increase because demand was there when demand is one of the seven factors, but not all seven of them. And he's like. And I shot myself in the foot. He's like, because now I'm priced so significantly above my market, my demand is crumbling down at record speed and I don't know what to do. So for somebody, if that's your story, this might be good for you. Anybody whose clients are pushing their appointments out, we were talking, I had a wealthiest year at coaching call recently, and we were talking about retention. And one of the people on the call, it was such a great point, was saying, my retention is good. It's not that I'm losing clients, but the clients that I'm keeping are pushing their appointments out. Such a brilliant way to look at retention. So she was like, I'm not losing guests, but the frequency of which they're coming in to see me is decreasing and it's causing me a loss of revenue. I was so thankful for that perspective on what was happening to her business because I was like, man, you're so right. And the way that she phrased it was so, so good. So if you're in that boat, this might be something to consider. Now the reason I know that this works is because we did it. We did this in our salon, I think we rolled it out in 2009 and at the time we didn't call it shrinkflation, we called it survival. But it worked so incredibly well. And for those of you who listen to this idea and are like, I wouldn't want to do that long term though. We didn't do it long term. It was funny. It was one of those things. We were a little bit nervous to do it as well because same, same we were worried that it would cause these like long term repercussions. But what was funny is when the economy recovered, the demand for these services decreased because people stopped wanting these shrinkflation things and just wanted like regular stuff again. So it was kind of like a needless fear because it was a short term solution that kind of rectified itself when the economy bounced back. So let me talk about how you could do this if you're going to consider it. And by the way, some of these things are not going to rub you the right way. It's okay. Listen, be curious, be open minded. And by the way, you don't have to do any of this, but some of you are going to implement this and it is going to be beneficial to you and this episode's for you. So I want to talk about Minion maintenance services and if you're in Thrivers, this is something I promoted a lot a few years ago and then I hadn't really promoted it in the last Thrivers update so much because the economy was so booming that it wasn't really appropriate. But now we're getting back to the place and space where, where this does feel appropriate again. So one of the mini and maintenance services that we rolled out that was a banger was called Mini root touch ups and it was a partial root touch up done between normal visits. So what it would do is somebody would have their roots touched up just at the front hairline. So if they pulled their hair back like into a ponytail or something like that, it was covered just on the part and it was about half an inch on either side of the part. And just around the front hairline and just around the back hairline. So it would take maybe four minutes to apply. I mean, it was nothing. And it would take, I don't know. We use ccs, so probably 20ccs of color and 20ccs of developer. Nothing. Maybe half an ounce of color. It was just so, so minimal. So the cost of doing it was really minimal. And the time to do it was really minimal. So our terms were anybody could book this partial root touch up, but it had to be done within six weeks of your last full root touch up. So if I got my roots touched up on September 1, I could get this partial root touch up, but it would have to be done before October 15. If I came in on October 17, I would need to get the full root touch up. So what we did is we offered this partial root touch up at a rate that was less than a full root touch up. But it wasn't like half off. And the reason why I like this is it's something that makes clients feel like you are being financially aware of their adjusted position. You are. This would be a highly profitable service for you because you'd be getting a guest in rather than them pushing their appointment out. They'll feel like you're meeting them in the middle. They're still feeling like they're getting their roots touched up. I'm doing air quotes here. The amount of product you're using is quite minimal. And you can either. I don't know what your price point looks like if you're listening to this. For some of you, it should be like offered at 70% of your current root touch up price. For some of you, you're on the crux of doing a price increase, but you're feeling kind of small or sensitive about it. Maybe you offer a root touch up at your existing color price point and then you do the increased price point for your full service. Maybe, but it has to be done within six weeks of the last full touch up. And again, it only covers the front hairline, the back hairline, and the part. That's it. And don't let anybody push you any further. If they want to push further, they're paying for the full thing. Then we have the hairline highlight. This was a really big one too. So it's eight foils or less, and it's just at the part and the front hairline. So really everything kind of like in front of the ears. And often it was like a baguette on either side, kind of like in front of the ears. And maybe like four foils right at the very front. This is before money pieces were popular. We were really doing this. So it's kind of just to allow a blonde client to still feel light and bright in the front. What I like about this now is I might combine it with a toner. So if somebody was a partial highlight client and they're feeling a little price sensitive, say, listen, I'm introducing a new service, it's called a hairline highlight. And what we can do is if you come in within eight weeks, you can set the timeline on this. Come in within eight weeks. What we can do is just pop in six foils or eight foils and do a toner for you. And you could probably do that at what, 50% of the partial rate? I don't know, maybe 60 or 70% of the partial rate. And they still feel like it's going to still feel like you changed their life, but they're going to pay less than they would have if they had come in for a whole nother partial. You're going to keep that visit frequency with them. You're going to keep your books a little bit more full. And even though you're doing their hair at a reduced rate of what they would pay if they were doing a full service, if you calculate out doing these mini maintenance services on a still fairly regular frequency, what you'll find is the guests will still pay more over an entire year than they would have if they had just done the regular full price services and pushed them out, which is what we're seeing a lot of clients doing. And. Or if they left you all together to go to somebody cheaper. Right. So it's to prevent those things from happening. Okay? Now my most controversial suggestion of all, and I expect a lot of people to hate this, if you hate it, don't do it. I'm not your manager, I'm not going to force you to do this service. But there's a really common term coming up and it's the D word. And the D word is dusting and the T word is trim. And I am fully in agreement with you that there is not a huge difference in our work and our effort between doing a cut and a trim. Now, sometimes there is. If somebody is going from shoulder length hair to a pixie cut, that's a huge transformation and it's going to take a lot of time and a lot of consultation and styling and, you know, all these things, I totally get it. But if somebody is like, well, I just want to trim today versus I Need a haircut today for the average person. For us it's the pretty much the same amount of work. Whether you want to cut off an inch or five inches. Often it's more or less the same amount of work. I totally get it. Especially if somebody has really thick hair. Like I have paper thin hair. You could do four scissor open and closes across the bottom of my hair and I'd have a beautifully even haircut. My hair is like. I just had a stylist call it pompouson. Like what are they're like the white feathery plants that live on the side of beaches. Palm frost. What are those called? That's my hair. It's like feathers blowing in the wind. So a cut or a trim on me is the exact same amount of work. If somebody has really thick hair, you're talking about multiple sections of partings and all kind of things to be considered. Because dusting and trims are so popular right now. You can choose to continue fighting that and you can continue to try and stand on this hill and say they're the same thing. It's the cost of my time. It's my ex expertise. It's the same amount of work for me. You got to pay the same price. You can try and hammer that home. You can totally try and shift consumer mindset about that. You go for it. I think it's going to be hard. What I think would be potentially really smart if you fall into those categories I talked about before is introducing a dusting or a trim service. And here's what I would consider. It's probably not a service that's for everybody. It's a dry cut only. So there's no shampoo or full style included in it at all. And it's a dusting or a trim of half an inch or less. It can only be done once between full haircuts. So again, kind of the same terms as that coloring service of like, okay, if you just want to trim, that's fine, but the health of your hair is really important to me. And if we don't like really do a full cut on you at least every six months, you are going to get split ends, you are going to get semi permanent damage. And and I think you come to see me for my professional advice. And my professional advice is you'll do long term damage if you aren't doing a full haircut at least every six months. But what we can do is a dusting or a trim in between. I'm happy to do that for you. It is at a reduced rate and you'd set that rate on what's comfortable for you. If you're doing a dry cut and you can pull it off in 20 minutes, I don't know what client you're serving and what your timing is. You could probably do that at a fairly reasonable rate. But again, it would not be for new clients, it would be for established clients. It is totally a price and compromise. It's literally shrinkflation and it's meeting clients where they're at with all of these ideas. Please know I am still not promoting that you become a discount stylist at all. I'm not suggesting that you add these things to your service menu on your website. I'm not suggesting that you use these things to entice new guests to come in to see you. What I'm saying is these could be verbal offerings that could potentially make it onto your online booking software, depending on how you have guests online book as a way to make them feel seen and heard, make you appear as if you are very well aware of what people are struggling with, and hopefully to give you a little bit more visit frequency. I do believe if you math this out, that you will find doing these mini maintenance services does financially put you in a better position than if guests continue to just push their appointments out and out and out. Also, for those of you who did cost of goods increases and are now kind of in a bind, this might be your Hail Mary before having to do a price decrease altogether. If you're somebody who's like Brit, should I do this or should I do a price decrease? Go back and listen to podcast episode 221. If you want access to the calculator I'm referring to, it is available totally for free to members of all of my Thriver Society programs. So if you're at any of those programs, you can run yourself through the calculator. We have a pricing workshop that's available for free to annual members. Our coaches are in there every single week. Happy to help you with it, but this is a really good chance for everybody to sit back and say like, am I priced appropriately for my market? Am I in a place where I'm sustaining my business well? Is there anything I could do differently? I hope this has been helpful. So much love. Happy business building and I'll see you on the next one.