Thriving Stylist Podcast Episode #362: Is "Shrinkflation" a Good Fit for Your Business as a Stylist?

Host: Britt Seva
Release Date: November 18, 2024
Podcast Description: The Thriving Stylist Podcast, hosted by Britt Seva, delves into the evolving beauty industry, offering strategic marketing insights and business skills essential for hair stylists and salon owners to thrive in a competitive market.

Introduction to Shrinkflation (00:52 - 05:30)

In episode #362, Britt Seva explores the concept of shrinkflation—a strategy where businesses offer less product or service at the same price point instead of increasing prices directly. While shrinkflation typically carries a negative connotation, Britt argues that it can be a viable alternative for stylists grappling with rising business costs.

Notable Quote:
"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."
— Britt Seva (02:45)

Examples of Shrinkflation in Consumer Goods and Services (05:31 - 15:00)

Britt provides a comprehensive overview of shrinkflation across various industries, illustrating its widespread application:

• Consumer Goods: Brands like Gatorade, Walmart (paper towels), Tillamook (ice cream), Skippy (peanut butter), Crest (toothpaste), and Huggy's (baby wipes) have reduced product sizes without altering price points.

• Service-Based Industries: Airlines have increased fees for checked bags and limited beverage options, while credit card companies now charge for paper statements. The postal service is contemplating reducing mail delivery days.

Notable Quote:
"Even if you don't drink Gatorade, you likely eat peanut butter or brush your teeth or use a paper towel. And I'd be willing to guess that if you look at easily 50% of the products that you have in your cupboards, a lot of those things have experienced this shrinkflation."
— Britt Seva (07:20)

Economic Impact on the Service Industry (15:01 - 20:00)

Britt discusses the current economic challenges facing the service-based beauty industry. With inflation and a tough economic climate, maintaining profitability through traditional price increases has become risky. Shrinkflation presents an alternative by subtly adjusting service offerings to manage costs without directly burdening clients with higher prices.

Notable Quote:
"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."
— Britt Seva (16:10)

Consumer Behavior Shifts (20:01 - 25:00)

Referencing a Mintel study, Britt highlights how surging inflation is steering consumers toward value-seeking behaviors. Over 30% of consumers anticipate seeking more discounted services in the coming years, focusing on maximizing value rather than merely saving money. This shift underscores the potential relevance of shrinkflation strategies for stylists.

Notable Quote:
"Over 30% of consumers expect to seek more discounted services and offerings in the next few years."
— Britt Seva (22:15)

Is Shrinkflation Suitable for Your Stylist Business? (25:01 - 35:00)

Britt outlines criteria to help stylists determine if shrinkflation is appropriate for their business:

• Cost Increases: If your business costs have surged by 20-30%, shrinkflation might offer relief without alienating clients.

• Pricing Above Market: Stylists priced significantly above market who face demand drops could benefit from adjusting service offerings.

• Appointment Frequency Issues: If clients are extending the intervals between appointments, minimizing service offerings might retain their business.

Case Study: Britt shares her salon's experience from 2009, where implementing shrinkflation under the guise of "survival" helped maintain client engagement during economic downturns. When the economy recovered, demand for regular services rebounded naturally.

Notable Quote:
"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."
— Britt Seva (34:50)

Implementing Shrinkflation Strategies for Stylists (35:01 - 50:00)

Britt provides actionable strategies for stylists considering shrinkflation:

1. Mini Maintenance Services: Introduce services like partial root touch-ups or hairline highlights at a reduced rate. These services require minimal time and product, offering clients a cost-effective alternative to full services.

   • Partial Root Touch-Up: Covers only the front and back hairlines within six weeks of the last full touch-up. Priced around 70% of the standard rate.

     Notable Quote:
     "This would be a highly profitable service for you because you'd be getting a guest in rather than them pushing their appointment out."
     — Britt Seva (40:20)

   • Hairline Highlight: Limited foils with optional toner application, offered at 50-70% of the partial touch-up rate.

2. Dusting and Trimming Services: Although controversial, offering dusting (trim of half an inch or less without shampoo or full styling) can accommodate clients seeking lower-cost maintenance without compromising hair health.

   Notable Quote:
   "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 introduce a dusting or a trim service."
   — Britt Seva (45:35)

3. Communication and Positioning: Emphasize the value and necessity of these services for hair health, ensuring clients understand they are receiving professional care tailored to their current financial situation.

   Notable Quote:
   "Make them 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."
   — Britt Seva (48:10)

Controversial Insights and Final Thoughts (50:01 - 60:00)

Britt addresses potential pushback against shrinkflation strategies, particularly around services like dusting and trimming. She acknowledges that not all stylists will be comfortable with these ideas but encourages openness and adaptability in response to economic pressures.

Final Advice:

• Evaluate Appropriateness: Not all strategies suit every stylist. Approximately 30% might find shrinkflation beneficial based on their specific circumstances.

• Avoid Discounting New Clients: These strategies are designed for established clients to maintain loyalty and visit frequency without diluting perceived value.

• Leverage Resources: Britt directs listeners to prior episodes and her Thriver Society programs for further guidance, including access to pricing calculators and workshops.

Notable Quote:
"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."
— Britt Seva (58:05)

Conclusion

In this episode, Britt Seva provides a nuanced examination of shrinkflation as a strategic tool for stylists navigating economic challenges. By offering scaled-down services that respect both the business’s financial needs and the clients’ budget constraints, stylists can sustain and potentially grow their businesses even in tough economic times. Britt emphasizes thoughtful implementation and client communication to ensure these strategies enhance rather than undermine client relationships.

Final Quote:
"I hope this has been helpful. So much love. Happy business building and I'll see you on the next one."
— Britt Seva (60:00)

Key Takeaways:

• Shrinkflation can be an effective alternative to price increases for managing rising business costs.
• Implement mini maintenance services tailored to client needs and economic sensitivities.
• Ensure clear communication about the value and purpose of these services to maintain client trust.
• Utilize available resources and support networks to optimize pricing strategies and business practices.

By thoughtfully integrating shrinkflation strategies, hairstylists and salon owners can better navigate economic fluctuations, retain their client base, and ensure the longevity and profitability of their businesses.