How Procurement Leaders Are Fighting Rising Costs
What is Shrinkflation?
Shrinkflation is one of the most subtle and dangerous cost pressures facing businesses today.
The Cambridge dictionary describes shrinkflation as:
The situation when the price of a product stays the same but its size gets smaller:
- Shrinkflation is a cunning way of raising prices without actually raising the price of the product you are buying.
- Many products have been hit by shrinkflation.
Rather than increasing headline prices, suppliers reduce quantity, volume, weight, or service levels while keeping prices the same.
On paper, nothing appears to change.
In reality, your unit cost quietly increases.
The image below illustrates a perfect real-world example:
Two identical boxes of rooibos tea, purchased one year apart.
- 2025: Larger quantity
- 2026: 20% less product
- Price: The same
From a procurement perspective, this is not a price rise—it’s a margin leak.
And it’s happening across:
- Consumables
- Energy contracts
- Telecoms allowances
- Payment processing
- Waste collections
- Software licensing
- Business services
Shrinkflation doesn’t hit the P&L loudly. It erodes it silently.
Why Shrinkflation Is Accelerating in 2026?
Suppliers are under pressure from:
- Inflation in raw materials
- Rising labour costs
- Energy volatility
- Increased compliance costs
- Reduced access to cheap capital
Rather than risk losing customers with overt price increases, many suppliers choose the less visible route: give you less for the same money.
For businesses without tight procurement controls, shrinkflation often goes unnoticed for months or years.
By the time it’s spotted, margins have already been permanently compressed.
Why Shrinkflation Is a Bigger Threat Than Price Rises?
From a procurement expert’s viewpoint, shrinkflation is more damaging than inflation for three reasons:
1. It Bypasses Budget Controls
Finance teams track prices, not always unit economics. Shrinkflation avoids scrutiny because invoices “match expectations”.
2. It Compounds Over Time
A 10–20% reduction here, another 5–10% elsewhere—across dozens of suppliers, the impact becomes material.
3. It Masks Supplier Underperformance
Service degradation, reduced quantities, and poorer quality all hide behind unchanged pricing.
This is why many businesses feel like they are “working harder for less” despite stable revenues.
How Procurement Leaders Combat Shrinkflation
The solution isn’t to squeeze suppliers harder; it’s to procure smarter.
At Digital Media Technology Solutions, we approach shrinkflation as a data and buying-power problem, not a negotiation problem.
Step 1: Re-establish Unit Cost Visibility
True procurement control starts with understanding shrinkflation:
- Cost per unit
- Cost per transaction
- Cost per employee
- Cost per location
Without this, shrinkflation remains invisible.
Step 2: Benchmark Against Market Reality
Most SMEs are benchmarking against historic contracts—not the live market.
Through access to FTSE-250 level buying power, Digital Media Technology Solutions benchmarks:
- Energy tariffs
- Merchant service rates
- Telecom allowances
- Waste volumes
- Insurance cover vs premiums
This immediately exposes where value has eroded.
Step 3: Replace “Supplier Loyalty” With Commercial Discipline
Long-standing suppliers often rely on inertia. Shrinkflation thrives in complacency.
We renegotiate or replace contracts based on:
- Delivered value
- Measurable outcomes
- Unit economics
- Cost-to-serve efficiency
Step 4: Reduce Overheads at the Source
The most effective way to fight shrinkflation is to remove cost entirely, not absorb it.
DMT Solutions regularly helps businesses:
- Reduce overheads by up to 60%
- Consolidate fragmented suppliers
- Automate transactions using open banking
- Eliminate hidden fees and excess margins
This isn’t about cutting corners; it’s about removing wastage.
Why Digital Media Technology Solutions Is Different?
Most cost-saving providers focus on one category. We act as an extension of your procurement function.
Our advantage:
- Cross-category cost reduction
- Technology-driven transparency
- Open banking–enabled automation
- Buying power normally reserved for large corporations
When shrinkflation hits, our clients feel it least—because their cost base is already optimised.
The Strategic Takeaway for Business Leaders
Shrinkflation isn’t a consumer issue.
It’s a board-level procurement risk.
If your business isn’t actively reviewing:
- What you receive
- What you pay
- What value is actually delivered
Then, shrinkflation is already impacting your margins.
The smartest businesses don’t just grow revenue.
They defend profit.
Ready to Protect Your Margins?
If you want a procurement-led review of where shrinkflation and hidden cost increases are affecting your business, DMT Solutions can uncover savings quickly—often without operational disruption.
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