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Carrefour exposes suppliers for 'shrinkflation' practices

The French grocery store, Carrefour (CA.PA), is gaining attention for exposing companies that reduce the size of their products without adjusting the selling price. Yahoo Finance Live's Pras Subramanian, Alexandra Canal, and Josh Schafer discuss "shrinkflation" and how consumers may react to such practices.

Video Transcript

ALEXANDRA CANAL: Welcome back to Yahoo Finance Live. I'm Alexandra Canal here with Josh Schafer, Pras Subramanian. It's Friday, guys. We got some killer Friday stories. Pras, I want to kick it over to you. Start us off.

PRAS SUBRAMANIAN: Yeah, so, you know, you don't want to see, right, where you see higher prices and smaller sort of quantities for things. Like, think yogurt containers or even Starbucks coffee, right? But it's actually happening. And one company in France is shaming these companies-- Carrefour in France-- putting labels on certain objects that are saying like, this object costs more money now and had as fewer quantity of whatever you wanted to buy, yogurt.

In this case, it's-- sorry, in this case, it's Lipton iced tea, Pepsi, two boxes of Lindt chocolates. And now they actually-- now, they're doing this as a public service to people, but also they're trying to shame these suppliers as they renegotiate new deals. But they want to say, hey, you're getting less money, less stuff for your money. And actually, they're not changing prices either.

JOSH SCHAFER: So it's the grocery store--

PRAS SUBRAMANIAN: Shaming, yeah.

JOSH SCHAFER: Complaining that it's now hard to sell the product because it has less-- because they have to pay the price?

PRAS SUBRAMANIAN: Well, they're saying that--

JOSH SCHAFER: The grocery store wants the producers to bring down the prices.

PRAS SUBRAMANIAN: Yes, but they're not. They're not.

JOSH SCHAFER: Interesting play. Why doesn't it--

ALEXANDRA CANAL: But I can see we just the price too, right, if they're raising the prices.

JOSH SCHAFER: Yeah, instead of being smug and putting shrinkflation on the thing, why isn't the grocery store just be heroic for the consumer and mark the prices down?

ALEXANDRA CANAL: I actually--

JOSH SCHAFER: How about that?

ALEXANDRA CANAL: I actually think this tactic is genius. I mean, the French, they just do it right. They don't care. They're going to say, you know what? If you're going to raise prices and lower the quantity, then we're going to tell consumers that you're doing it. Because consumers don't really know.

JOSH SCHAFER: Oh, yeah. Yeah, you don't know until you buy it.

ALEXANDRA CANAL: You don't know. You don't understand. And I think it's important to know what you're buying, and I think it's a great tactic.

PRAS SUBRAMANIAN: Starbucks tall coffee, right? Went from, like, 10 to 8.

ALEXANDRA CANAL: Right. Like, there's those TikTok, like, hacks about how, you know, you do it in different cup sizes and how they're really charging you--

JOSH SCHAFER: Oh, the movie theater one is my favorite one.

ALEXANDRA CANAL: Which one's that one?

PRAS SUBRAMANIAN: Which one's that?

JOSH SCHAFER: They go to a movie theater and they pour in, like, a large soda and an extra large soda, and it's the same amount. They just shaped it tactically.

ALEXANDRA CANAL: Yeah, and then they're charging you more of that? That's ridiculous.

JOSH SCHAFER: But then every time you go to the movie theater, the guy's upselling you by $0.25, right? You can't possibly get a medium soda because they're like, well, it's $0.25 more for a large.

ALEXANDRA CANAL: Right. And as a consumer--

JOSH SCHAFER: So then you end up getting the XL.

ALEXANDRA CANAL: --it makes sense.

JOSH SCHAFER: You start at the small, and you work your way up. Yeah.

ALEXANDRA CANAL: That just gets me. Like, that's very deceptive. And I don't like that. I like to experience and seeing what I buy.

JOSH SCHAFER: I wonder if the grocery store is getting more consumers. You would think that that's kind of a thing people like, right? It's pretty funny. I would go to see it.

ALEXANDRA CANAL: I wonder how it's affecting sales.

PRAS SUBRAMANIAN: Well, yeah, if you're Pepsi, Lindt chocolate, Lipton iced tea, I mean, what do you do then, right? You're getting kind of called out in the store, on the shelf, you can call that so. It may not be the best thing. But Carrefour-- hand it to you guys. Got to hand it to you guys. Nice work.

ALEXANDRA CANAL: Yeah.

PRAS SUBRAMANIAN: I appreciate that.

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