This is true in so-called scale invariant theories. These theories do not contain any intrinsic length scale. The moment your theory contains a fundamental length l you break scale invariance. In this case you are able to compare your yard stick to the length l to find out if your yard stick was shrinking or the universe really is expanding.
Our present model of the world still contains a few fundamental length scales (such as the Planck length, or a length scale associated to the nuclear force), but people such as Christof Wetterich are building models that try to get rid of (some of) these fundamental length scales. A major approach in this direction is asymptotically safe quantum gravity, that also led Christof Wetterich and Mikhail Shaposhnikov to the most precise prediction of the Higgs mass prior to the Higgs' discovery in 2009, see https://arxiv.org/abs/0912.0208.