How the rise of GLP-1 drugs is upending apparel inventory planning
Apparel brands are changing their size curves to adapt to the growing use of GLP-1 drugs like Ozempic and Wegovy.
GLP-1 drugs are typically prescribed for diabetes but used by millions of people for weight loss. As a bigger part of the U.S. population — now estimated at 6% — actively uses these drugs, apparel brands are noticing a shift in people’s shopping habits. Sizes like S and M are flying off the shelves more quickly than usual; last June, Lululemon’s CEO mentioned the brand was “out of stock in some of [its] smaller sizes.”
Clothing brands typically place orders six to nine months in advance and use size curves to determine how many of each size (0, 2, 4, etc.) they want to include in a given assortment. The brands typically adjust these algorithms once a year, said PwC retail leader Kelly Pedersen, who speaks with apparel companies about their retail strategies. But now, as more people use GLP-1 drugs, brands are updating these models “more often than they have before” to meet the need for small sizes, Pedersen said.
In the past, many apparel brands followed a 1-2-2-1 ordering model, Gabriella Santaniello, founder of the consultancy A-Line Partners, told Modern Retail. This corresponds to the following ratio: one part S, two parts M, two parts L and one part XL. Now, she recommends a 2-2-1-1 model, she told Modern Retail. This corresponds to two parts S, two parts M, one part L and one part XL.
Updating sizing algorithms can be expensive and time consuming, “but you have to have the right sizing, so you have to do it,” Santaniello said.
As of November 2023, most fashion retailers had a “size match percentage” between 20% and 51%, according to Impact Analytics, an AI-based forecasting company. That metric, which compares planned size curves to actual sales by size, is “well below the industry’s best-in-class 70% match rate,” Impact Analytics said in a report.
Because apparel brands lock down shipments months in advance, “there’s a bit of an urgency” to have the right sizing algorithm, PwC’s Pedersen said. If a brand makes a certain batch of jeans six months ahead of time, and then sells that merchandise for three months, “that’s nine months of commitment at potentially a wrong size range,” Pedersen explained. “That’s why brands are quickly reacting and thinking about, ‘How do I revise this?'”
The clothing industry, unlike electronics or furniture, operates on a season-by-season basis. With that in mind, it has a bit more flexibility around production. Even if a clothing company gets a sizing algorithm wrong, it will need to cycle in new products eventually. “There is always going to be opportunity to buy,” Pedersen said.
Still, Pedersen and Santaniello both recommended that brands constantly monitor their sell-through rates to see which sizes are performing better than others. It’s important to stay hyper-focused on this and get updates in real-time, Santaniello said. “It’s way better to run out of things than it is to have excess inventory,” she said. “I think brands have sophisticated systems, but they just need to stay on top of it.”
Clothing rental companies are also seeing a greater demand for smaller sizes. Last year, Rent the Runway CEO Jennifer Hyman told The Wall Street Journal that more customers were switching to smaller sizes than at any point in the last 15 years. Many who lost weight also began to experiment with different styles, she said. “When you are more comfortable in your skin, you are more willing to try edgier looks,” she told the publication.
PwC’s Pedersen mentioned this point, as well, saying that clothing brands he’s spoken with have seen an uptick in sales of more form-fitting clothing. These brands, whom Pedersen declined to name on the record, have seen an increase in demand for dresses and resortwear like swimsuits and cover-ups. Pedersen predicts a similar trend will happen with activewear.
Data indicates that customers on GLP-1 drugs are likely to buy more apparel within their first year of being on the medication. Circana detected a 23% uptick in dollar sales of jeans among active GLP-1 users, compared to non-GLP-1 users. That number likewise stood at 23% for sales of jackets, coats and parkas, and 50% for sales of sweatpants.
Impact Analytics, meanwhile, predicts a 10% shift in the next five years to smaller sizes. Last year, using data from Manhattan’s Upper East Side, Impact Analytics found that sales of women’s button-down shirts in sizes XXS, XS and S increased by 12% from 2022 to 2024. Meanwhile, sales of women’s button-down shirts in sizes XXL, XL and L decreased by 10.9%.
Ultimately, GLP-1 drugs have taken the apparel industry by surprise, said Santaniello. “This has got to throw people off,” she said. “On one hand, it’s good [for sales] because it creates a lot of turnover. … But it’s definitely confusing as to how you’re going to do your size runs and plans, if you’re an apparel brand or retailer.”