While fit has been an ongoing problem for consumers, retailers and brands, new research from Impact Analytics points to a new wrinkle in the apparel sizing issue: the impact of weight loss drugs such as Ozempic and Wegovy.
Researchers at the firm said the discussions around these drugs “has centered on their revolutionary potential for weight loss and improved health, and no one has ventured to consider the profound implications they may have on the optimization of size curves for fashion retailers.”
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The authors of the report said GLP-1 drugs “are poised to disrupt the conventional norms of the fashion industry, and why retailers need to take immediate note of this paradigm shift.”
The white paper sets the context of the research by noting the importance of size curves for retailers and brands and how they play a pivotal role in inventory management, “with retailers generally making buy decisions for upcoming seasons six to nine months in advance.” Size curves are unique to each product type and points of distribution and “influence which sizes should be part of the assortment” while driving the quantity of each size to be ordered.
“Surprisingly, many retailers have clung to the same size curves for years, despite evidence suggesting their inaccuracy,” the report’s authors noted. “Our work has shown, on average, a fashion retailer with $1 billion in annual sales incurs substantial losses due to this rigidity, amounting to $20 million in margin and an additional $20 million in lost sales.”
That said, Impact Analytics said there are opportunities to manage size curves and improve accuracy. By evaluating the size match percent on a more granular level, the researchers at the company found match rates ranging between 20 percent and 51 percent for key categories, which is well below a best-in-class performance rate of 70 percent.
“This discrepancy is largely attributed to a reliance on historical data, which often does not account for missed sales due to stockouts, or opportunities to add sizes to a point of distribution where those sizes have not been part of prior assortments,” the report noted. “Poor size curves directly impact both the buying and allocation processes, resulting in both lost sales due to stockouts and excessive inventories that are subsequently heavily marked down.”
The report noted that addressing these issues “requires a fundamental shift toward historically informed, but forward forecast … data-driven decision-making to optimize match rates and deliver improved sales and margin on the entire inventory investments.”
Match-rate optimization is key, especially as market variables such as the impact of weight-loss drugs ripple through the industry.
The report’s authors said the “consequences could be dire” if retailers and brands fail to optimize match rates. “Our analysis has shown that without responsive changes in size curves, retailers risk seeing their entire profit margin erode, with more than 10 percent of their clothing inventory remaining unsold at the end of the year. In a market where precision and adaptability are paramount, failing to adjust to this dramatic shift in body sizes could spell financial catastrophe for fashion retailers.”
Researchers at the company urged retailers and brands to “get ahead of the problem” by understanding the efficacy of current size curves and “identifying gaps and their causes and correcting them.” And doing so by creating new size curves for the spring and summer of 2024.
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