By Andrew Miller
The only thing plus-sized for retailers lately is the number of returns.
GLP-1 medications like Ozempic are causing customers to lose weight faster than their wardrobe can follow. In some cases, it’s possible to go down a size every month.
When you don’t know what size you’ll be in three months, you don’t shop with confidence. It’s more like placing a bet. For example, a customer needs a suit for a wedding. They plan ahead and order two months out. Suddenly, the day before the ceremony it fits like a burlap sack.
To avoid this, next time they order three sizes up front. Before the event, they return what doesn’t fit.
The phenomenon is so widespread that some retailers say returns are up 50% in the past year. One women’s brand lists 60% of returns as “too big” or citing weight loss as the reason. That’s nearly double what it was last year.
The returns aren’t just lost sales. Each one carries shipping costs, labor, warehouse time, and the possibility that the item comes back out of season. In that case, it’ll be sold at a discount.
For a $1 billion retailer, a 5-10 point increase in returns can wipe out $20 million in gross margin. While some large companies can absorb that, it can wreak havoc on small businesses.
Some are fighting back with restocking fees. One particular retailer, The Dress Outlet, doubled their restocking fee to 20% of the purchase price. To cut down on speculative orders, they now require that customers carefully check size charts before ordering a dress or formal gown.
For retailers, it’s important to note that demand has increased for smaller sizes. Medium, large, and extra large items saw the most returns. Retailers stocking deeper in smaller sizes with clearer sizing guidance upfront are better positioned to come out ahead.
After all, weight loss drugs show no signs of slowing down. By 2030, an estimated 30 million Americans will be on a GLP-1 medication.
That’s a lot of suits that won’t fit by Saturday.
P.S. Not in apparel? Consumer behavior is shifting across every industry. Signet can get your business funded in as little as two hours.Let’s talk.