As Weight Loss Gains Momentum, Retailers Struggle to Keep Up with Changing Size Demands

The “Ozempic Effect” is beginning to reshape the U.S. fashion market, as weight loss from GLP-1 drugs like Ozempic, Mounjaro, and Wegovy is driving a shift in consumer demand for smaller clothing sizes. A new study by Impact Analytics warns that U.S. retailers could face a potential $5 billion margin hit by 2027 if they fail to adapt to this changing landscape. The study highlights a growing misalignment between size demand and inventory, leading to increased clothing returns and financial strain on retailers.

According to Prashant Agrawal, CEO of Impact Analytics, traditional retail planning processes are not equipped to handle the rapid changes brought about by the rise in GLP-1 drug use. “Ozempic is upending America’s size curve in retail time – and traditional retail industry planning processes are not ready,” Agrawal warned. The study shows that the shift in size demand is already evident, with sales of larger apparel sizes declining and smaller sizes gaining popularity from 2022 to 2024.

The impact of GLP-1 drugs is not only reshaping the fashion industry but also influencing broader societal trends. A JAMA study found that obesity rates began to decline slightly in 2023, following a steady rise from 2013 to 2021. The decline in BMI was most notable in the South, where the dispensing rate of GLP-1 medications is highest. This trend is expected to continue as the Trump administration’s MAHA movement, led by Health and Human Services Secretary Robert F. Kennedy Jr., addresses the upstream causes of obesity, such as diet, exercise, and environmental factors.

As the use of GLP-1 drugs increases, the fashion industry faces potential downstream disruptions. Impact Analytics estimates that up to 400 million apparel units could be misaligned with consumer demand by 2027 if the use of these medications rises from its current 6% rate to 8%. The rise of GLP-1 is collapsing traditional demand patterns at a speed retailers have never experienced before, according to Agrawal.

Fit-related returns are also on the rise, with return rates for women’s bottoms increasing from 12% to 15% over the past two years. This trend is expected to intensify, leading to higher markdown pressure as working capital is tied up in unsellable large sizes. ReturnPro CEO Sender Shamiss notes that the practice of buying multiple sizes and returning what doesn’t fit is becoming more common, especially among high-income consumers who are more likely to afford GLP-1 medications.

According to a Bank of America Institute study, higher-income consumers return 20% of their department store spending, compared to 11% for lower-income shoppers. This behavior is particularly prevalent in categories like denim and dresses, where sizing is less forgiving and fit issues are more common.

Impact Analytics suggests that retailers should use fit-related returns as a leading key-performance-indicator to signal the direction and pace of change. It also advises retailers to adjust their planning models to a half-year, even quarterly schedule to recalibrate sizing curves in real time. Retailers are encouraged to plan sizes by region rather than relying on national averages, as regional differences in body size and fashion preferences are becoming more pronounced.

As the use of GLP-1 drugs for weight loss increases and new weight loss drugs enter the market—such as Eli Lilly’s oral weight loss pill, expected to be FDA-approved in 2026—the resizing of American consumers is expected to accelerate further. The fashion industry needs to get ahead of the curve or risk a $5 billion margin hit.

“Retailers must act now to recalibrate size curves or be stuck discounting unsold stock while missing the opportunity to serve tomorrow’s customers with full margin integrity,” Agrawal concluded.

In response to these changes, some retailers are already experimenting with more flexible sizing options and improved fit technology, while others are investing in data analytics to better predict consumer demand. As the market continues to evolve, the ability to adapt quickly and efficiently will be crucial for fashion brands looking to stay competitive in the years ahead.