How The ‘Ozempic Effect’ Is Reshaping The U.S. Fashion Market

Ozempic and other GLP-1 drugs are starting to have a positive impact on Americans’ weight, leading to a shift in demand for smaller clothing sizes. However, U.S. retailers are unprepared for the change, suggests a new study from Impact Analytics. Retailers could take up to a $5 billion margin hit by 2027, resulting from a misalignment in size demand and increased clothing returns.

“Ozempic is upending America’s size curve in retail time – and traditional retail industry planning processes are not ready,” warned Prashant Agrawal, Impact Analytics CEO. “Our data shows billions of dollars in retail margins for inventory are at risk unless brands start planning for the shopper of 2027, instead of the shopper of 2022.”

On the flip side, weight loss often leads consumers to reward themselves with new clothing purchases, sometimes even buying entirely new wardrobes. This will be good news for fashion retailers’ topline results, but as Agrawal warns, retailers need to plan for the downward sizing shift to protect their bottom lines.

Changes Starting To Show

Based on the latest data, a JAMA study found that obesity rates started to retreat slightly in 2023, after steadily rising from 2013 to 2021 and plateauing in 2022. The decline in BMI was most notable in the South region, where the dispensing rate of GLP-1 medications is highest. There also was a modest decline in obesity among GenZ consumers, aged 18 to 25 years.

As the Trump administration’s MAHA movement, spearheaded by Health and Human Services Secretary Robert F. Kennedy Jr., fights the upstream causes of obesity, the shrinking of the American consumer will continue to pick up steam. In turn, the fashion industry could experience even greater downstream disruption in the years ahead.

Changing Sizes In Real Time

Following a downsizing trend it observed in New York City early last year, Impact Analytics identified that up to 400 million apparel units could be misaligned with nationwide consumer demand by 2027, particularly if the use of GLP-1 medications, such as Ozempic, Mounjaro and Wegovy, increases 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,” Agrawal said.

In the analysis of aggregated point-of-sale and returns data from major U.S. fashion retailers, including both brick-and-mortar and online retailers, it found that sales of larger apparel sizes (L, XL, XXL) fell and sales of small sizes increased from 2022 to 2024.

Specifically, these fashion items experienced a downward sizing shift over the past two years:

• Women’s Tops: Demand for XS and S sizes rose from 35% to 37% and large and above dropped from 33% to 31% .
• Women’s Bottoms: Small band sizes of 26 or less rose from 19% to 22%, while sizes 27 to 30 dropped from 57% to 54%.
• Women’s Shapewear: Small and medium sizes advanced from 42% to 44% and XL and above declined from 35% to 33%.
• Men’s Tops: Demand for medium sizes grew from 25% to 27%, while XL/XXL dropped from 34% to 30%.
• Men’s Bottoms: Core brand sizes from 30 to 35 rose from 57% to 59%, while larger sizes 36+ fell from 40% to 38%.

Despite the two-year percentage shifts being small, the trend is expected to intensify through 2027, resulting in rising return rates and higher markdown pressure as working capital is tied up in unsellable large sizes.

Returns Are The Canary In The Coal Mine

Along with the shift toward smaller sizes, the study also identified an uptick in fit-related returns over the two-year study period. Return rates were highest for women’s bottoms, which increased from 12% of units to 15%, followed by a one-percentage-point increase in returns for men’s tops.

Returns are a perennial problem for retailers – one that cost the retail industry $890 billion in 2024, according to the National Retail Federation. Clothing is among the top categories for returns.

“Fit has always been the top driver of apparel returns, and GLP-1 use is amplifying the trend,” shared ReturnPro CEO Sender Shamiss. “As body sizes change quickly, shoppers are less certain about fit and more likely to bracket their purchases, i.e. buying multiple sizes and returning what doesn’t work. That uncertainty is pushing return rates higher, especially in categories like denim and dresses where sizing is less forgiving.”

The practice of bracketing is particularly pervasive among high-income consumers – just the ones most likely to be able to afford GLP-1 medications for weight loss, which generally isn’t covered by insurance for that purpose – suggests a recent Bank of America Institute study.

BoA analyzed transaction data from U.S. credit and debit card holders and found that higher-income consumers make returns to department stores at about twice the rate of lower-income shoppers. High-income shoppers return 20% of their department store spending as compared with 11% for low-income shoppers. While clothing isn’t all that department stores sell, they certainly sell a lot.

Recalibrate Now

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 away from traditional ones that assume slow change based on five-year averages to a half-year, even quarterly schedule to recalibrate sizing curves in real time. It also stresses the need to plan sizes by region, rather than relying upon national averages.

As the use of GLP-1 drugs for weight loss increases and new weight loss drugs come into the market –Eli Lily is expecting the FDA to approve its oral weight loss pill that overcomes hurdles using injectable GLP-1 drugs in 2026 – the resizing of American consumers is sure to accelerate. 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,” Impact Analysis’ Agarwal concluded.