What: US fashion retailers face significant financial and operational challenges as the “Ozempic effect” accelerates demand for smaller sizes and increases return rates.

Why it is important: Retailers must act quickly to recalibrate size curves and return strategies, as evolving consumer demand and fit-related returns reshape the economics of fashion retail.

The widespread adoption of GLP-1 drugs such as Ozempic is driving a rapid and unprecedented shift in American body sizes, with a marked increase in demand for smaller clothing and a corresponding decline in sales of larger sizes. This transformation is exposing U.S. fashion retailers to substantial risks, as traditional inventory planning and forecasting models are unable to keep pace with the speed of change. If retailers fail to realign their size curves and inventory, they could face up to $5 billion in margin losses by 2027, compounded by rising return rates and markdown pressures. Fit-related returns, especially among high-income consumers who are more likely to use GLP-1 drugs, are climbing sharply and adding to operational costs. The trend is forcing the industry to move away from multi-year, national averages and adopt real-time, region-specific planning powered by AI and advanced analytics. Retailers who adapt quickly will be best positioned to protect profitability and capture new demand in a rapidly evolving market.

IADS Notes: The “Ozempic effect” is accelerating a shift toward smaller sizes, compelling retailers to overhaul inventory and planning processes (September 2025). Industry research from late 2024 and early 2025 confirms that inventory misalignment and traditional merchandising inefficiencies can cost U.S. retailers up to 4.5% of revenue. The surge in fit-related returns, now totalling $890 billion annually, is being driven by bracketing and over-ordering, especially among high-income and Gen Z consumers. To address these challenges, retailers are increasingly adopting AI-powered, real-time planning solutions and moving away from outdated, multi-year models.
How the ‘Ozempic effect’ is reshaping the US fashion market