Size matters, especially for fashion brands. In fact, it matters so much that retailers are losing a whopping trillion dollars a year due to messed-up size availability. Let’s talk about how we can fix this colossal problem, and no, there is no “one size fits all” solution.
The Sad Truth About Size Availability
Here’s a scenario we’re all too familiar with: You spot your dream dress on Instagram, you tap to shop, and bam—your size is out of stock. Heartbreaking, isn’t it? Well, it’s not just a tragedy for you, the loyal customer, but also for the retailer who has lost out on a valuable sale. This happens millions of times a day across the world.
In fact, retail analyst IHL Group estimates that retailers globally lose $1 trillion in revenue annually due to out-of-stock situations. It’s astounding that such a vital aspect of the buying and fashion merchandising cycle, like sizing, is often overlooked by retailers of all sizes.
The Nitty-Gritty of Size Curves and Ratios
Before we dive into the solution, let’s break down some of the key terms and concepts related to sizing in the fashion industry:
- Size run: All the sizes that a particular product is produced in (e.g., XS to XL for clothing, or 5-13 for footwear).
- Size ratio: A relative ratio that can be applied to your total number of buy units (e.g., a 1:2:1 ratio for Small, Medium, and Large sizes).
- Size curve: A curve based on the distribution of buy units across the available sizes for a product, determined by the merchandising teams.
Now that we’re all on the same page, let’s talk about the elephant in the room: the current problems with sizing in the industry.
Where We Go Wrong with Sizing
There are several flawed methods commonly used in determining size curves and ratios, such as analyzing sales units versus intake units or full-price sales versus intake. These approaches often fail to take into account factors like size sellouts, age of stock, and markdown-driven sales, leading to inaccurate size curves.
So, how can we do better? The answer is to calculate the rate of sale when all sizes are in stock, ensuring you’re analyzing the true sales potential of each size. But with massive data sets, that’s easier said than done.
The Importance of Sizing and Its Impact on Your Business
Getting sizing right is crucial for several reasons:
- Reduces the need for heavy discounting, preserving profit margins
- Gives customers a reason to choose you over competitors
- Reduces waste and improves cash flow
- Enhances customer loyalty and satisfaction
By offering an optimal size mix that caters to the needs of various customers, retailers can improve customer satisfaction, create a positive shopping experience, and foster customer loyalty (Bolton, 2020). When customers can consistently find their size at a particular store, they are more likely to become repeat buyers and recommend the store to friends and family.
Minimizes markdowns and inventory holding costs: A well-planned size curve strategy can help retailers avoid overstocking or understocking of certain sizes (Style Arcade, 2021). This can lead to reduced markdowns, as retailers will be less likely to have an excess of slow-moving sizes and can focus on selling inventory at full price. Additionally, efficient size allocation can lower inventory holding costs by reducing the need for excessive storage space.
To implement an effective size curve strategy, retailers should consider the following steps:
- Analyze historical sales data: By examining past sales data, retailers can gain insights into the size preferences of their target customers and make informed decisions about the sizes they should stock (Heikkinen, 2020).
- Monitor customer feedback: Retailers should actively listen to customer feedback regarding size availability and preferences. This information can help retailers refine their size curve strategy to better meet customer needs (Lomas, 2018).
- Use technology to optimize size curves: Retailers can leverage advanced software solutions to analyze data, forecast demand, and optimize size allocation (Style Arcade, 2021).
- Continuously evaluate and adjust size curves: A successful size curve strategy requires ongoing evaluation and adjustments based on sales trends, customer feedback, and market changes. Retailers should be prepared to adapt their size curve strategy as needed to ensure continued success.
In conclusion, adopting an optimal size curve strategy is essential for retailers looking to maximize sales, reduce inventory costs, and enhance customer loyalty. By implementing the right size mix for their target customers, retailers can improve their bottom line and create a better shopping experience for their clientele.