Why Are Discount Stores Full of XS and XXL Clothes?

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My former Ph.D. student and frequent co-author Erik Snowberg sends along an interesting question:

Why do discount clothing stores (like Nordstrom Rack — and clothing sales in general) have an excess of really small and really large sizes?

I have to admit, I’ve always wondered. Erik continues:

The typical answer seems to be that there are more medium [people] in the world than XXL’s. Duh.

But the problem with this idea is that clothing buyers for stores obviously know this. And if they didn’t at first, they should have figured it out by now.

Hmm. He’s right — it is important to think about the supply side as well as demand. If there are twice as many mediums as XXL’s, then twice as many should be produced; and so it should be about as likely that a store will be left with excess mediums as XXL’s.

Here’s Erik’s explanation:

My best guess is that for some reason small and large people are, in general, less willing to pay for clothes. Maybe because they are outside of the norms for physical beauty, they believe that sharp clothes won’t help them that much.

Whatever the reason, a clothing store can’t set lower prices for different sizes, so it price discriminates by waiting a little bit and putting remaining stock on sale — which happens to be (surprise!) in the large and sometimes small sizes.

That’s a pretty interesting story, and it may well be right. But there must be readers with better information, or competing theories.

What are your thoughts?

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  1. Christopher says:

    Could there be a disproportionate amount of larger people in the group of less wealthy people? There have been many links to obesity and being poor. And, naturally, the poorer you are the more prone you are to look for discounts on clothing. The converse is then true, the richer you are the more you’ll spend on clothes.

    So the end result of your theory would be true- clothing stores stock the same amount of S, M, L as they do XL, XXL, XXXL… they just count on discounting the larger ones and waiting to sell them- knowing XXL customers will eventually buy them.

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  2. Ryan says:

    Hm… maybe people who are less well off or just plain cheap don’t mind buying ill-fitting clothing if it’s on sale? Sure they could put normal sized clothing on sale, too, but then alot of people would just wait until it’s on sale.

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  3. Adam says:

    Speaking from personal experience, overweight people are less willing to spend a lot of money on clothes because they (we) are always thinking that the big change is right around the corner. There’s no reason to waste money on fat clothes when we’re going to get our butts in gear and drop this excess weight soon.

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  4. eman says:

    How about this: they are targeting obese/overweight (probably negatively correlated with income) with the XXLs and foreigners (Asian, some Latin Americans, etc) with XSs?

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  5. Dennis says:

    Do discount stores like Costco and Walmart have the opposite proportions of sizes left over?

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  6. Elizabeth Anne says:

    Actually, I think it’s this: if you’re buying a clothing line in which you are the “XS” or “XL”, you probably won’t buy within that line – if you’re an XS you’ll most likely drop into a petite line in which you’ll have more gradation of sizes, and if you’re an XL you’ll head to the Women’s department for the same reason.

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  7. Marty says:

    Perhaps many of the XL and XS clothes have been returned. Many people who are of odd sizes will buy a lot of clothing items, then try them on at home where they feel more comfortable, then return them. Many of these go straight to discount, or they’ve been out a while and now the store only keeps them in discount.

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  8. Kevin says:

    I like the explanation provided above, but I’ve got another idea: a statistical explanation. Disclaimer: I have no knowledge of clothing industry practices and haven’t taken economics beyond introductory-level courses.

    Maybe clothing stores attempt to ensure that, with some level of confidence (90%, for example), every customer who wants to buy a given item in a given size at full price will be able to do so. Perhaps, then, there is a greater variance in the quantities demanded by small and people. This would force stores to buy more extra small and large shirts above what they expect to sell than medium sizes.

    Just an idea.

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