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. Rony says:

    It is very simple – medium size cloths should fit larger people (OK a bit tight)or smaller people. So every size has an additional demand from “neighboring” sizes in both direction. Fringe sizes only from one direction. Provided that jobs order according to an equal distribution. The demand will allways be higher for the sizes in the middle than on the fringes

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  2. Marc F says:

    I suspect there is some truth to #180′s idea that they want it that way. I’m a S who hates to pay retail. Finding certain items (leather jackets are particularly hard) off price in S is tough. (XS is viryually nonexistent in most men’s departments) I once asked a salesperson at Lord and Taylor and he said if they ordered 1 small in a style it was a lot. Implicit in his reply was that he could sell a lot more if the buyers did not do this deliberately. I’ve often wondered if it was because many women could buy a mens small and get a good jacket at half the price it would fetch in the women’s department.

    Even sample sales I frequent have very few items in small sizes, and lots of small people willing to buy. Since retailers could probably dispose of their S’s at 20% off, if they bought more , why am I confronted by tons of L and XL at 50% off, despite the higher fabric cost?

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  3. Jemma says:

    Perhaps this means that people are more inclined to buy clothing that doesn’t fit them properly. In my daily observations of the students here at college, most college students either try to wear clothing that is too small for them or in contrast clothing that is far too big. People, who are more cautions about the way they look in public, even just going to and from class, tend to wear clothes according to the number. The smaller the number (size 1 and 2 for example) the better they think they look, and or consider themselves thin. On the other hand, you see people who are more obsessed with being comfortable and care little for their wardrobe. They can be seen around campus wearing clothing that looks to be two sizes too big. So although the average person is a medium that does not mean that is the size they would be most inclined to purchase. So perhaps stores anticipates this, having observed the tends in sizes over the years and stock more of the larger sizes and smaller sizes, which creates an excess of each and not so much of the middle sizes.

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  4. david says:

    I think that that’s about right. I don’t think it was a conscious decision, I think they just observed that it gets sold that way and continued.

    As another indicator of his argument’s validity, notice that discount stores rarely run massive discounts on clothing. They already have discount prices on other goods such as the last seasonal holiday’s candy or movie t-shirt, but Target, Old Navy, and other low-cost clothing providers typically cut prices only marginally, and when they do do blow outs, they’re typically to rid themselves of last season’s stock.

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  5. Frederick Michael says:

    #20 hit the kernel of the answer. The extreme sizes stay on the sale rack longer.

    This is classic Freakonomics stuff. For example, “Why are most of the prisoners in a jail on any given day serving longer sentences yet the jail says that most of their prisoners had short stays?”

    The answer is that the longer stays get “counted” over and over in the snap-shots of prison population. Similarly, a single XXL shirt that sits on the sale rack for 5 years can tilt the stats on what the rack looks like on a random day.

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  6. Eric says:

    The answer is very simple.

    Because each store needs to stock all the sizes.

    Most items are stocked in small numbers – a store wants to carry the minimum number of items that it can, both to reduce inventory costs and to reduce risks if something doesn’t sell. So, you look at the common distribution of sizes purchased at the store, and you find that it’s

    XS – 0.5
    S – 1
    M – 5
    L – 3
    XL – 1
    XXL – 0.3

    You don’t want your shoppers to be disappointed if they wear XS or XXL, so you buy 1 of each of those. Averaged across all your stores (and all clothing lines), that means you will have some of the outlier sizes left over. Off to the discount house they go.

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  7. Liz says:

    1) I don’t think they take the design/body type relationship into account when they plan retail inventory – and I think they should. I am a size 4 and when I’m looking at sale items the ones that would look good on me are typically only available in sizes 14+.

    2) A distribution of sizes for women’s tops at a 70%+ discount right now found at Shopstyle.com (includes over 200 retailers).

    XXS 38
    XS 291
    S 569
    M 572
    L 428
    XL 187
    Plus 2X 8

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  8. Pieter says:

    I might have missed someone else’s post, but I wonder how much psychology plays into this. Extreme aversion is a type of cognitive bias where a person will avoid the extreme options and choose a middle option instead. People will do this regardless of whether or not the middle “fits” or is the best option for them. This affects many people’s decision-making for fear of standing out from the crowd.

    This bias was recently documented in consumers’ choices of soda size at fast food restaurants . In this study, customers were often choosing the 16oz size of soda (the middle between the 12oz and 20oz). When fast food restaurants upped their drink sizes and the 16oz soda became the “small” and 21oz became the “medium,” most consumers chose the 21oz drink because it was the new “medium.”

    Given America’s increasing waistline, it would be interesting to see how different a size “M” or “L” from today compares with the same labeled size of 10 years ago. The point being: is the large from 10 years ago the medium of today? If so, we might have a case of extreme aversion in the clothing industry.

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