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. Jake says:

    Thought I might offer the following explanation to the question. It relies less on the psychology of XXL shopping, and puts a bit more faith in micro-optimization.

    A glut of XXL clothing usually ends up left on shelves during sales, but such an excess doesn’t usually exist at the regular prices. Why does a change in price, specifically, cause a surplus of XXL clothes?

    At regular prices, retailers can forecast and order enough XXL clothing given demand, considering the amount of data they collect. That XXL surpluses appear during sales suggests the following: that demand for XXL clothing is much less elastic compared to moderate sizes.

    The upshot of this inelasticity is that the careful forecasting which makes sure that, at regular prices, the Gap orders the right amount of blazers goes out the window when they put those blazers on sale. The ratio of small to medium to large sizes that is correct at regular prices no longer works at sale prices. The demand for moderate sizes rises to a much greater extent and excess medium sizes are snapped up quickly. The demand for XXL goods on the other hand, does not rise nearly as much, and thus, those XXL shirts are left on the sales rack despite the Gap’s best profit maximizing efforts.

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  2. Cindy says:

    That is an interesting question to ask! There is a similar situation with shoes. The shoes on sale feature disproportionate numbers of very small sizes and very large sizes. I am lucky to be a size 6. Because I know the past pricing behavior for shoes, I don’t buy shoes at regular price because I know they will be on sale soon. So if every customer thinks like I do, then the demand for regular priced shoes will go down and retailers will have to mark them down, resulting in the disproportion. For retailers, they don’t want to cut back on the supply either because making a lower profit is better than getting nothing. So the cycle just self-perpetuates.

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  3. thethorninyour says:

    The reason why there are more larger sizes left at the end of the season is because they are priced higher than their regular sized equivalents the moment they hit the store. A Nautica polo shirt that costs $57 S-XL, costs $67 2XL on up. Big and Tall Buyers wait for the discounts so they don’t have to pay the upcharge retailers such as Belk, Dillards and Macy’s automatically place on big and tall products. It has nothing to do with amount of fabric in the larger sizes. there is a bigger difference between small and XL than there is between XL and 2XL. If they want to price by size, why aren’t all the sizes a different price. This problem doesn’t exist in other parts of the store. Mens shoes size 6-13 are one price. Mens suits size 40S to 48L are all one price. Bras sized 32A to 38D are all one size. What makes big and tall Polo shirts so different. Pricing discriminataion. the same goes for Plus size women and Petite sizes. The customers who buy these items are a captive audience that the retailers feel perfectly fine overcharging. Kind of like a movie theater charging $8 bucks for a bucket of popcorn just because they can.

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  4. ginger says:

    i worked for many years in a clothing distribution. being fat skiny med. sample; all clothing is tagged by price first,walmart, kamrt etc.then its all counted by sizes and seperated. then its broke down to what size amounts and even in colors at times. for instance if thers ioo.oo small. 70 med and 50 large. it get broken down by a dozen 7 sm. 3 med 2 large. and that combination is done until what size is done and broke down again. all tagging is done bt distribution . so big lots, pennys mervys kmart tags are also switch using the same clothing but diffrent tags. your buying the name tag not the brand.

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  5. Sam says:

    I am a size xs. I do find a lot of clothes marked xs in discount stores but they are always clothes that are Medium or small, sometimes even large that are marked wrong. No wonder they end up in the discount section. People who are xs wont fit into them and people who are a size S or M wont obviously bother looking at the xs section

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  6. A Californian says:

    Having worked, many years ago, in the buying line at Macy’s, let me suggest this:

    You have to assort each store with a minimum number of pieces in each size (even if that number is 1 fr the largest and smallest), while you can buy the ‘right’ number of pieces for the middle sizes. The stores know the ratio of pieces in each size, say

    size 2 4 6 8 10 12 14 16
    # 1 2 4 8 8 6 4 2

    Let’s say you’re giving each store 12 pieces. How do you divide them?

    size 2 4 6 8 10 12 14 16
    # 1 1 2 3 2 1 1 1

    So maybe no one bought that one size 2 piece in 7 of the 20 stores you bought it for. Those 7 get aggregated and sent to the discount location.

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  7. Gene Craig says:

    Sizes have been changing, there is a psychology to it. When I was 25 lbs. lighter than my current 200lbs, I bought T-Shirts and Polo’s in XXL and they fit just a wee bit loose, but the way I liked them. I recently tried on a XXL Polo and there was room enough for my wife to fit in it with me. Now it is XL, and in some cases L fits fine. I think this size change helps (or not) people feel that they are smaller than they really are if they can fit into a smaller size; making them feel better about themselves.

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  8. Lyndy says:

    Well I would surely like to trade with some of these people as my XS and XXL sizes sell out quickly and I’m stuck with Mediums all the time. And responding to the following:

    ” 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. ” Quoted from Erik

    I find this very unflattering as I myself wear a small, spend loads on clothing and have never been considered outside the norm for physical beauty!

    You might also note that clothing manufactuers don’t all use the same guidelines for measurements. I received a shipment of high quality dresses last week that had to be returned as the Large was a 32″ bust (hah to that) I carry sizes for almost all sizes size 0 to womens plus size 6X and they are all beautiful women and not outside the norm for physical beauty at all, so, I am terribly offended by Eriks comment

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