The weight-loss era is not just about selling clothes

Speaker A: GLP1s today are being blamed for things like fit problems, size, volatility, returns, and excess inventory. But they're not the root cause. They are exposing how fragile apparel supply chains and product creation processes already are foreign.

Speaker B: Hi, I'm Daphne Howland.

Speaker A: And I'm Dani James, and we're reporters at Retail Dive. This is our podcast where we look into the biggest retail trends shaping the industry.

Speaker B: We cover the important news trends and happenings in retail, and we often go into the story behind those stories, too.

Speaker A: Plus, we'll be talking to some industry experts along the way.

Speaker B: This is the back room. Welcome back, everybody, to the back room. Today I have with me, returning to the pod, one of my favorite go to sources Liza Amlani. Liza, thanks for joining me today.

Speaker A: Oh, uh, I'm so excited. I'm excited to talk about this.

Speaker B: I know. So Liza is principal and co founder at Retail Strategy Group. Lots of merchandising experience. Um, Lisa, I'm going to have you in a second, talk about your background and what your firm does. But today we're talking with her about GLP1s and their impact on the apparel industry. And one of the reasons I wanted to bring you on, Lisa, is because when I reached out to you for a story I was doing on this, a lot more is going on than the surface, which is we're getting a lot of input from analysts and research about how weight loss medications, which are becoming so prevalent, are really boosting apparel sales. But that is not the end of the story. Um, so we're going to talk about that today. But first, if you could just tell us you've got a really rich merchandising background. Last time you were on the podcast, we talked about wholesale. You had just written a book about that. So tell me a little bit about your background, what the firm does, and we'll take it from there.

Speaker A: Okay. So my name is Liza Amlani, and I'm the principal of Retail Strategy Group. I spent over 20 years in merchandising and product creation with brands all over the world. So I have this very interesting worldly point of view. And, um, I think what's interesting is the work that I'm doing today with brands and retailers on merchandising, go to market strategies, implementing things like technology into a process to really process innovation. It's fascinating to see and reflect on how I used to work as a merchant and product creator for over 20 years and how the industry hasn't changed that much. So. So some of the work that we do today is working with global brands on, um, process innovation. And our second book, the Material Life, also touches on some of that. Um, really looking at process innovation as the most underrated opportunity in the fashion supply chain.

Speaker B: So that just really goes really nicely to what we're talking about because it seems really obvious to say that when a, ah, significant number of people in the population are going down several sizes that they will need new clothes and that's going to stimulate sales of apparel. Retail. It just, and that's, we're reading, we're getting numbers on that it's happening. But when I talk to you, your perspective and your research and your um, experience is showing you that it is way beyond a demand change, that actually retailers and brands are up against something that they might not really appreciate when it comes to this new approach and experience that people are having with weight loss. So what is the first thing, thing that you think retailers and brands should know about what's happening out there?

Speaker A: What I would say is GLP1s today are being blamed for things like fit problems, size volatility, returns and excess inventory. But they're not the root cause. They are exposing how fragile apparel supply chains and product creation processes already are. So what I would say is GLP1s are not the disruption, but they're the stress test. They're the magnifying glass of um, today's product creation process, which is part of fit and size and of course demand in the market.

Speaker B: So I'm guessing that analysts maybe are the ones and maybe reporters. Reporters and analysts are the ones with the most obvious first line observation, which is this is a demand stimulant or uh, catalyst. I'm guessing that a lot of retailers and brands are already realizing it's not just demand, it's returns. It's the stuff that you're talking about. What are we talking about when we're talking about these weight loss medications you and others that I've spoken to are talking about. It's not just shedding pounds. There's a wellness component. There's a desire and effort to build muscle. So it's, it's not just that your body's changing one way, it's changing in more than one way. So what is happening out there and what are, what is the customer now expecting?

Speaker A: The customer is really expecting brands and retailers to meet them where they are on their weight loss journey. The challenge that brands and retailers have is that they're not impacting the fit of the garment and they are reacting to this shift in demand with buying more smaller sizes. Or assorting smaller, smaller garments.

Speaker B: Right.

Speaker A: But that's not really solving the issue because the conversation is too focused on weight loss when the real issue is the body composition is changing and the speed of that change. And we coined this term fit volatility. That reflects how dynamic and how quickly bodies are changing, whether it is due to GLP1s, whether it is due to the, the increase in strength training among women especially. But the way that the retailers and the brands are creating products is so static that they'll never be able to meet the demands as quickly as they should. And I'll just pause there for a second because I think it's important to also note that the apparel product creation calendar, which is the time that it takes for a season to go from concept to market to develop, the Entire season is 52 weeks or longer. So if a customer's body composition is changing so quickly, in fact, Eli Lilly reports that they help patients lose up to 30% of their body weight over two years. I mean, they have a new drug right now, and that is in clinical trials. But what we're expecting to see is that the magnitude of body change could be greater than what brands are already seeing with current GLP1 drugs. So it's actually going to get faster. And then, um, there's also the rebound effect, which is also happening. So if brands and retailers are assorting smaller sizes, not necessarily reacting to the body composition and the fit changes, but if they're just assorting smaller sizes, they will be out of stock when that customer actually rebounds.

Speaker B: I'm thinking about during COVID there was so much disruption to the supply chain. And that was another example, I think, of, um, exposing flaws in the system. And a lot of those flaws got solved. So some retailers and brands actually came through that period with an improved supply chain, more agility. Are there retailers out there or brands out there out there that are ready for this challenge, or are you seeing that even those sort of revamped, upgraded supply chains need to sort of take this whole thing into account?

Speaker A: I would argue that even though Covid and the Pandemic triggered brands to really take a look at their supply chain and how they were creating product, where they were creating product, and many of them did diversify their supplier base, where they were, um, you know, where they were sourcing their fabrics, their yarns. But the issue here is that the size curve and how sizes were determined or are determined, I should say that hasn't actually changed.

Speaker B: Mhm.

Speaker A: And when we think about the cross functional teams that are part of that product creation process. You have materials sourcing, design, merchandising, planning, marketing, Sizing sits with planning and the fit of the garment and the design of the garment sits with design. And because retailers today are so siloed in their functions and how they operate, I mean, everyone knows this is still a challenge in today's industry. They're not actually talking to each other when they need to. And with size curves built on yesterday's customer, you won't be able to serve tomorrow's body.

Speaker B: You know, it kind of reminds me of my coverage of Plus Apparel. First of all, I'm going to guess that you're going to tell me that there is still a place for plus Apparel.

Speaker A: There absolutely is, yes.

Speaker B: Mhm. You and I were talking, uh, in mid June. You and I talked earlier today about Isaac Mizrahi's return to Target as creative director. I remember a few years ago when I was writing about Plus Apparel, he was saying there should be no plus in the sense that there should just be sizes that go start here and end here. It's a range and it should not be, um, the plus mainstream dichotomy. It's just all one thing in this era. Does that make even more sense to you?

Speaker A: I would say it's a different conversation because no matter who your customer is, you must reflect your product to fit that customer. And fit and size are very different things. Size is not standardized and it's brand specific. And fit is something that changes depending on your customer's body shape and your and the customer's body composition. Whether they are a size 10, 12 or 2X, it's irrelevant because it is subjective and it is a standard that is created by the brand. So I agree with what Isaac Mizrahi was saying because we shouldn't be generalizing that way because there's no standards against the sizing. So for me that doesn't make any sense either. What we should be doing is, I mean, I don't think we're ever going to standardize sizing across the globe, across every single brand. That's. I don't think that's realistic. But what we should do is we should have a very clear idea on who our customer is, how their body is changing. And questions that uh, brands need to ask their customers is how many of those customers have considered a GLP1 are, um, possibly increasing strength training in their routine, have changed their diets. There are so many factors that contribute to fit volatility, not just GLP1s. GLP1s are just the magnifying glass that we have today, which is great because this is where apparel brands can really, really think about how they need to innovate their process and what their customers needs are truly what their needs are and what their challenges are when it comes to fit and size.

Speaker B: So what kinds of variables are we talking about exactly? Are we talking about material? Are we talking about speed to market? Are we talking about batch sizes? Take me through that.

Speaker A: Sure. So when we think about the concept to market process, if we look at the master fit block, for example, the master fit block is how every size created and measured for the brand when they're creating their styles. That master fit block is updated every three to five years. If your customer's body composition, body shape is changing every few months and that's only going to perhaps either go in one direction or the other. If they're rebounding, then you need to update your fit blocks a lot more often. Fit models, and I speak, you know from experience with working with fit models for 20 years that we would be reliant on that fit model to fit our garment. And if our fit model changed, we would wait until she was free because we always use the same fit model. So if you're using the same fit model, does she or he represent your actual customer's body composition today? That's another question to answer. And how often are you updating your size curves and your and your sizes and your standards around size? So fit volatility is what is happen, what happens when your customer changes faster than your product creation calendar, faster than your fitblock, faster than your size curves and your inventory system can't keep up? So that's your planning. Right. And I uh, think the biggest mistake that brands are making today is treating GLP1s as something that's niche, that's a niche health trend. But this is actually a structural demand signal.

Speaker B: Is this an era where we are going to be seeing, seeing flexibility within a garment to make it easier on the customer and the brand?

Speaker A: I think that's one solution, uh, is are you going to be using more, um, let's say more stretch in your materials instead of more rigid materials? Yes, that's one way for sure. But that's not going to solve your fit issues. Mhm. And if your customer doesn't have fit trust with your brand, your customer is going to go elsewhere.

Speaker B: Are you seeing any brands that are actually meeting the moment?

Speaker A: That's hard to say. What we know today is that fit failure shows up as returns markdowns and excess inventory and of course lost confidence with the brand. Right. The customer just calls, calls it the brand. This brand doesn't fit me anymore. I'm going to move on to something else. Right? Or they'll keep trying. The brands that can get to market faster, that can test and learn with their products probably have a better chance in reducing things like returns and markdowns and excess inventory related to fit. Most brands though take 52 weeks or longer to go to market, which means they have things like overlapping calendars. They are uh, they have fit, uh, models that they're possibly not updating to truly reflect the customer. They don't have the opportunity to reflect uh, fit blocks that again represent their customer and updating those fit blocks. So no, I don't think brands are really ready for this. I don't think they're set up to be.

Speaker B: I don't know if this is for my benefit or if this is something that would be good to include, but what kinds of, how does that show up in the supply chain? Are we talking about moving waistbands up or down? Are we talking about you can't suddenly go to like size four, size six, size eight and then start um, doing four and a half? No you can't because people aren't going to understand that. But so how do you finesse if you have, if there are issues with what you've come up with, how do you fix them and ah, what do the fixes look like?

Speaker A: The fix is truly process innovation. Truly because you can't solve fit volatility with a 52 week calendar and a spreadsheet full of stale assumptions. More data is not going to save you. And if you capture insights from the customer, but your calendars are too long and your process is too long and complex, the data doesn't matter. So when we talk about fit and updating fit, we need to talk about it as part of the upstream process. So we can't solve fit at uh, proto review like when we are actually trying on the samples before we order them. We have to think about it from the design stage and how tech design will influence the fit block and the fit of the garment. So fit has to move upstream process has to be innovated. And merchants I know because I was one for so long, need to stop treating fit like a technical issue that lives in product development. And the merchant should be asking where is the customer moving? Where is the size curve breaking and what are returns really telling us? And are they telling us the truth? That merchant, that designer even the planning team should be sending time in the fitting room with the customer, with the sales associates to really understand how their customer's body shape is changing. If we can analyze returns, that would also help us to understand, okay, why are products being returned? Is it because of fit? And it most likely is. How do we solve for that?

Speaker B: So this is not about buying more size eights?

Speaker A: It is absolutely not. No. And because size is so subjective, it's really difficult to, to say that, you know, even as a customer, you and I, if I go to Zara today and I buy a medium and I go to Zara next week and I buy a medium, they'll fit, it'll fit completely differently. Right, Right. I mean that we've talked about it. It happens even at one reason. It's a cross brand. Yes. And I've started strength training. My body shape is changing, clothes are fitting me differently. So now I have to trust another brand to help me solve my own fit problems. But the real question to ask is what is the customer telling us today? How can we innovate our process so that we can react more quickly to how the customer is changing and how do we predict and meet that customer on their journey with products that are relevant? I think that there's a real opportunity here to really look at ah, how are we really capturing fit and fit related issues with our customers? How are we solving the fit issue for them?

Speaker B: So this is not just about weight loss medications is what you're saying. You're saying to the extent that there's an opportunity here for innovation around in the weight loss era, it's also an opportunity to maybe fix some wrongs or address some wrongs that were just glossed over. I guess when you're having an innovation discussion, when you start asking questions, what do we really need here? It's not going to just be a design choice, it's going to be an everything conversation.

Speaker A: Absolutely, yes. And I think what's really fascinating here is GLP1s are not causing apparels fit problems, they are exposing it. And this is a time when we can tackle things like excessive over development and speed to market and increasing full price sales. Because we're actually understanding how the customers bodies are changing, but how we can react to it is updating and innovating our process, whether it is our fit process, whether it is our concept to market calendars, or whether it is just really thinking about our entire product creation process and who's in the room when decisions are being made, especially around fit and size.

Speaker B: So do These teams, are they. Do they have these conversations sometimes? Or is this actually. Are they gonna have to learn to operate together on some level in the way they haven't before there?

Speaker A: So that's such a loaded question, because cross functional teams across product creation are traditionally quite siloed. Um, they are incentivized for their own tasks versus the entire organizations. I mean, this is a deeper conversation which we can get into another time.

Speaker B: But.

Speaker A: But, um, yeah, there. There is an opportunity to change the way we operate within creating product. Within the product creation calendar concept to market process. This is a time where planning. Who handles allocating sizes to different regions or even creating. Creating the vendor pos. This is their opportunity to say, hey, something's up here, because we're not meeting our forecasts. We have a lot more access and we have a lot more returns that are due to fit. How do we close that gap? And the way we start doing that is we start talking about design, merchandising, sourcing materials, and planning all together about how do we solve these fit problems, but how do we really understand the entire process and what we can do better?

Speaker B: I'm thinking that there are probably teams right now, um, getting returns, and they're misinterpreting the reasons, because people. People might check the box that says doesn't fit. I think you often have, like, an opportunity. It's usually a box checking.

Speaker A: Not all the time. Not all the time, though. This. This is another problem we have is we're capturing reason codes for returns that are not always reflective of what's actually happening with the garment. We could say, and a customer might not understand that. Okay, did I. I. You know, I'm a bracketer. I bought three different sizes. One fits, and I have to return these. But the only way. The only thing I can think of is that it doesn't fit, but that doesn't actually give us.

Speaker B: Even though even one pair did fit and you kept it.

Speaker A: Yeah, right, Exactly. It could be just the wrong size, it could be the wrong length, it could be the wrong color. But you can't leave it up to the customer to say, oh, hey, this doesn't fit. Because they're not the ones creating the garment. They don't understand why something doesn't fit. That is the job of the brand. The apparel brand needs to better really understand better and more clearly why a garment doesn't fit by spending time with their customer. This is the only way to do it. You can't find that on a spreadsheet. And I think the real opportunity Here is not to chase GLP1 demand and create more, smaller size runs. It is to build a product creation process that can handle volatility. Whether it comes from weight loss, drugs, shifting demographics, plastic surgery, trends, changing lifestyles or the next disruption. This is all about product creation, process innovation.

Speaker B: This almost sounds like something that needs to start at the education level when people are going to school and.

Speaker A: Oh, yes, I agree with that. I agree with that. I also think there's this, there's an opportunity to really, um, really think about asking the right questions from our current process, like how long is it really taking us to go to market? Are we revisiting decisions once we've made them? Are we bloating our own calendars because we can't decide on a material or a style until we actually see it on a body? I think the biggest mistake that brands can make right now is ignoring that fit is a very big challenge right now and it's a challenge for the consumer, but it's also, it's an opportunity really for brands to take a good look at how they're creating their product and what are the impacts of them not changing the way that they're creating their products today and going to market. Because if their GTM process hasn't evolved, then they're not going to be ready for the next disruption.

Speaker B: What is the best way to speak to the customer? Uh, you mentioned the fitting room earlier. I mean, at some brands, they do 30% of their sales online. So is that in store, customer become that much more valuable as a source of information?

Speaker A: I think it does. And I think that there's a lot of, there's a lot of ways that we can speak to our customer, interact with our customer, focus groups with our most loyal customers. There are fundamentals in retail that I think a lot of us, a lot of brands have possibly shifted away from. And without a customer, you don't have, you're not going to sell products. So talking to them, building trust with them, building a relationship with them and learning more about them, that's how you're really going to impact your product assortment and become more relevant with them and get them to trust you. Right. Um, fit trust is a very real thing. And as consumers, I can tell you that I will buy from certain brands and I'll always buy the same product from a certain brand because it fits me well. And that's because I have fit trust with that brand. But fit failure, it's very difficult to get that customer back to trusting you. So start building that trust. And spending time with them, talking to them. Even if you don't have a store, if you're a wholesale brand, spend time, uh, you know, with your specialty or department store partners. There's a lot of opportunity to learn from your customer. I think you just have to, to meet them where they are.

Speaker B: We talked about the supply chain disruption during COVID Can you think of other cataclysmic change, societal changes that sort of impacted the apparel industry in this way, or is this sort of a unusual moment?

Speaker A: I think it's unusual, but I think it's going to become more and more part of the conversation. It's going to become more common, uh, and it's not just impacting apparel either. I think that we need to point that out. There's a trend, um, ozempic finger. Have you heard of this?

Speaker B: No.

Speaker A: So jewelers have reported, um, a significant increase in customers sizing down their rings and bracelets because they're significantly losing weight. And that is a very interesting stat because resizing is costly, but there's also an art to that. So we're seeing that there's this decrease in skills, trades, um, and tailors for example. So I think that there's, there's a lot of disruption because of this particular um, disruptor in today's uh, across so many categories. And it's not just apparel and accessories. We're seeing um, it impact the automobile industry, the airline industry, obviously food, beverage, hospitality, wellness. I don't think that brands are going to have much of a choice to really take a look at. Okay, how are we connecting with our customers and how can we build our process or update our process to handle the volatility from this particular disruptor?

Speaker B: It seems obvious to say that uh, a retailer like Nordstrom that has, that offers tailoring right in the, in the shop or um, has stylists who can have these really in depth conversations is going to be at an advantage. Oh yes, but, but do those people, the tailors and the stylists, also need to have conversations that they maybe are not aware of?

Speaker A: Yes. And that really does come with training and education. And again, eliminating those silos across teams. We're also seeing that there is a tremendous shortage of skilled sewing talent. So to what extent can we rely on tailoring and alterations as a contingency plan? Of course we need to have as m. As many tailors as we can. Sure. But again, we are impacting things like over development, over assorting throwing supply into the market, hoping something sticks in terms of fit and you can't rely on reactive measures. We really need to be more proactive in innovating our process because it really is such an underrated opportunity where we can really create, seize, take advantage of superior processes in a way that we can win here.

Speaker B: Well, Liza, this is a fascinating area. I think we're at the beginning of it. I'm definitely going to stay in touch with you on this. I also would like to hear from brands who are either struggling with it or starting to find solutions around this.

Speaker A: Because.

Speaker B: Because sort of like you said, it's not even a one way street. People are not just going down in size. They're dealing with their own volatility and changing their mind about things for a variety of reasons is what I'm hearing from my reporting. So I think volatility is the word for it. That was a good one to capture.

Speaker A: Yeah. And I think, you know, I'll leave you with one last thing is we shouldn't throw a fit about fit. This is an opportunity to really fix the problem.

Speaker B: Yeah. All right, well, Liza, you know, you'll be hearing from me on this and other topics as I try to figure things out. Thanks so much as always for talking to me. Coming onto the podcast. Let people know where can we find you on social media and etc.

Speaker A: You can find me on LinkedIn under Lisa M. Lanney, our retail strategy group. You can also find us, uh, @retailstrategygroup.com and we have a newsletter, as I know you are a subscriber, uh, themerchantlife.com I've also been posting quite a few videos under the Chief Merchant minute. And, um, yeah, I look forward to hearing from you from, from the audience. Also on Instagram. Uh, yeah, the minutes are fun.

Speaker B: They're worth checking out.

Speaker A: Oh, uh, thank you. Thank you.

Speaker B: Yeah, those are fun. All right, well, as I said, we're going to keep an eye on that. Lisa, thanks so much for joining us today.

Speaker A: My pleasure.

Speaker B: This episode of the Back Room was produced and edited by Caroline Jansen. Please be sure to like, rate and subscribe wherever you get your podcasts.