Old Navy overhauls plus-size fashion line for women to win sales in $32 billion market

• Old Navy will offer more of its women's apparel in extended sizes, as demand for plus-size apparel rises in the U.S.
• Old Navy, which is owned by Gap, has offered a limited selection of plus-size apparel since 2004.
• Coresight Research estimates the extended-size market for women in the U.S. will grow to $32.3 billion this year, representing roughly 20.7% of the total women's apparel market.

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For American women, shopping for a stylish outfit in size 16 or above can be a hassle.

It can entail walking to a tiny corner tucked in the back of a store, or directing a web browser to a pint-sized section of a retailer's website, where the models displayed may or may not be plus-sized. Or, it could involve shopping from brands entirely different from where a woman's thinner friends shop. Although more women than ever are searching for extended sizes, the choices can be frustratingly limited.

Old Navy is looking to seize this opportunity. And part of the retailer's strategy will involve breaking down some of the barriers that have existed for years.

Old Navy will soon offer sizes 0-28 and XS-4X for all of its women's styles in its stores, and up to size 30 online. On its website, the Gap Inc.-owned brand will create a single destination for all women's clothing. Models will appear in sizes four, 12 and 18.

Across its 1,200 stores, Old Navy will also rearrange merchandise so that customers in search of extended sizes won't be directed to a separate area to browse, which has been the case since Old Navy debuted dedicated plus-size shops in 75 stores in 2018. All stores will soon feature mannequins in sizes four, 12 and 18.

Although Old Navy has offered a smattering of plus-size apparel since 2004, its latest efforts go beyond prior attempts to reach this market. To succeed, it will need to effectively juggle a wider array of inventory, which can be a risky bet.

"As we started to understand the opportunity here, we realized a few years ago that we weren't doing enough to really think about size inclusion and how the demographics are changing in the U.S.," Old Navy Chief Executive Nancy Green said in an interview.

"I have family members that wear plus sizes, and I can't shop with them," Green added. "And shopping is social. It's something that people want to do together."

$32 billion market, and growing

Old Navy's investments come as the plus-size apparel category is seeing growth, in part because of an increasing obesity rate. The Centers for Disease Control and Prevention reports 73.6% of all U.S. adults over the age of 20 are overweight, with the average woman wearing a size 16 to 18.

The fashion industry doesn't strictly define the plus-size category, but a number of retailers put anything over size 14 in this segment.

Retail research and advisory group Coresight Research has estimated that the value of the extended-size market for women in the U.S. will grow to $32.3 billion this year, representing roughly 20.7% of the total women's apparel market. (Coresight cited Plus Model magazine, which identifies plus-sized apparel as sizes 18 and over, or 1X and up.)

"Extended sizes has been outpacing the growth of the regular-size market, and according to our research it's going to continue to outpace the regular-sized market," said Brian Ehrig, a partner in the consumer practice of the global strategy and management consulting firm Kearney.

"The average American is a plus size, yet only about 20% of the apparel is actually made in those sizes," he added. "So, we have this very strange dichotomy."

An even bigger blank space

The disconnect likely exists because launching into this space isn't easy. Even Old Navy's Green said it has been a difficult task and years in the making.

"It requires a lot of expertise and knowledge, and it does require a lot of investment to be able to do it well," she said.

Ehrig said more retailers haven't invested in plus-size lines, in part, because manufacturing apparel in extended sizes requires extra fabric, and companies can't necessarily pass the higher costs to consumers. Producing apparel in extended sizes also means maintaining more inventory, which can be a liability.

"As a retailer, you really have to figure out who your core consumer is, and what size are they," Ehrig said. "And that answer actually will be different for every company."

Women's apparel brands Eloqui and Torrid have opted to tackle extended sizes exclusively. Target, on the other hand, has manufactured items from some of its private labels, including an athleisure line called All In Motion, in plus sizes. Victoria's Secret has been adding plus-size models to its stores to feature different fits of its lingerie.

A bankruptcy filing last year by Ascena Retail Group, which led to the shut down of its plus-size brand Catherines, left an even bigger blank space in the market. Ascena also has closed a number of Lane Bryant plus-size fashion stores.

"Consumers are seeking clothing options … the same options that individuals who don't require extended sizes have in the market," said Erin Schmidt, a senior analyst at Coresight. "There is an extreme opportunity for retailers to extend their current offerings."

While Old Navy declined to comment on how its sales of plus-size items have trended in recent years, a spokeswoman said searches for "plus" on the retailer's website are up 63% year over year. "Plus" is also a top-100 searched term on Old Navy's website overall, she said.

With its extended line, Old Navy promises complete pricing parity, so all styles will be the same price no matter the size.

Old Navy is relying on its parent's learnings from Athleta, too. The women's workout line, also owned by Gap, has added plus-size mannequins to its stores and made more of its styles available in extended sizes in recent months. Green said the two brands have been working simultaneously over the years on their respective plus-size launches.

Similar to Athleta, Old Navy store employees have also received special training to talk to customers about body positivity and size inclusivity.

"How this apparel is branded and marketed and merchandised has to be very thoughtful and considerate," Schmidt said.

The growth at both Old Navy and Athleta is key to fueling Gap's overall business, even more so as it emerges from the Covid pandemic.

The San Francisco-headquartered retailer is trying to turn around its namesake banner and Banana Republic division. Old Navy and Athleta have consistently reported the strongest same-store sales gains among Gap's four brands. For Gap's quarter ended May 1, same-stores sales at Athleta surged 46% from pre-pandemic levels and grew 25% at Old Navy on a two-year basis, while the Gap brand and Banana Republic booked declines.

"This is very, very material," Green said about how the investments in extended sizes will impact Old Navy's business. "This is the largest, integrated launch we've done since we founded the brand. This is very important to our growth."

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