It is too small.
'Piccola' — PIC-co-la. Three syllables, double 'c'.
Use when the item is too tight or small in the fitting room. The adjective changes with the noun — 'piccolo' for masculine, 'piccola' for feminine.
'Piccolo/a' means small. Combined with 'troppo' (too), it expresses excess smallness. In Italian clothing talk: 'è stretta' (it's tight), 'è corta' (it's short) are more specific. 'Troppo piccola' is general enough to cover all situations.
È troppo stretta.
It is too tight.
Specifically about tightness across the body.
Non mi entra.
It doesn't fit me / I can't get into it.
Very natural colloquial expression.
Avete una taglia più grande?
Do you have a bigger size?
The natural follow-up.
In Italy it is perfectly normal to need a size up from your usual — especially in luxury and Italian-cut fashion, which tends to run narrow. There is no social awkwardness about asking for a larger size.