Why Instagram Is the Latest Threat to Luxury Fashion Brands

Perhaps you’ve seen their ads making the rounds on the Instagram accounts of some of today’s buzziest celebrities and influencers. A new wave of e-boutiques — offering inexpensive take downs of popular clothing and accessories brands — have made social media their marketing playground.

And by many accounts, they’re becoming remarkably successful by doing so.

Online fast-fashion brand Fashion Nova — which has been endorsed from the likes of Kylie Jenner and “Orange Is The New Black” star Dascha Polanco — is perhaps the most popular of them all.

But, how does the growth of these Instagram-savvy fashion firms impact other brands that have a foundation rooted in more traditional forms of advertising and promotion?

A quick glance at Fashion Nova’s Instagram page, for example, shows its follower count sitting impressively at 6.3 million — that’s significantly higher than the follower count of several luxury and couture labels. Ferragamo’s Instagram account has 1.9 million followers, Maison Margiela has 1.4 million and the official page of Italian designer Giambattista Valli has 1.6 million. More accessible high-end brands such as Coach — with 1.6 million followers — are also trailing the fast-fashion social media brand.

Still, it’s difficult to tell what this all means. How valuable is a brand’s social media following and is it reflective of the size of its bottom line?

What’s more, do brands such as Fashion Nova actually compete directly with mid-to-high-end labels? While it may have been different in decades past, today this is probably becoming the reality.

Fashion’s biggest influencers — actresses, musicians and other entertainment stars — are helping to usher in a new era when it comes defining brand desirability.

In a bid to stay relevant among a social media obsessed generation, celebrities are bowing to pressures to present a more accessible image on red carpets and in their paparazzi-filled day-to-day lives. One way they’re doing that is by downplaying the aspirational high-end labels and mixing their fashion choices with more affordable, e-brands that they can “shout-out” on red carpets and on their own social media accounts.

“The way consumers get information and use information regarding brands and stores is so different now than it was years ago,” explained Sam Poser, a retail industry analyst with Susquehanna Financial Group LLLP. “So brands have to change the way they’re communicating — whether they’re luxury or not. Labels that are losing share are not communicating with their consumers the way they need to.”

While traditional fashion brands should learn to communicate more effectively in a digital landscape, Canaccord Genuity Inc. analyst Camilo Lyon said he also believes that the growth of e-brands and the challenges it presents to mid-to-high-end labels is evidence of the progression of a larger and older trend.

“I’d ask the question: ‘Is this just the evolution of what Zara and H&M have started?’” Camilo said. “I think that’s the driving force behind the deflation in apparel — and it has probably been the bigger threat to mid to high end priced brands — is the ability to get the same looks for a much lower price point.”

Still, the fall out from the growing popularity of popular e-brands and retailers is likely not limited to mid-to-high-end fashion firms.

Several teen mall staples with similar target customers are also sitting below Fashion Nova’s follower threshold. Charlotte Russe has 856,000 followers, Wet Seal has 367,000 followers and Rainbow Stores has roughly 40,400 social media admirers.

The jury might still be out on the importance of social media clout to a brand’s long-term success, but the short-term indicators show that winning on social media is generally good for business.

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