Fashion Briefing: Substack is boosting sales for young brands

In this week’s briefing, inside Substack’s growth as a revenue driver for summer dress brand Ciao Lucia. Plus, insights on how a luxury brand should work with its artisans, exclusive research on Prime Day, funding news and executive shifts to know.

As the digital landscape continues to evolve, brands are exploring new platforms to engage with their audiences and drive sales. Subscription-based newsletter platform Substack has emerged as a powerful tool for direct-to-consumer clothing brand Ciao Lucia. Founded by Lucy Akin, the L.A.-based brand has seen substantial sales growth from the channel, driven by organic mentions in popular newsletters like The Cereal Aisle by Leandra Medine.

“Substacks have been doing so well,” said Lucy Akin, the designer and founder of Ciao Lucia, which launched in 2017. “Becky Malinsky’s substack [5 Things You Should Buy], and Laura Reilly’s substack [Magasin] have been really great [for the brand’s sales].” The brand reported that 10% of its sales come from the platform, and more during the summer.

Influencers on Substack have a unique ability to engage their audiences with in-depth content, creating a sense of trust and loyalty. “Laura [Reilly] wore [our] Cassia dress, and sold those out,” Akin said. “Becky [Malinsky] featured [our] Maja dress, and those sold out at Shopbop because she linked to Shopbop.” The newsletter writers were unavailable for comment.

The top three fashion newsletters on Substack, based on subscriber count, are Leandra Medine’s The Cereal Aisle (127,000 subscribers), Becky Malinsky’s 5 Things You Should Buy (53,000) and Michael Williams’s A Continuous Lean (23,000), according to Substack rankings. Substack, which has over 35 million active subscribers and takes a 10% cut of subscription fees, has seen significant growth in fashion and beauty. There are more than 3 million paid subscriptions to writers on Substack, and more than 35 million active subscribers. Total subscriptions are up +80% year-on-year in the fashion and beauty category on the platform.

Over the last two years, the platform has expanded beyond newsletters to include video, podcasting and chat functions for its newsletter writers, enhancing their direct communication with subscribers. And brands are starting to sponsor newsletters, with Free People sponsoring the Feed Me newsletter by writer Emily Sundberg in March.

“Unlike on Instagram, where it’s getting harder to find your audience, you can have direct communication with a fan or reader on Substack,” said Tom Garland, co-founder of the London-based brand consultancy Edition+Partners, which uses the platform to share cultural fashion think pieces. “The engagement is very high, with an average of 60% newsletter opens. Traditional brand newsletters might celebrate a 2-10% open rate. [Success just depends on] whether or not there is a meaningful mass. If I were a brand wanting to push a certain product, going to a style influencer on Substack would be attractive due to the high engagement rates.”

For Ciao Lucia, the integration of Substack into its marketing strategy offers not only reach but also trackable results. Ciao Lucia spends about 10% of its revenue on ads across all digital marketing platforms, including Google and Facebook. The success of Substack provides an additional, often more cost-effective, channel to reach potential customers. The brand’s costs are restricted to gifting products and paying an affiliate commission.

“We never ask [creators] to feature us, but it always helps if they have a Substack because that’s just easy commission links for them, and it’s trackable for us,” said Akin.

Since May, Ciao Lucia has been working with the affiliate platform ShopMy. Affiliate marketing spending in the U.S. is expected to reach $15.7 billion in 2024, driven by the increasing effectiveness of influencer partnerships.

But Akin expressed concern about the potential for Substack to become oversaturated. “Because it’s working, everyone will follow, and then Substack will stop having the [sales] effect it does now,” she said.

As of a 2022 article from The New York Times, some Substack writers were earning six-figure incomes purely from subscriptions. This success mirrors the broader trend of consumers seeking more personalized and authentic content, which Substack provides. A 2023 study by consulting company McKinsey found that personalized recommendations can increase revenue by up to 40%.

Last year, Ciao Lucia finished with just under $6 million in revenue and is on track to hit $8 million this year. “We’ve done $4 million so far this year,” Akin said. “My plan is to increase our sales in the off months by expanding into the holiday and evening dressing categories.”

Amazon Prime Day boosts back-to-school sales

Prime Day 2024 underscored the power of apparel in e-commerce, according to the latest results from insights platform Adobe Analytics. On day one of Prime Day, July 16, U.S. consumers spent $7.2 billion online across retailers, driving a 20% surge in apparel sales and a 210% increase in sales of back-to-school supplies year-over-year.

On day 2, July 17, consumers spent $7 billion online, resulting in an 11% year-over-year sales increase over the two-day event. Mobile devices accounted for nearly half of the purchases. Notable categories across both days included kids’ apparel, with sales up 165%, and suits, up 36%. Discounts played a significant role, with apparel seeing an average discount of 20%. The buy-now, pay-later option also gained traction, driving $1.08 billion in sales across both days. Social media emerged as a strong revenue driver, with an 11.1% increase in contributions from this channel.

As for competitors, BestBuy.com thrived, boasting a 68% sales jump over both Prime Days. According to exclusive research from transaction intelligence platform Grips Intelligence, Walmart and Wayfair saw modest single-digit sales growth. Meanwhile, Shein’s sales stagnated, and Temu experienced a sales decline of 2% on day one and 5% on day two.

Alexandra Gucci on working with artisans in the right way

Dior and Armani are currently under investigation by the Italian competition authority over labor abuses, with Dior saying it has cut ties with the suppliers under investigation. Alexandra Gucci is ensuring her business takes a different approach.

“We know each of our artisans and work closely with them,” said Alexandra Gucci, the granddaughter of the original Gucci chairman, Aldo Gucci. In February, Alexandra Gucci launched the brand AGCF, which is focused on a philanthropic model. She opened a store on Rodeo Drive in April. “One of our team members quality checks every piece before we approve it. We are very concerned with subcontracting and only work with people we know very well, ensuring everything is perfect.”

“The business started out of my frustration with the industry’s little regard for women and children,” Alexandra said. “I wanted to make a meaningful impact, which was partly inspired by my work in the nonprofit sector. My goal is for the company to help in whatever way it can, with 20% of the profits going toward the safeguarding of children and women.”

Funding Round

Tala, the activewear brand founded by U.K. influencer Grace Beverley, has secured a £5 million ($6.5 million) funding boost from investors including Pembroke VCT, Venrex, Active Partners and one of the early backers of the womenswear label Me+Em. The funding will support Tala’s international expansion, particularly into the U.S., and explore the potential for establishing a physical standalone high-street retail presence for the first time.

Executive Shifts

Laura Burdese, previously vp of marketing and communication at Bulgari, has been appointed deputy CEO of the brand as part of LVMH’s executive changes.
Nike Inc. announced that Thomas Clarke, who joined the company in 1980 and recently served as president of innovation, will become a senior adviser to CEO John Donahoe and the leadership team, focusing on growth efforts.
Ewa Adams has been appointed as the new president of Kering Americas, overseeing operations in North and South America. Adams aims to strengthen Kering’s market presence and drive growth across its portfolio of luxury brands in the region.
Frédéric Arnault, CEO of LVMH Watches Division, announced executive changes effective September 1, 2024. Ricardo Guadalupe will become honorary president of Hublot, stepping down as CEO after leading significant growth. Julien Tornare, the current CEO of TAG Heuer, will succeed Guadalupe as CEO of Hublot. Antoine Pin, currently gm of Bulgari Horlogerie, will take over as CEO of TAG Heuer, succeeding Tornare. These changes are part of LVMH’s strategy to support the growth of its Watches Division.
Turkey’s leading fashion retailer, Boyner Group, has appointed Polat Uyal, a 29-year veteran of luxury department store chain Beymen, as the CEO of its upcoming un-named brick-and-mortar and online retail venture.

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