Coach announced this week plans to acquire Kate Spade for approximately $2.4 billion, diversifying its portfolio of masstige brands. After the transaction, scheduled to close in the third quarter of 2017, the Coach portfolio will include a wide range of product offerings at an aspirational price point that appeals to the millennial shopper.
L2’s Digital IQ Index for Fashion ranks all three brands under Coach Inc.–Coach, Stuart Weitzman, and Kate Spade–as Gifted, but finds that all three have a relative weakness in social media. Since Q4 2016, when the Fashion study was released, both Coach and Stuart Weitzman accelerated their approach to social and enlisted celebrities like Gigi Hadid and Selena Gomez to market the brands on Instagram and the red carpet. L2 research has shown that 20% of the top performing posts on Facebook and 33% of top performing posts on Instagram have celebrity endorsements or mentions, surpassing brand collaborations and holiday campaigns. Clearly, Coach and Stuart Weitzman have implemented efficient strategies to push forward reach on social media and Kate Spade will likely be brought into this fold as well.
As shown in this L2 graph, the average Instagram engagement lift for Selena Gomez was nearly 55% between Q4 2015 and Q3 2016 while Gigi Hadid increased average engagement nearly 46% in the same time frame. Leveraged effectively, these campaigns allow brands to capitalize on the Instagram accounts of these celebrities as well as branded accounts. Combined, these drive engagement and brand loyalty.
Kate Spade has also made strides in its social strategy. Since the release of L2’s Fashion Digital IQ Index, has one of the first brands to use shoppable tags on Instagram posts, Instagram Stories, and Facebook Live. Moving forward, Coach and its brands will need to continue to innovate and spend to compete in the fast evolving space of Social Media.