Why do you care about being labelled the opposite of a word you don't even like?
In religious terms, an above-knee skirt is immodest. So what? Why do you care? In religious terms I'm also a "sinner" and "unpure" but who gives a shit?
Have you not noticed how popular culture affects society? Particularly advertising? These days it's incredibly popular to show blended families, families of colour, not heterosexual couples and parents, mixed race families and trans people. This type of thing shapes how we view our society and the place of people within it. We see these things and people accept diversity in society. And yes this sort of thing always starts off with a few trailblazers. So it's M&S today, in a few years all the shops will have a 'modest' section with the other section implied to be for tarts. And that will be the message going out to society: if a woman isn't 'modestly' dressed and covered head to toe, she is a tart advertising that she wants sex and inviting male attention.
Religion doesn't sit in neat little boxes in Mosques or Churches or Synagogues does it? Whether we like it or not, it's principles still underpin our system of ethics and values in the West. It shapes people's attitudes and how they treat others, particularly women.
Someone may choose to believe that women are only being 'modest' when you can only see their face. I can't change that, people are entitled to think and dress as they wish. But I don't want a mainstream company like M&S buying into the idea of 'modest' and 'immodest' clothing and thus promoting an idea about women's dress which is pretty unpleasant.
They could call it 'observant' clothing or 'covered' but not modest.