Luxury brand: what it is and how it is categorized

Written by Fany | Read in Indonesian

Recently, a teenager named Zoe Gabriel was bullied by netizens over a video that she posted on TikTok. The video—that currently has over 21 million views—shows her getting a new bag at Charles & Keith, then calling it her first “luxury” bag. Netizens do not seem to accept that Charles & Keith should be considered a “luxury brand” and started to bombard her with negative comments. Clearly, some perceive the Singaporean brand as a luxury brand, while others do not. So, what is actually considered a “luxury brand”?

“In my opinion, luxury brands have well-crafted products with expensive prices, and the products are exclusive, not mass produced,” said Rara, the curator behind Curated Deals, a personal luxury fashion goods shopper since 2016.

As Rara said, there are some characteristics that make luxury brands besides the high price level and their signature elegance. First, they have excellent craftsmanship combined with the brand's long heritage. Second, they boast exclusivity where scarcity is the key. Next, they use high quality materials with meticulous attention to details. They also offer unique and innovative designs. Lastly, they offer excellent customer service with one-on-one experience that one would not get from mass-market brands.

However, luxury brands can be perceived in a different way based on people’s standard of luxury; Rara believes that purchasing power might be one of them.

“Maybe for some people, Chanel and Hermès are not considered luxury because they can buy them as easily as buying peanuts. But for others, just like in the Charles & Keith case, the brand can be considered luxury,” said Rara.

Luxury in ancient times

Centuries ago, luxury goods came in different forms from the ones we know today. In ancient China, silk was considered a luxury, and it was used to weave ceremonial garments and as gifts to foreign dignitaries. It was a highly valuable item in China, and anyone found smuggling silks were subject to capital punishment.

Going back even further, ancient Egyptians held giant bird hunting activities as a royal sport since the predynastic period to show the king’s control over nature. Goods from the prey that they caught, such as ostrich eggs and feathers, were considered luxury and used for decorations and delicacies. Speaking of delicacies, the ancient Greek had something similar. Fish and meat were rare and considered luxurious as only the rich could enjoy them.

Hierarchy in luxury brands

There are various levels when it comes to luxury brands; a hierarchy. For example, there are five levels in the fashion pyramid. Haute couture ranks first with masterpieces made by the world’s leading fashion designers; made-to-measure, the design is usually handmade with great craftsmanship and high in quality. Hermès and Chanel fall into this segment.

In second place is ready-to-wear. It is usually seen in runways as the designer’s form of expression with various designs based on occasions and standardised sizes. Some prominent brands in this category are Louis Vuitton and Fendi.

Diffusion takes the third place. It’s inspired by ready-to-wear, but has higher production volume and younger consumers. You can find brands such as Ralph Lauren and Stella McCartney here. “Bridge” is in fourth place. It is created to bridge the gap between luxury and high street fashion, such as Coach.

Last is the mass-market, where a brand aims to reach as many people as possible. Combining high street and fast fashion, this segment enables people to keep up with trends without spending much, but the quality is not the best. Brands in this segment include H&M and Zara.

Then, there is also a marketing term that blurs the definition of luxury brands, namely masstige. The term stands for mass and prestige, usually defined as premium but accessible. Luxury brands usually have their own masstige lines. For example, the Italian luxury fashion house Armani has masstige lines called Armani Exchange and EA7.

Evolution of luxury goods consumers

Back in the day, luxury goods were only available for the aristocrats or “old money”. These days, though, luxury consumers are getting younger, especially millennials and generation Z. This applies both at the international level as well as local markets. Rara told TFR, “Based on Curated’s statistics, most of the purchases come from people over 25. As for gen Z, we are often getting reached by their parents.”

The same goes with Kezia, a gen Z luxury shopper who started to shop on her own at 19. She said, “It was the YSL wallet.” Kezia is interested in luxury goods because of their longevity and timeless design, “So I can wear it when I’m older and pass it down to my kids,” she added.

Bain & Co reported that spending by gen Z and the even younger generation Alpha is expected to make up a third of the luxury market through 2030. The luxury goods market is also expected to grow annually by 3.47%, based on a report by Statista.

The growth itself is influenced by several factors, such as the increasing wealth in certain groups of people, and especially the use of social media. Deloitte stated that 85% of luxury consumers use social media to find the latest trends, product recommendations and new collection releases, notably for female consumers.

“I personally bought Prada’s re-edition Nylon bag because of how frequently the product shows up on my social media pages even though at first I didn’t find it attractive. The same goes with Balenciaga Cagole and Bottega Mini Jodie. They are all over social media, like everyone is wearing those bags hence others want them as well,” said Rara.

She added, “Influencers also play a significant role. For example, Polène. Many people testified about how good the products are and they become sought-after despite the fact that the brand is a newcomer in the luxury market.”

The latest trends in luxury market

Luxury brands have been transforming from custom-made works by specialised small businesses with exclusive distribution into a mass production of luxury goods by profit-focused large corporations. At least for some brands. For example, Louis Vuitton Moët Hennessy (LVMH) is the largest luxury goods producer in the world with 75 brands, including Louis Vuitton and Dior.

“Today, we see an influx of different ways that luxury brands are betting on the future, such as innovation in the metaverse and NFTs,” said Kezia.

The world is getting increasingly modern with the metaverse constantly expanding; so are luxury brands. Starting from metaverse fashion shows to fashion NFTs. Luxury brands also digitalise ways for consumers to try on their products using augmented reality and virtual reality.

In addition, luxury brands have started to become more eco-conscious, Kezia shared that there is a need in exploring a more eco-conscious way to shop luxury. More than ever before, young consumers are becoming more environmentally aware when considering their fashion choices. They are also keen on customisation and one-of-a-kind shopping experiences that create an immersive and curated experience, including exclusive collaborations that may fall under an umbrella of the categorisation in luxury branding, Kezia added.

Social media is still expected to be a strong influence, though Rara has a different perspective about the current luxury market trend, where there is a public display of people’s opinion on social media following the recent Charles & Keith case.

“If there’s no social media, we might think that Charles & Keith is a luxury brand. But with public opinion, people can say that it is considered luxury because people's standard of luxury is different. However, I think in the long run luxury brand categorisations will remain the same,” she explained.

In the end, some things are expected to remain luxuriously the same, while some aspects of the luxury market are open to change. The economy, market demand and technology will dictate the directions.