Defining a luxury brand has never been easy. Every day, we see and hear about brands that use their pricing to make it appear that they are at the upper echelon of the luxury tier. However, just because a product has a high price point does not mean that it is a luxury product.

Consumers must be educated and informed about how to find out the true difference between a brand name and a genuine "luxury" product that has been manufactured with the highest quality and standards for many decades.

These companies and their marketing firms are constantly trying to make the average consumer think that premium prices equate to couture-level quality. 

It is therefore critical that consumers can distinguish between premium mall brands and true couture when seeking to build their investment wardrobes.

Luxury Is Subjective

While it is surprising to learn that currently there is no legal or formal definition of "luxury," companies are free to define themselves however they would like. 

What may be considered a luxury purchase to one consumer may simply be the most expensive item that they have ever purchased.

Luxury has become meaningless because everything has become a luxury. A set of standards is necessary to differentiate truly luxurious products from other products of lesser quality. 

We will explore the three major categories that define the most exclusive luxury brands in the world. If you want to know which houses make the cut, check the rankings. The Top 50 Brands list is a vital resource that highlights the giants that dominate the global market.

Trait 1: Royal Patronage

The most significant sign that a luxury brand is considered true luxury is its history of servicing high society. Luxury brands typically have long-standing business relationships with royalty and aristocrats from around the world. Many luxury brands began as suppliers to royal courts and not to the general intake of consumers.

Exclusivity is the lifeblood of the high-end fashion industry’s reputation. Historically, brands have been appointed by kings and queens to produce leather or silk for the court. Having this royal warrant gives a luxury brand a legacy that cannot be purchased with money.

Trait 2: The Weight of History

The difference between high-end fashion and premium brands is simple. If you walk into a shop and see an identical piece for sale in five different colors, you can be certain that it is not a true luxury product.

An excellent example of this is Hermès: established in 1837, they are the oldest active company in the world, with a reputation for being able to persist through various wars and economic downturns.

There are newer luxury brands that have not yet created their stories and cannot compete with brands such as Hermès for their heritage or narrative weight.

There are newer luxury brands that may have very high price points; however, they lack the same depth of narrative as the heritage brands.

Trait 3: Innovation Through Couture

Luxury brands will continue to produce haute couture and influence trends. The fact that these brands have developed this market, and that there are now many such brands, allows consumers to have more choice.

Luxury brands invest millions in their creative expressions, which does not guarantee profit. When a luxury brand creates a product, its effects on the entire world can be felt.

Haute Couture is a registered trademark in France that defines the highest standards of design and craftsmanship in French fashion design. Haute couture is more than art and business; it is a form of high art. 

The clearly formulated structure of the fashion hierarchy provides a visual representation and organization of how premium goods differ from ultra-exclusive investment products.

Understanding Fashion Hierarchy

There is a clear separation between a brand's position within this hierarchy and the associated level of value that consumers ascribe to a brand. When attempting to evaluate the cost, it is imperative to know what level of the luxury pyramid a brand occupies.

Those brands located at the very top satisfy all three criteria outlined in this tiered structure. The items manufactured by those brands will retain their original investment value over time and have maximum income potential (if sold).

At the middle levels of the pyramid, brands will be identified as being of high quality and are currently mass-produced globally, yet they are of lower monetary value than brands located at the top levels due to their mass-production attributes.

The "Accessible Luxury" Trap

The concept of "accessible luxury" is misunderstood by many consumers. In particular, the growth of brands such as Coach has resulted in consumers being exposed to these products in larger numbers than before and therefore in larger numbers than traditional luxury brands.

Whether or not a brand is considered "a real luxury" is determined by the consumer, and by understanding the difference between the two types of luxury: accessible versus true luxury, your customers will have a better understanding of high-end fashion, as well as less embarrassment about discussing or purchasing from a high-end company.

Genuine luxury usually has waiting lists or established relationships between the customer and sales associate to maintain brand equity and value of the items.

Using Your Closet as an Investment

Portfolio Owning items from these top-tier categories can be a smart financial decision. The secondary marketplace for true luxury items is growing rapidly and will provide you with the opportunity to sell or consign any luxury item for substantial gains. 

Because you have the capability to sell or consign any luxury item, your closet can become a continuously revolving investment portfolio.

Having items from the highest-end brands means you have money sitting in cash or easily convertible items. The second-hand market for heirloom brands is growing rapidly in cities like Dubai. 

There are always collectors looking for certain important vintage pieces made by the largest luxury brand manufacturers.