Fashion vs. Luxury: What is the Difference Anyway?

Not all fashion brands are created equal. This is especially true when it comes to the uppermost echelon of the market: The luxury sector. Yet, the once clear distinction between fashion and luxury is becoming increasingly murky (in part due to the media’s categorization of these brands and synonymization of these formerly distinct terms). For example, Bloomberg recently published an article, entitled, “Luxury Brands Yield to Discounts Despite Push to Stay Exclusive.” The photo corresponding with the title: A Tory Burch brick-and-mortar outpost. Is Tory Burch really a “luxury brand,” you ask? Many would argue that it absolutely is not.

This type of synonymous use of “luxury” and “high fashion” by consumers and the media, alike, seems indicative of what Vincent Bastien, author of The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands, calls “confusion about what really makes a luxury product, a luxury brand or a luxury company.”

What is not obvious from the increasingly interchangeable uses of these terms is that there have traditionally been very distinct definitions used to distinguish between “fashion” and “luxury” brands and products. The difference between such brands and their offerings is “huge,” says Bastien, who was tasked in the mid-1970's with developing and implementing a new marketing strategy for brands, such as Louis Vuitton, to enable them to expand their consumer bases while also allowing them to remain firmly within the luxury sector.

That different lies most centrally in their business models.  

The Luxury vs. Fashion Strategy

The luxury brand model, for instance, is distinct from that of "fashion" and "premium" brands in that it aims to “create the highest brand value and pricing power by leveraging all intangible elements of singularity – i.e. time, heritage, country of origin, craftsmanship, man-made, small series, prestigious clients, etc,” per Bastien. By mobilizing all of these intangible assets, a brand may be positioned as largely incomparable to any other, even its rivals.

In addition to unmatched brand value and pricing power, the traditional luxury brand endeavors to create long-selling products, as opposed to best-selling products. Two examples set forth by Bastien: The Porsche 911, which debuted in 1964, and Chanel’s N°5 perfume, launched in 1921, both of which are still very much in demand today.

Chanel’s quilted 2.55 Flap bag, which made its debut in 1955, and Hermès’ Birkin and Kelly bags – which were first released in 1984 and the 1930s, respectively – are additional examples, as they are still some of the most coveted handbags on the market many decades later.

The strategy of luxury brands is distinct from fashion brands, which employ a markedly different model. Here, says Bastien, “heritage, time, are not important; fashion sells by being fashionable, which is to say, a very perishable value.” In other words, fashion brands largely thrive on the proliferation and adoption of seasonal trends, or as Bastien puts it, fashion brands rely on their practice of “recreating the rhythm of the seasons.”

Is this to say that fashion and luxury never overlap? No. “Luxury and fashion represent two worlds – both economically important, but still very different – and they overlap only marginally (limited to haute couture),” per Bastien. “In these cases, success relies on a tandem arrangement, where you have a brand (which covers the luxury side) and a creator (who covers the fashion side), and the best examples of this are Chanel and Karl Lagerfeld.”

Rule Number 14

The distinct positioning of luxury versus fashion brands is also not to say that the line between them is not further being blurred by brands, themselves, as they move away – in many cases begrudgingly – from some of the rules set out in Bastien's code.

For instance, rule # 14: Do not sell openly on the internet

According to Bastien, "Selling on the Internet is strictly hype in luxury marketing. Many marketers seem to think that if you do not sell on the Internet, you are ‘out’. There, the distinction between luxury, fashion and premium strategy of prestige brands operating on the luxury market is crucial. Internet sales are extremely well adapted to fashion and premium, but not to luxury. Self-proclaimed ‘web specialists’ fault the luxury companies for not selling online, forgetting – or ignoring – that all the ‘plusses’ of digital trade (instantaneity, permanent change and actualization, availability, accessibility, price reductions, automation of service, crowdsourcing, etc.) are huge ‘minuses’ for luxury." 

Nonetheless, this year, alone, some of the market's luxury stalwarts, including LVMH and Hermès, made significant strides in the digital sphere. LVMH, for one, rolled out a new platform, 24 Sevres, to sell its brands' products, and Celine, which falls under the LVMH umbrella, will launch its own e-commerce site this month; its first foray into online sales. As for Hermès, seemingly unwilling to ignore the significant growth for "luxury" brands, according to studies, that comes with digital sales, the 180-year old brand increased its footprint by rolling out a new site. Do note: Its most in-demand bags, Kellys and Birkins, are not available for sale online.  

Chanel is, it seems, the only one holding out most significantly in this regard, as the Karl Lagerfeld-helmed brand recently swore off selling garments and leather goods online entirely. Does that make it more of a "luxury" brand? According to Bastien's strategy, yes.

But before we get ahead of ourselves, it is worth noting that "The Luxury Strategy" and its 24 anti-laws of marketing were conceived of in the 1970's, when e-commerce was (obviously) not in play. With that in mind, there is an worthwhile argument that today – when online sales are the most important and promising engine of growth, with online sales of luxury goods will triple in the next 10 years – brands need to sell online in some capacity. 

On the other hand, if Chanel is any indication, not selling online is not necessarily a death knell for a brand. Despite Chanel’s title of the last-standing outliers, the brand says that it is not losing out when it comes to its bottom line. According to Bruno Pavlovsky, Chanel's president of fashion, that the label is reaching an increasingly young audience and boasts waiting lists for best-selling bags. 

In short: In 2017, as some of the industry's most established luxury brands attempt to modernize and reach even larger audiences, namely by way of the internet, some of the formerly set-in-stone differences are lessening. There is still, however, a difference between the core models embodied by and the some of the most significantly underlying values of luxury brands in contrast to fashion ones; Louis Vuitton and Tory Burch, for example, are not on the same plain.