Fashion – from Louis Vuitton and Hermeś bags to Off-White t-shirts and Chanel shoes – has once again topped the list of some of the most heavily-targeted types of goods by counterfeiters, and some of the most frequently purchased types of products by consumers. That is what the Paris-based Organization for Economic Cooperation and Development (“OECD”) reveals in a new report that sheds light on the magnitude and scale of the counterfeit trade in the United Kingdom.
In 2016, alone, the OECD revealed in its “Trade in Counterfeit Products and the UK economy” report, that $17.6 billion worth of counterfeit or otherwise infringing goods were imported into the UK, largely from China. Of that total, fake garments and accessories accounted for a whopping $3.11 billion in goods (a total based on what the individual counterfeit goods would be sold for if they were authentic). Sales of counterfeit or infringing watches and jewelry, such as Rolex watches and Tiffany & Co. silver, amounted to almost $2 billion of the nearly $20 billion total.
As for fakes that specifically target British brands (as opposed to luxury goods from French fashion houses, for instance, or Swiss watchmakers), the OECD again found that garments and accessories were among the most prevalent, along with the likes of vehicle parts, electrical household appliances, electronic and telecommunications equipment, and pharmaceuticals. “As a percentage of total trade, clothing, footwear, leather goods, and related articles, as well as perfumes and cosmetics, were among the UK products most often faked worldwide,” the global policy organization discovered.
The OECD’s fashion-specific data mirrors that from the International Trademark Association, which recently found that the two most commonly purchased counterfeit products among Gen-Zers in the U.S. and China are apparel and shoes and accessories, with some 73 percent of the surveyed American consumers revealing that such purchases are driven, at least in part, by the fact that they “feel they cannot afford the lifestyle they want.”
Speaking of its own findings, including the growing figures associated with the economic harms that counterfeiting imposes upon heavily-copied brands, as well as entire sectors (the total volume of forgone sales for UK wholesalers and retailers due to counterfeit and pirated products smuggled into the UK was $11.9 billion in 2016, up from $5.43 billion in 2013), OECD Public Governance Director Marcos Bonturi says that this “clearly show the need for continued vigilance and for the strengthening of measures to counter illicit trade in the UK and abroad.”
One of the most striking takeaways from the OECD’s report looks beyond the scale of the multi-billion dollar fake economy to the intentions of consumers. Interestingly, despite the increasing sophistication of fake luxury goods, themselves, and the evolving methods used to sell and transport them, which have made it gradually more difficult to distinguish between authentic and inauthentic products, the OECD found that the bulk of purchases of fashion and luxury-specific fakes did not occur by chance. Instead, nearly 60 percent of purchases of counterfeit fashion items in the UK were done intentionally by consumers who knew that they were buying fakes.
Looking at the sale of fashion items – including clothing, footwear, leather goods, and handbags – that infringed the trademarks of UK-based brands but that took place outside of the UK, the OECD discovered that more than 65 percent of the products were openly presented as counterfeits to consumers and purchased on that basis. Chances are, no small number of these sales took place on social media platforms, such as Instagram, which was has been infiltrated with ads for infringing and counterfeit goods and accounts dedicated exclusively to selling fakes, according to a report from data analysis firm Ghost Data.
The large portion of intentional counterfeit purchases is telling, as it suggests that even if brands and anti-counterfeiting organizations increase their efforts to cut down on the supply of fakes, a sizable challenge remains: countering consumer demand. And deterring consumers when it comes to counterfeiting – which World Trademark Review describes as “one of the biggest threats facing brand owners, threatening profits, corporate reputation and, potentially, customer safety and loyalty” – is almost certainly just as difficult, if not even more difficult, than taking consistent and creative legal action to shut down counterfeit-sellers.
As Lyn Amine and Peter Magnusson stated in their paper, Cost-Benefit Models of Stakeholders in the Global Counterfeiting Industry and Marketing Response Strategies, “Many [consumers] gain enjoyment from fashion items that are knowingly purchased at a lower price regardless of quality,” even if such consumer attitudes are “at odds with legal standards, moral values, publicly stated corporate codes of conduct and even the consumers’ own well-being.”
“Even if consumers suspect potentially negative consequences,” such as lower quality or the connection between the proceeds of counterfeit sales and organized crime, for example, “their desire to be fashionable and to keep up with friends and peers lead them to ignore these consequences,” per Amine and Magnusson. This view is often paired with the larger belief that multi-billion-dollar-generating luxury brands are unlikely to actually be harmed by the sale and purchase of counterfeits, making such buys virtually “harmless,” particularly since they give consumers the ability “to choose between expensive, genuine brand-name products and much cheaper but inferior counterfeit alternatives.”
The BBC summarized this sentiment back in 2016, writing, “After all, are the people who buy fakes for a tenner really depriving the companies that sell goods for hundreds or even thousands of pounds? A woman who makes an impulse buy in a market almost certainly wouldn’t otherwise invest in the real deal, while the buyers of genuine items pride themselves on knowing the difference and having the real thing.”
Also at play is the fact that fakes are readily increasing in quality so much so that consumers and even luxury authenticators have trouble distinguishing them, which has proven to increase to attractiveness of these goods. “In sneaker world, for instance, ‘replicas,’ a term that connotes the tippy-top class of ‘fake’ sneakers … [are] so meticulous they can fool all but the most fastidious collectors,” according to the Wall Street Journal’s Jacob Gallagher.
“These are not the shoddy rip-offs peddled for $20 or $40 on street corners,” he says, and for no shortage of consumers, “they’ve proven tempting,” particularly for “people currently in their teens to early thirties, [who] grew up illegally downloading movies or streaming reams of music for less than the price of one CD.”
This predilection towards fakes, particularly when it comes to sneakers and streetwear, is likely bolstered by the fact that an increasing amount of these products are released in limited runs, making it difficult for consumers to get their hands on them upon initial sale and making them potentially prohibitively expensive at resale. The early releases of Kanye West/adidas’ Yeezy sneakers come to mind.
While the luxury model has always depended on expensive price tags and at least somewhat limited volumes, this has been put into overdrive in recent years. The result is overly eye-popping prices for products, and seemingly more limited products (potentially thanks to the burgeoning resale market and the widespread usage of bots to hoard products upon initial sale) than ever before.
This equation is driving at least some consumers to fakes in order to be able to get in on the action, and if these attitudes – whether they be the view of counterfeits as relatively “harmless” or a larger, generational comfort with infringements – are not factored into “the analysis of consumer involvement in the counterfeit market, then initiatives to dissuade consumers from these purchases will remain ineffective,” Amine and Magnusson aptly assert. And they are right.
Meanwhile, the OECD says that it “is working with governments to address gaps in regulation and poor law enforcement that enable counterfeit trade, largely run by organized crime gangs, to flourish.”
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