What are the most Counterfeited articles in Luxury Industry?
Luxury is a term that is associated with the products that are prestigious to those who use them. Although luxury can be subjective to one’s well-being, social status, and excellence of power one holds — in association with brands, it is often linked with the products designed and developed by world-leading renowned brands. Luxury items are often — as per a research conducted by the Association of Consumer Research by the title of “Why do consumers buy counterfeit luxury brands?” — associated with social-adjustive attitudes and value-expressive attributes of a consumer.?
Social-adjustive attitude defines the need of consumers in favour of the form and image of a product, which is directly linked to the social appeal function. In contrast, the value-expressive is associated with the intrinsic aspects of a product like quality and reliability.
The counterfeiting of luxury items falls under the umbrella of social-adjustive function, where customers are lured more by the appearance of a product than its reliability and quality. However, customers do seek quality in counterfeits as well but are okay with the slightly meagre quality of the products.?
The prime reason for a customer to look for a duped Chanel bag, a fake Swiss Rolex, or a counterfeit Nike is to gain social acceptance with the trends and the sought-after products recently launched by these big brands. But as these products are limitedly produced — keeping in mind the exclusivity by the brands — it becomes difficult for a middle-class consumer to buy any such products for both price and availability.?
Therefore, here comes the establishment of a counterfeit factory that imitates the particular trendy in-demand product, producing large quantities of lower quality products which only serve the image (social-adjustive) function, though not totally avoiding the value-expressive function — making them available at fractional prices in contrast to the genuine ones.?
Luxury brands like Louis Vuitton, Hermes, Gucci and some ultra-exclusive brands like JaegerLeCoultre create products considering the utmost importance given to creativity, exclusivity, craftsmanship, precision, and innovation. These brands value the artists and their craftsmanship which distinguishes them from other brands for their rare, exclusively served and tailored experience — providing excellence in what they create.?
The designers invest years in developing a design for the product, which needs to be protected under the Intellectual Property Rights for their peculiarity.?
But when a counterfeit factory owner imitates the product to release a hefty amount of deceptives within a month, it directly demeans the artwork of a designer, eventually leading to losses incurred in losing jobs and great sums of money by brands.?
The luxury brand market is proliferating and is not likely to stop anytime soon. Consumers are becoming more reputation & image oriented and are willing to buy products that define or set their social status apart from everyone else. As a result, the luxury brand market has grown multiple folds in the last decades and is expected to grow even more so in the future.
According to a report generated by Statista in 2020, “the luxury brands market is expected to increase from USD 285.1 billion in 2020 to USD 388 billion in 2025”.?
This means that luxury brands are constantly evolving and have to innovate new designs and bring new trends into the market more often. But unfortunately, that would also mean that there will be a demand for copious amounts of counterfeit luxury products, which shall steal the sales of the genuine luxury industry.?
Reckoning with the “Luxury brand consumption and counterfeiting: A case study of the Portuguese market ” report, there has been an estimated increase in the counterfeiting industry globally, amounting to 1.82 trillion USD? alone in 2020. The luxury counterfeit market accounts for approximately 65% of the total counterfeit market, thus exceeding 1 trillion USD in 2020. Moreover, according to a study carried out by EUIPO and OECD in 2019, the estimates of Intellectual Property Rights Infringement in International Trade has reached over 3.3% of the world trade. Of which, 6.8% of EU imports or 147 billion USD per year is of fake goods.?
Why has counterfeiting become more prevalent in the luxury industry?
Counterfeit luxury items are becoming more popular in the fashion industry. The primary reason for their popularity is the customers’ demand for high social status. In the past, the social status of any individual was determined by their education and qualifications. However, in this age, social status is the definitive function of acquiring products designed and developed by these brands, dependent on the social-adjustive function accepted in society.?
A larger portion of the society belongs to the category of people who cannot afford these high priced products. Or even if they can, they go for counterfeits only to satisfy the reputational needs — as they believe that any new product launched is associated with the current trend and cannot sustain in the ever-changing acceptable standards for longer periods. This makes even individuals who buy a genuine product opt for a counterfeit one for their social-adjustive function over value-expressive function.
All of this collectively leads to directing more weightage to counterfeit products, making the counterfeiters stronger than ever for catering closely-knitted imitations.
Moreover, counterfeiters are strengthening at producing fake products that resemble the genuine. In recent years, counterfeiters have made counterfeits look so similar to a genuine product that a regular customer who identifies a product by its trademark attributes cannot distinguish between real and fake. Eventually, this gives the counterfeiters the power to shelve their knock-offs on legitimate supply chains and retail stores, bringing in the money that contributes to copious quantities of production and manufacturing of counterfeits.
However, a significant question that is inevitable to avoid is, “What products are most sought after in the counterfeiting luxury industry?”
Some principal products involve most of the 3.3% of the counterfeiting industry. These products belong to different categories: footwear (22%), clothing (16%), leather goods (13%), electrical equipment (12%), watches (7%), medical equipment (5%), perfumes and cosmetics (5%), toys (3%), jewellry (2%), pharmaceuticals (2%), other industries (12%) according to the report Trends in Trade in Counterfeit and Pirated Goods (Manganello, 2019).
Summing up, the counterfeiting industry holds 65% of the counterfeit luxury items consisting of footwear, clothing, watches, cosmetics, leather, and jewellery.?
But why are these subcategories from the luxury industry most sought after by the customers?
Moreover, why do they hold a particularly significant percentage in the counterfeiting industry?
Footwear holds a larger percentage over any other luxury industry in producing counterfeit items. Around 22% of the counterfeit luxury industry consists of footwear brands like Nike, Adidas, Reebok, Christian Louboutin, etc., and these brands’ exclusively rare products.
In addition, the shoe industry has seen massive growth in recent years, as consumers are subjected to more vivid images paired up with fashionable clothing. As estimated by Statista, the revenue of the footwear market is expected to grow annually by 3.60%, amounting to $94,527 million by 2022.?
The boom of e-commerce has brought a tidal wave in the sale of celebrity-endorsed products that lure customers in the desire to look like celebrities. In addition to that, the young generation has now become fitness conscious more than ever before, making all types of footwear products enjoying the high demand in marketplaces.?
A young millennial or Gen-Z would not opt for a single pair of shoes for every occasion and any particular purpose. They would instead make various purchases for different occasions and purposes. Reckoning that, an individual will have one pair of trekking shoes for treks and mountaineering, another pair for morning jogs, sprints and runs, and the third pair for casual daily commutes. In addition to that, if their income allows, they will also have one pair of exclusive and rarely available items for satiating their soul, for the secretion of serotonin — mostly purchasing from their favourite brands. This has led the footwear industry to become an emerging and booming market for brands and on the parallel for counterfeiters.?
The counterfeit footwear market is so prevalent that there is even a demand for proudly-purchased counterfeits. Consumers swap tips & suggestions on where to buy the most high-quality fakes. Unfortunately, the customs and law enforcement find it difficult to trace the source of manufacturers as these new-age smart counterfeiters outsource pairs from a cluster of subsequent small networks of factories. This process of outsourcing counterfeits, where factories have to design and manufacture near identical products, is acknowledged as ‘third-shift’ manufacturing.?
The replication of counterfeit footwear has now become so prolific that a New York Times reporter received a statement from a counterfeit producer, who says, “the only way you can tell the difference between the real ones and ours is by the smell of the glue”. In addition, counterfeit shoes are highly damaging brands risking their reputation, revenue and taxes held by governments and consumers. Counterfeits can pose serious injuries for its substandard material used, and the quality offered and contain harmful chemicals that can cause serious ailments to a stakeholder’s feet.?
Some of the ways to pull the strings of burgeoning problem of counterfeit footwear is by -
Clothing holds the second position on the most counterfeited articles in the luxury industry. The fashion industry, especially clothing, has seen a massive bombardment of purchases in recent years due to the emergence of e-commerce and social-media hosting platforms. It has made it effortless for anyone to design fake apparel and churn out sales directly.?
Instagram has appeared as the extremely prevalent market of counterfeits, both in promotion and sales. People hiding behind screens offer incredible offers to the customers already looking for an alternative that doesn’t make a hole in their pockets, unlike heavily-priced trend-setting products of fashion companies like Gucci, Dior, Fendi, and Chanel.?
Moreover, Instagram is also used by Influencers to promote fake products — either wittingly or unwittingly. In most cases, the consumer and influencers do not find any harm in purchasing or wearing fake apparel, believing that it doesn’t cause any harm to them and is even available for a fraction of the price of a genuine product. This perception has alone led to a loss of more than $50 billion in 2020, stealing the sales and reputation of authentic brands.?
Counterfeiters directly compete with genuine brands and original sellers by using identical names, trademarks, real images, and logos. As a result, buyers lured by the incredible price are attracted to make a purchase, making the original manufacturer lose a customer. This practice of deceiving a customer through online counterfeiting has made the clothing luxury industry incur a loss of around $30.3 billion.?
However, what intents the customer to choose counterfeit over genuine clothing?
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Counterfeits are manufactured in low-labour cost states spanning across Asian countries. However, the counterfeit factory owners do not bother to provide adequate payment for manufacturing the fakes, and moreover, counterfeits are produced from inferior quality materials — hence the fractional retail value. This derives the primary reason a customer goes for a knock-off product over a genuine one.?
In addition, it is a common perception and the subsequent trait of a consumer to get lured by incredible prices that satisfies their visual appeal for the product. Even if the product turns out to be on the lower side of its value-expressive function, the customer won’t bother purchasing it for its offered pricing that is nowhere close to that of a genuine product.?
But this does not mean only the brands are a victim of counterfeiting. The consumers also are the victims of counterfeting, if not immediately then in hindsight — incurring losses in other aspects like increased taxes, victims of terror attacks funded by counterfeits , and more.?
Besides, in partial negation to the victimisation of a customer, if any customer deliberately buys a counterfeit item, they are also an accomplice in the losses incurred by the ones who were deceived unknowingly.?
Some of the measures to stop the spread of counterfeit clothing are -?
Watches, alternatively known as timepieces, are the most sophisticated luxury products counterfeited in the luxury industry. Nobles often acquire luxury watches with superior build quality and magnificent visual appearances. And these attributes themselves make people lured to look for other alternatives in the form of “superfakes” because they cannot afford such big-ticket timepieces. To fulfil this gap of the desire to act as a part of a noble community and still not have perforations in your pants, counterfeiters stand in between to satiate the customer’s needs.?
Counterfeiters and counterfeiting factories flourish the online marketplaces with fake brand-name watches targeting the customers who are unaware of the products’ deceptiveness and the ones who are deliberately interested in buying one.?
Most of the sites (from the Asian Regions) are aware that they participate in selling and promoting counterfeit products. Therefore, the people who sell these “superfakes” — no matter how shady they are — are open to disclosing the fake quality of watches upfront. This is because they assume their target market is the ones who are willingly interested in buying fakes over unaffordable and unavailable authentic products.?
Fake watches and knock-offs are not that hard to find. You can easily visit a beach market or a street hawker, and you’ll witness that the portable shelves have stacks of copied genuine watches. An interesting fact about these fakes is that they are available for a fraction of the price of an authentic watch. Some are available for as low as $100 to $500 compared to their original counterparts, priced at $7,000 to $8,000. However, the precision of dials and physical dynamics are nowhere close to genuine products.?
Despite knowing the product’s inferior quality, people intentionally buy these fakes. A believed reason is the desire to be a part of the high-standard status of society. Moreover, in some cases, it is also found that people who were oblivious of the counterfeiting industry fall for the exciting and exclusive deals offered by sites like Alibaba and Bukalapak, which seems to be selling original products but deliver cheap quality fake.?
In addition to that, there are instances where sites like eBay have unwittingly auctioned fake watches that were sold for the genuine product’s value. Even on Youtube, the people who consciously sell counterfeit watches explain how to buy counterfeit watches with sites’ links mentioned in the description.?
Therefore, the conclusion from the statements mentioned above is that the probability of buying a fake watch is only relevant when:
If that is the case, then what measures or initiatives should be taken to stop the practice of buying fake watches?
The fake watch market is increasingly prevailing as the people are inclined towards social status and how they appear to society.?
Buying a counterfeit watch does not hold any accountability for its authenticity, trademark, quality, and guarantee, and therefore considering these solutions are the best for the greater good of everyone.
Leather Goods and Jewellery are the two areas in the counterfeit luxury industry that may not have massive productions compared to other products mentioned above. However, they still have enormous demand in the market.?
The market for Leather goods such as leather bags, purses, belts and more has declined in recent years because the new generation is more conscious of the environment and, therefore, opting for vegan or synthetic leather over genuine leather. However, the individuals who demand genuine commodities do not hesitate to lose their pockets for the quality offered. Therefore, counterfeiters tend to target these individuals by imitating the genuine designs, trademarks, and dynamics of any product such as purses, wallets and belts. And because the market for leather goods is comparatively small and is gradually declining, the customers believe the product to be true — which in contrast is untrue.?
The most prevailing products in the luxury leather industry are appreciated and manufactured from Italy. The leather products made in Italy are so appreciated that they have a particular commercial value only because they have been manufactured in Italy. Due to these lofty demands for Italian leather, counterfeiters prey on stealing the trademarks and IPs of Italy manufactured products. Counterfeiting in Italian leather is practised to such an extent that, according to IPERICO data, during the period 2008-2013, there were over 36,000 seizures in Italy for the counterfeiting of clothing accessories (excluding footwear), representing over 36% of total seizures, totalling approx. 64.404 million seized items with over Euro 1.3 billion estimated total value. More than 37% of the goods were seized in Lombardy, approx. 16% in Campania and Lazio respectively.?
If the market of imitation leather is so massive, how can one protect themselves from falling for a fake article?
Imitation leather is sold through various distribution channels, where counterfeiting is not always obvious. They are often sold in markets outside legal points of sale, such as on stalls or beaches, or through the internet and ultimately, in shops belonging to legal distribution channels. So, by just being aware of the hubspots of counterfeit leather, one can avoid purchasing one.?
Consumers tend to purchase a Jewellery product mostly on an offline basis. It is because jewellery articles require physical presence to decide the likeability of its appearance on an individual, consumers often go to retail stores to buy any jewellery item.?
However, sometimes jewellery items sold at the small beach or highway shops have links to counterfeiting. This is because the products may look almost identical to that of a genuine jewellery item but have a great possibility of being a counterfeit — if one is unaware of the methods to examine its authenticity.?
Therefore, customers usually buy jewellery items from official stores and websites because it costs a fortune to buy one. Moreover, no one would like to be deceived for a token of love and compassion.?
For the same reason, the counterfeit market of jewellery items in the luxury industry is the smallest. However, counterfeiters still manage to deceive consumers through sneaky methods such as counterfeit crosshairs around fine jewellery. As the entire jewellery item is not fake, and it is partially counterfeit, customers fall for the comparatively lesser price tags.?
How can one be sure of buying authentic jewellery?
Conclusion
Although the counterfeiting industry is expanding its horizons to enter into new markets and steal the sales and reputation of the stakeholders, these were the most counterfeited products in the luxury industry.?
And to stop the practice of counterfeiting in the luxury industry, the biggest role — even bigger than technology — is to be played by consumers themselves. Because consumers are eventually either the accomplices or victims of promoting and buying these fake products.?
To bring down the sales in counterfeit luxury and upscale the reputation of brands, a consumer has to appreciate the investment of time, energy, and knowledge of an artist in designing and manufacturing a luxury product.?