Trade in counterfeit and pirated products has grown steadily in recent years – even as overall trade volumes have stagnated. They now represent 3.3% of world trade, according to a new report from the OECD and the EU’s Intellectual Property Office in 2019.

According to the latest studies on counterfeit and pirated products, the value of counterfeits imported into the world based on customs seizure data peaked in 2016 at $ 509 billion, compared to $ 461 billion in 2013.

For the European Union, the counterfeit trade represented 6.8% of imports from third countries in 2016, against 5% in 2013. Worse, these figures do not include counterfeits produced and consumed in the country, nor pirated products distributed over the Internet.

To fight against this rapidly growing phenomenon, the luxury sector has invested heavily in ultra-sophisticated technological solutions (Internet of Objects, Big Data, Machine Learning, etc.). He is also lobbying governments to expand the powers of law enforcement agencies to seize and destroy counterfeit products, prosecute buyers and dealers, and block access to websites that sell products. counterfeit.

Despite this, these efforts are not bearing fruit, in particular due to increased competition, the absence of common standards in this sector and of effective laws, proportional to the stakes.

Fake luxury goods represent 60 to 70% of the total counterfeit market, ahead of pharmaceuticals and entertainment products as shown in the following diagram (source: OECD – Trends in Trade in Counterfeit and Pirated Goods – March 2019)

These figures, which have been growing steadily for several years, suggest the inability of luxury companies to organize themselves and stem this scourge.

Many luxury brands have only become symbols of status and privilege. Across the luxury industry, the focus has been on signage rather than luxury; intangible product attributes versus tangible product attributes; and the logo on all other quality markers.

This philosophy has been consistently applied to supply chains, manufacturing and pricing: by offshoring production to low-cost countries, luxury companies have broken the centuries-old association of luxury goods with their places of origin. historical.

Outsourcing also led to relaxed control of the supply chain, design and manufacturing, when counterfeiters put unprecedented pressure on each of these processes. At the same time, despite the cost savings, the prices of luxury product labels have increased considerably. Initially, the idea was to cushion the impact of the growing traffic of tourists buying abroad and selling at home.

Revisit the client connection

It is also high time for many luxury goods companies to redraw customer assumptions as their customers evolve.

More and more, today’s nouveau riche are Millennials, and their ethics and tastes are quite different from those of their forefathers. The focus today is on experience, sustainability and the sharing of products, consumption and exclusivity.

Some luxury brands are changing their strategies accordingly.

After-sales service such as maintenance, authentication, certification and repair, as well as the booming trade in “second-hand” luxury items, are all promising areas for product companies to explore. luxury.

Some watch brands (i.e. Audemars Piguet) announced in 2018 their intention to launch a second-hand watch business. Done correctly, this type of strategic positioning can help a luxury business regain control of its products throughout their lifecycle. It can also change the economics of buying a fake by providing consumers with more affordable but still genuine options.

Watch brands are generally linked to a history, a heritage and a tradition which associate them with memorable moments (the first man on the moon for Omega), universes (automobile for Tag Heuer) or individuals (Rolex Daytona and Paul Newman , Monaco Tag Heuer and Steve McQueen).

The inherently hedonic nature of luxury brands needs to be enhanced and conveyed through high levels of service, and while quality and craftsmanship ensure functional satisfaction, luxury products provide greater psychological and social needs than others products.

These characteristics also create brands that consumers connect with personally, further enhancing the usefulness of these products as signals about the social groups that users wish to be affiliated with.

In summary

The high signage value and low accessibility of luxury goods attract consumers to counterfeiting. Due to falling prices and more accessible distribution channels, counterfeiting has become a major problem for luxury brands.

Thanks to our technology, we have the ambition to become a standardization tool to effectively fight against counterfeiting.


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