Counterfeiters get sophisticated

DSN Retailing Today, March 14, 2005

While licensing is flourishing, whether it's with reference to designer, art or character-based goods, so is its shadow: counterfeiting.

Whether it's a PVC facsimile of a Louis Vuitton bag or the illegal use of trademarks like Disney's Mickey Mouse, this parasitic business has long been a problem. Lately, however, it has been getting worse, according to industry experts, despite recent crackdowns on various counterfeiting rings. This forbidden practice not only hurts sales on the high-end, it cuts into profits for mass retailers by competing with bogus products on price or even with the increasing number of designer brands that have gone downmarket.

A recent Gallup poll found this practice was rife across the marketplace and that a whopping 13% of Americans had knowingly purchased, copied or downloaded counterfeit goods in the past year. This is true not only in apparel and accessories but in consumer electronics as well as entertainment industry-based products.

While faux designer handbags, priced hundreds of dollars below original merchandise, have long been on the black market, they have resurfaced in new form at "purse parties" during the past few years, where a fake Prada bag will retail for about $180.While well below the original price tag of $800, the product still targets a fairly affluent consumer. The difference between the $30 obvious knockoff and the more expensive counterfeit bag is that the consumer purchasing the pricier version could possibly afford the real thing but opts to save instead--ultimately hurting the luxury brand.

"Having spent the last 15 years living and working in Asia, I was familiar with brand piracy, but I wasn't aware of how wide the practice had become in America," said Chris Stewart, global brand manager for Gallup. The results in the Gallup Poll Tuesday Briefing were based on telephone interviews conducted in January 2005, with a sample of 1,304 U.S. adults.

Consumer demand, based on increased awareness of designer brands, is ultimately driving this industry. The have-nots want to have what's hot--whether it's real or not.

HAVE YOU PERSONALLY PURCHASED, COPIED OR DOWNLOADED
ANY IMITATION OR COUNTERFEIT PRODUCTS IN
THE PAST YEAR IN ANY OF THE FOLLOWING CATEGORIES?

BRAND-NAME FASHION CLOTHING    3%
BRAND-NAME WATCHES             1%
MUSIC CDS OR AUDIOCASSETTES    5%
MOVIES (VHS, CVDS, DVDS)       3%
JEWELRY                        2%

Source: Gallup Poll Tuesday Briefing