How to Protect Your Brand from the Counterfeit Industry

Existing Challenges in the Apparel Industry and How to Fight Counterfeit Activity

Counterfeiting and gray market activity is growing at a rapid pace globally, significantly impacting sales and diluting equity for the world’s leading apparel and footwear brands. With the rise of sophisticated ‘knock-offs,’ brands need a strategy to differentiate and protect authentic goods.

According to the Organization for Economic Cooperation and Development (OECD), it is estimated that counterfeit goods are costing the global economy up to $250 billion a year. The most impacted categories are luxury brands, sporting goods and footwear. While luxury brands are targeted due to high manufacturer’s suggested retail price (MSRP), counterfeit sports apparel is the second largest category, costing the industry approximately $116.2 million in seized MSRP in 2014. Footwear goods are also becoming a large target of counterfeit activity, with $54.9 million worth of seized goods in 2014.

As counterfeiters become more savvy, brands and retailers must proactively identify ways to protect and authenticate the goods associated with their brand. In many cases, one of the best ways to accomplish that objective is to leverage the tag or label and incorporate both overt and covert identifiers that are integrated into the design. Since the tag or label is a common component for all garments, accessories and footwear, it can universally apply brand protection strategies without significantly increasing cost or creating additional components. In fact, due to this commonality many counterfeiters also try to duplicate the trim, tag and label components to make their items look more authentic. In order to combat this challenge, many leading brands and retailers are leveraging the available sophistication in the trim components to maintain their authentic product in legitimate channels.

With the proliferation of mobile technology, the brand owners can add a layer of digital protection to enable field investigation, while limiting authentication knowledge for maximum protection. Brands can employ multiple field investigators that are neither product nor authentication experts to scan questionable garments, which automatically send reports back to headquarters for authentication. As markets become increasingly global, this digital component is vital to enabling brands to drive large, global authentication campaigns, without risking exposure of their specific authentication measures. By using this critical digital component, even the efforts of the best counterfeiters may not be able to mimic the brands exact identifiers.

Labels, which are sewn-in or sealed on, form an integral part of the product and are one of the preferred methods for authenticating goods. Since labels are a permanent part of a product and physically convey the brand’s identity, they are an ideal vehicle to carry a brand protection solution. Brand labels applied during the manufacturing process that include security features further provide the brand with the lowest total applied cost by incorporating brand protection into the core labeling.

Label security techniques can include both physically overt or covert elements, but more brands are trending toward utilizing data elements tied to item level serialization, which provide opportunities for both authentication and identifying gray market. Although they are often imitated, security labels can be extremely difficult to duplicate. The addition of product specific serialization creates a further barrier for counterfeit activity.

RFID item-level authentication based on EPC serialization ensures integrity and visibility across the entire global supply chain, facilitating immediate product authentication and shipment tracking while reducing the risk of counterfeiting and diversion.

By embedding a serialized EPC (Electronic Product Code) into every label produced, and storing that information in a database, retailers and brand owners have a historical record of where and when an item was produced as well as its intended destination. This information can then be used by brand protection and loss prevention personnel to authenticate an item as well as to highlight when an item may have been diverted from its intended destination.

The technology that is best suited for the job will depend on the particular product category, the application and the garment’s attraction as a counterfeit target. Some security solutions are overt, visible to the consumer and counterfeiter alike, and can even have customer appeal. Holograms containing brand logos and text are an example of overt technology. Covert security includes specialized yarns, inks and coatings that can be selectively integrated into woven and printed labels for authentication by viewing with a handheld or other tool. Security threads, similar to those used in currencies and secure documents, can be used to authenticate apparel using micro printed weavable threads that are woven into the labels. Labels can contain multiple technologies to serve different needs within the supply chain.

Our AD Certify™ Mobile Authentication App allows field inspectors to identify counterfeit items on the spot. This easy-to-use app provides brandspecific multilayer functionality to facilitate the process of identifying fakes with greater confidence.

Utilizing serialization tied to product specific data is a powerful tool that can be used to identify authentic versus counterfeit goods. Through mobile devices, this authentication can take place in any market venue from the shelves of big name retailers, to shipments found in unauthorized warehouses, to ports of entry. This technology is also a strong foundation to communicate one-on-one with consumers. By leveraging mobile technology and item uniqueness, brands can open doors to consumer engagement at a product level and drive everything from social media interaction to product registration and authentication.

We talked with Kim Schneider, Senior Director of Technology Solutions, who has been with Avery Dennison for over 14 years, to discuss the main things to keep in mind when considering a Brand Protection program and more.

Q. What are the main things to keep in mind when considering a Brand Protection program?

A. First, we need to start by understanding the problem and associated threats. Is the issue counterfeiting, gray market, overproduction out of the factories, or all of the above?

Every situation is different, so understanding the opportunity and what the customer hopes to accomplish is important in understanding how to achieve the goals.

Q. What is the best way to ensure success when developing a Brand Protection program?

A. When determining success parameters it is important to remember that Brand Protection programs are more about deterrence than prevention. Stopping counterfeiting or gray market activities is most often an unreasonable goal. The goal should be more about applying situational crime prevention and deterrence by equipping your brand protection team with effective tools to identify and confidently act on problems they encounter while policing the brand.

Q. How do I decide what kind of features and technology to use in my Brand Protection program? Overt, Covert, Serialization, etc?

A. An effective Brand Protection program should follow a multidisciplinary approach that includes both supply chain management and labeling science. The more elements in the brand protection strategy, the more difficult the product will be to counterfeit. A layered approach should include physical security features combined with forensic features, as well as a data layer that is usually linked through item level serialization. Each element has benefits depending on where and how it is used in the supply chain.

Since every brand’s situation is different, Avery Dennison partners with brands to the find the best solution to fit their particular needs. We assist our customers in building a roadmap for ease of implementation while creating a strategy to serve future add-on capabilities.

Q. Will implementing multiple layers of Brand Protection stop counterfeiting, diversion and over production?

A. As we discussed previously, Brand protection is more about deterrence than prevention. Once implemented, a brand protection program can act as a powerful set of tools to help your brand enforcement team pinpoint these issues and potentially identify and remove their sources.

Sources

  1. IACC International AntiCounterfeiting Coalition, ‘Counterfeiting adds up’, Retrieved December 9, 2015
  2. USA Today , ‘9 most counterfeited products in the USA,’ March 29, 2014
  3. International Chamber of Commerce (ICC), ‘Global Impacts Study,’ Retrieved December 9, 2015
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