For Brands, Fake Goods Mean a Genuine Scare

Headshot of Robert Klara

During a late-night walk last Saturday, I happened to pass a tiny thrift shop when I literally froze in half-step. There, behind the window of the darkened store, was an antique Louis Vuitton hard-shell suitcase. Knowing that the shelf life of “vintage Louis” in Manhattan secondhand stores is measured in minutes if not seconds, I was first in the door when the place opened the next morning. The sales tag on the portmanteau constituted yet another thing you rarely find anywhere in this city: a reasonable price. No, it wasn’t cheap—but it was good. And I pounced.
Before I go any further with this story, I’d better just fess up: I’m one of those suckers the likes of whom is born every minute, as Barnum famously said. (I admit it, OK? So please, hold the e-mails.) Thinking I’d lose the deal if I did not act fast, I acted fast—too fast. Later, as I went over the valise stitch-by-stitch, I found some flaws that would never have been permitted to leave the proud showroom at 101 Avenue des Champs-Elysées. Point being: While a guy named Louis might have made my suitcase, chances are his last name wasn’t Vuitton. The suitcase was—probably—a fake.
Sometimes, even those of us who cover the world of brands forget that we’re consumers first, and our experiences often exemplify the very trends we spend our working hours trying to report. Consider my situation: I longed for an “LV” on my luggage, but there’s a recession on, so I was sniffing for a bargain. That’s a lethal combo, as it turned out—and not just for me. Right now, luxury brands are feeling just as angry and rotten as I feel.
A survey just released by the U.K.-based intellectual-property firm Marks & Clerk revealed that a whopping 97 percent of brands fear that the current economic recession will mean a flood of fake goods into the marketplace. According to the report, luxury brands have the most to worry about.
You see, not only are consumers less likely to splurge on high-end merch right now, those penny-pinching dreamers have simultaneously created a bigger demand for the spurious counterparts. And, given that most $40 Vuitton handbags and $10 Hermes scarves—all lovely until you wear them in the rain—hail from China, Beijing’s notorious Silk Street factories are only too happy to keep the ersatz production lines running. This is especially true since cubic tons of legitimate exports are moldering on the docks due to dried-up demand in the U.S.
Of course, anyone who’s ever walked down Manhattan’s Canal Street (home of the $10 Rolex fresh from a Senegalese vendor’s briefcase) knows that phony luxury goods have always enjoyed a brisk trade. But these days, things are different. Not only have lean economic times upped demand for cheap goods, we find ourselves in the first major recession of the Internet era. The Web is a vehicle that not only makes buying fake goods easier, it puts most sellers well beyond the jurisdictional reach of regulatory authorities.

It’s a double whammy that, according to Marks & Clerk attorney Pamela Withers, has luxury brands shaking in their Manolo Blahniks. “There’s concern that in the current climate, low-price fake goods will be of increased interest to consumers looking to make their money go further,” she said. And, of course, few commerce vehicles facilitate bargain hunting better than the Internet does.
So what’ll it all ultimately mean for luxe brands? Well, believe it or not, probably good news, so long as those brands are willing to be proactive about things.
First, the spate of luxury knockoffs from the Far East has prompted many governments (not just our own) to crack down harder and more frequently on counterfeiters. Just two weeks ago, Taiwan’s intellectual-property court fined a woman $7.5 million U.S. dollars for selling a mere four fake Hermes bags, a penalty that amounted to 500 times the value of the goods sold. (They like to make examples of people in Taiwan, apparently.)

@UpperEastRob Robert Klara is a senior editor, brands at Adweek, where he specializes in covering the evolution and impact of brands.